What is a good return on investment in South Africa?
You can choose a short-, medium- and long-term investment — either way, you're sure to get great rates from us. What is a good investment rate? Investors generally consider a return of 7% per 12-month period to be a good rate of return.
Equity market returns
The JSE All-share total return index delivered 10.9% in 2014 or 4.9% after inflation (i.e. in real terms). This was well below the average real equity return of 12.7% over the past decade and also the 9.1% average real return recorded during the past 25 years.
Return on Investment (ROI) is a financial metric used to evaluate the profitability or efficiency of an investment. It measures the return or gain on an investment relative to the initial cost or outlay.
As an example, with an interest-focused investment of R1 million, generating a return of 6.7% over 12 months will mean a return of R67 000 for the year.
General ROI: A positive ROI is generally considered good, with a normal ROI of 5-7% often seen as a reasonable expectation. However, a strong general ROI is something greater than 10%. Return on Stocks: On average, a ROI of 7% after inflation is often considered good, based on the historical returns of the market.
Real estate has historically been a reliable source of monthly income. Investing in rental properties can provide you with rental income, and you may also benefit from potential property value appreciation over time. REITs are companies that own, operate, or finance income-generating real estate across various sectors.
| ACCOUNT | INTEREST RATE |
|---|---|
| Investec savings accounts | 4.75 – 9.52% |
| Nedbank save and invest accounts | 4.5 – 10.06% |
| Standard Bank savings and investment accounts | 3.5 – 9.5% |
| TymeBank GoalSave | 4 – 10% |
- Discovery Bank. Get up to 9.5% monthly interest when you deposit a large sum into a fixed-deposit savings account at Discovery Bank. ...
- Capitec Bank. ...
- FNB. ...
- Investec Private Bank. ...
- Nedbank.
South Africa has a well-developed and diverse economy, boasting sectors such as mining, manufacturing, agriculture, and financial services. The country's economy is a cornerstone of the African continent, and it offers numerous investment opportunities.
Fixed Deposits
Like money market funds, fixed deposits pay interest that usually beats inflation. Money market funds are your best choice if you want an almost completely risk-free investment that doesn't 'lock you in' – money market funds allow you to withdraw your savings at any time.
What is a good rental yield in South Africa?
The average gross rental yield in South Africa stands at 10.15% (Q1, 2024). Previously, in Q3, 2023 the average gross rental yield stood at 9.69%.
Investments, such as stocks, do not have a fixed rate of return, but the Rule of 72 still can give you an idea of the kind of return you'd need to double your money in certain amount of time. For example, to double your money in six years, you would need a rate of return of 12%.
4% of 10 million = R400 000. This is the maximum annual salary you should withdraw once you retire, according to the 4% investing rule of thumb. R400 000 divided by 12 months = around R33 333. This is the maximum amount you should withdraw each month to ensure your savings last at least 30 more years.
FNB is the preferred bank for personal and business banking among South African retail and institutional investors, with Standard Bank second and Absa third. Discovery Bank is the preferred new digital bank, significantly outperforming TymeBank and Bank Zero.
- 40% FTSE/JSE All Share Index.
- 20% MSCI World NR USD.
- 30% BEASSA All Bond Index.
- 10% STeFI Call Deposit.
Rental Property Investment
By renting out a property, you can earn rental income and benefit from potential property value appreciation. With careful property selection and management, rental properties have the potential to yield a consistent 12% return or more.
Imagine you wish to amass $3000 monthly from your investments, amounting to $36,000 annually. If you park your funds in a savings account offering a 2% annual interest rate, you'd need to inject roughly $1.8 million into the account.
| Rate of Return | Rule of 72 # of Years to Double Money | Logarithmic Formula # of Years to Double Money |
|---|---|---|
| 5% | 14.4 | 14.2 |
| 6% | 12.0 | 11.9 |
| 7% | 10.3 | 10.2 |
| 8% | 9.0 | 9.0 |
Time To Calculate Your Retirement Target
Did you know that the current average South African salary comes to around R22 500 per month? So, if you want to continue living off this amount for the rest of your life, you will need to have R4. 5 million saved up by the time you retire at the age of 65.
However, according to data from Numbeo, a salary of R30,000 or more per month is considered to be good. This income would allow you to live comfortably in a major city like Johannesburg or Cape Town and have some money left to save or invest.
Where to invest 10,000 rand in South Africa?
- Reduce your debt first. ...
- High-interest savings account. ...
- Fixed deposit account. ...
- Unit trust. ...
- Shares or exchange-traded funds (ETFs)
| Period | R10 000 - R249 999.99 | R1 000 000+ |
|---|---|---|
| 6 month | 8.00% | 8.15% |
| 9 month | 8.15% | 8.30% |
| 12 month | 8.55% | 8.70% |
| 24 month | 8.65% | 8.80% |
| Terms | Monthly interest payout | Annual interest payout |
|---|---|---|
| 6 Months | 8.65% | 9.00% |
| 12 Months | 9.11% | 9.50% |
| 24 Months | 9.34% | 9.75% |
| 36 Months | 9.44% | 9.85% |
| Bank | Term | Nominal |
|---|---|---|
| SA Retail Bonds | 5 year | 10.75% |
| TymeBank | 1 year | 10.48% |
| Access Bank Plc | 5 year | 10.45% |
| Term (Months) | R0 - R9 999 | R10 000 - R74 999 |
|---|---|---|
| 13 - 18 | 3.20% | 7.75% |
| 19 - 24 | 3.20% | 7.80% |
| 25 - 36 | 3.20% | 7.85% |
| 37 - 48 | 3.20% | 7.90% |
