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Thread: Best short-term investment?

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    Bronze Member Beancounter's Avatar
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    Best short-term investment?

    I have perused the banks' interest rates on various savings options and noticed that none of them offer products where you could earn close to (and never more than) the current inflation rate.

    So you have a bit of spare cash lying around each month and want to earn some decent growth on it. You don't want to invest in long-term products as you will need some of it for e.g. paying provisional tax twice a year, paying your membership fees annually etc.

    Where to put your spare cash to earn the best interest and yet have access to it within at least 30 days?

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    Gold Member Houses4Rent's Avatar
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    What were your findings? Who pays interest close to inflation?

    I am parking some funds in Coronation Jibar. Daily availability and around inflation.
    Houses4Rent
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    Diamond Member wynn's Avatar
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    On the radio I hear an advert by Old Mutual where they say if you don't get more than 13% they don't charge you admin fees??
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    Bronze Member Beancounter's Avatar
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    Quote Originally Posted by Houses4Rent View Post
    What were your findings? Who pays interest close to inflation?

    I am parking some funds in Coronation Jibar. Daily availability and around inflation.
    I looked at FNB. Their 7 day notice account if you invest more than R50k earns around 5.35% - 5.45% depending on the term of investment. Still not close to inflation so your money doesn't grow. If you use some funds and the balance dips below R50k you earn no interest at all. Still better than the 30 day notice account that renders 4.25% for investments up to R50k.

    And I think the Old Mutual fund is aimed at long term investment that doesn't allow withdrawals.

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    Platinum Member Mike C's Avatar
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    Capitec Bank is 4.4% on amounts less than 10,000 and 4.5% on amounts 10,000 and over. This is their normal savings account. No notice required for withdrawal. R5.00 monthly Fee.
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    Gold Member Houses4Rent's Avatar
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    Here we have it the answer from Nedbank:

    "An investment product is linked to prime. A transactional product (Go Banking) such as a Current account is not linked to Prime and the rate changes are at the discretion of the bank."

    So they make sure that any prime drop gets passed on the next day and any prime raise much later or never or to a lesser extend.
    Houses4Rent
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    Platinum Member Mike C's Avatar
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    RSA Retail Bonds

    What do you experts think of RSA retail bonds?

    www.rsaretailbonds.gov.za

    At the moment they are advertising 7.25% for a fixed period of 2 years with no admin fees.

    One can also take out an inflation linked bond for three years, but I am not too sure that I am in agreement with what the government's declares as the official inflation rate.
    An education isn't how much you have committed to memory, or even how much you know. It's being able to differentiate between what you do know and what you don't. - Anatole France

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    Email problem Rafael's Avatar
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    Quote Originally Posted by wynn View Post
    On the radio I hear an advert by Old Mutual where they say if you don't get more than 13% they don't charge you admin fees??
    Thats the Liberty evolve range and a certain portion of your investment cannot be accessed for 3 years.

    Quote Originally Posted by Beancounter View Post
    I have perused the banks' interest rates on various savings options and noticed that none of them offer products where you could earn close to (and never more than) the current inflation rate.

    So you have a bit of spare cash lying around each month and want to earn some decent growth on it. You don't want to invest in long-term products as you will need some of it for e.g. paying provisional tax twice a year, paying your membership fees annually etc.

    Where to put your spare cash to earn the best interest and yet have access to it within at least 30 days?
    Have a look at Unit Trusts, you have liquidity, there are no penalty fees and you can view the performance online.
    You miss 100% of the chances you never take

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    7,25% with no admin fees is good. Better than most.
    Look at offshore options as well and hedge.

    If you want access to immediate cash, that could be challenging.

    I split my investments as follows:
    1. If I need immediate cash, I take it out of one of the bond accounts. I earn the average 9% by a reduced bond rate having the extra cash in there, and simply take it out if I ever need it. Easy, little cost.
    2. Take the excess cash you have and put it into a fund for a term longer than 5 years. Tax beneficial and if offshore, better. Since I like property and believe it to be the best investment, Property Funds have stood me in good stead with more than 18% (sometimes 30%) returns
    3. If you have stuff like credit card debt, pay that off first. In fact, have no debt unless it is good debt i.e. investments such as properties.
    4. Did I mention properties?
    5. Sorry, got sidetracked... Government bonds are good, secure investment vehicles. It is a guarenteed return which none of the other options really give you, unless it is at ~5% (from banks)
    6. I really do have to add this one. Add an extra payment to your bond account. Yep, property again. You should get at least 13% return.

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    Gold Member Houses4Rent's Avatar
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    I agree, your best short term return is usually your own bond account (property). And, dare I say, your best long term return is usually property.
    Houses4Rent
    "We treat your investment as we treat our own"
    marc@houses4rent.co.za www.houses4rent.co.za
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    Global Residential Property Investor / Specialized Letting Agent & Property Manager

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