How do RSA Retail Savings Bonds work?
RSA Retail Savings Bonds was launched by National Treasury in 2004 to encourage households to save.
peopleimages12/123rf
Gugs Mhlungu spoke to certified financial planner, Paul Roelofse.
Listen to their conversation in the audio clip below.
The South African government, over the years, has tried to make bonds more accessible to all citizens because generally, you need a lot of money to enter the bond market, says Roeloefse.
He explains that a bond is an amount of money that you lend to a corporate or a government for a period of time and they make a commitment to pay a fixed rate of interest over that period and when that period is over, they give you your capital back.
RSA Retail Savings Bonds was launched by National Treasury in 2004 to encourage households to start saving alongside business and government.
RSA Retail Savings Bonds:
- Can be bought for as little as R1 000
- Offers guaranteed returns
- Carries no commission
- No agency or service fees
There are two types of bonds on offer - a fixed interest option and an inflation-linked bond that is protected against inflation.
RSA Retail Savings Bonds are available to all South African citizens and permanent residents who possess a valid ID and have a South African bank account.
For more information, you can visit the RSA Retail Savings Bonds' website here.
"Because it's such a short term, there's nothing really that can go wrong."
- Paul Roelofse, certified financial planner
"The interest is taxed like a normal taxpayer."
- Paul Roelofse, certified financial planner
"Get to really understand it before you commit."
- Paul Roelofse, certified financial planner