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Money market savings, South Africa |
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Money Market Funds
When moving back to South Africa, you will be in a transitional phase, both literally and financially. You will probably be starting a new job, may be considering purchasing property on your return, almost certainly buying a car and generally getting used to life in South Africa again.
In these circumstances, it is not sensible to invest the money you have earmarked for these activities into investment products that carry a degree of risk, and which need time in order to deliver their potential returns. Having access to your money is also very important at this stage.
Many people like to keep the required money in their bank account which does give them a relatively respectable level of interest, especially when compared to the interest rates in savings accounts in the UK. However, inflation is higher in South Africa than in the UK, and there are other options to consider when investing this money in order to ensure that you keep pace with inflation. Banks do offer money market accounts or fixed-term deposits, which offer better rates of interest than their current and savings accounts. However a better option, from an interest rate and access to money point-of-view, are Money Market Funds.
These Money Market Funds are investment funds (unit trusts) where your money is managed by an investment professional that pools your money with that of other investors and strives to achieve the best possible rate of interest for you. As the manager is dealing in larger amounts of money than you will be able to on an individual level, he is able to get better interest rates. He also uses a number of different money market instruments from a number of different institutions, and thereby diversifies your risk away from one company. The money market funds are completely liquid and should you require the access to the money, it will be in your bank account within a couple of days.
A number of different asset management companies offer money market funds, and these should definitely be considered as an option for your short-term financing needs – to ensure that you are making the most of your money, even in the short-term.
Please note that specialist advice is advisable when considering your investment options as this is a complex topic specific enquires can be made to the contributor of this article.
The Incompass Group can be contacted here.
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