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South Africans are drowning in debt.

So, most would’ve applauded the recent deep cuts in interest rates and the expectation that, possibly, many more are to follow.

But what about the savers, and those who are reliant on interest (e.g. pensioners)?

They should consider investing in RSA Retail Savings Bonds, is the advice of many a personal finance advisor right now.

If you’re interested in learning more about RSA Retail Savings Bonds, also read these articles:

RSA Retail Savings Bonds offer interest rates which are significantly higher than South Africa's inflation rate.

Personal finance experts consider it to be one of the safest investments you can make.

In fact, it is – literally – safer than money in the bank.

Interest rates, right now:

  • 10% per year (5-year fixed term)

  • 7.75% per year (3-year fixed term)

  • 6.5% per year (2-year fixed term)

(How do these interest rates compare to what your bank is offering, right now?)

If you’re older than 60, you may opt for interest to be paid out monthly (and tax exemptions apply).

Those younger than 60 may opt for interest to be reinvested or paid out twice per year.

You may access your funds before the fixed term expires, but you will be penalised.

There are also “inflation-linked” bonds, offering these interest rates:
* Inflation plus 3.75% (10-year fixed term)

  • Inflation plus 3.75% (5-year fixed term)

  • Inflation plus 3.5% (3-year fixed term)

(In other words, you are guaranteed above-inflation returns, no matter what.)

The minimum investment is R1000.

The maximum investment is R5 million.

Refilwe Moloto interviews Terry Msomi (Director of RSA Retail Savings Bonds at National Treasury) to help us understand how it works.

You can restart your investment after 12 months. So, you’re not locked into the rate you chose… You can actively manage your portfolio, making sure you consistently earn a higher return…

Terry Msomi, Director of RSA Retail Savings Bonds - National Treasury

For more detail, listen to the interview in the audio below.

This article first appeared on CapeTalk : Super-safe investment offers sky-high interest rates (10%) – it’s not a scam!

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