Impact of RSA Retail Savings Bonds/Government Retail Bonds

Impact of RSA Retail Savings Bonds/Government Retail Bonds

Positives/ Advantages

  • Guaranteed returns, as interest rate is fixed for the whole investment period.
  • Interest rates are market related and attract more investors.
  • Interest can be received twice a year.
  • Interest is usually higher than on fixed deposits.
  • Retail bonds are listed on the capital bond markets/on the JSE.
  • Low risk/Safe investment, as it is invested with the South African Government which cannot be liquidated
  • No charges/costs/commissions payable on this type of investment.
  • Investment may be easily accessible, as cash may be withdrawn after the first twelve months.
  • It is an affordable type of investment for all levels of income earners including pensioners.
  • Retail bonds are easily/conveniently obtained electronically/from any Post Office/directly from National
  • Treasury.
  • Investors younger than 18 years/Minors may invest with the help of a legal guardian, which encourages
  • saving from a young age.

Negatives/ Disadvantages

  • Retail bonds cannot be ceded to banks as security for obtaining loans.
  • A minimum of R1 000 must be invested, which may be difficult for some small investors to accumulate
  • Retail bonds are not freely transferable amongst investors.
  • Investors need to have valid SA identification/should be older than 18 years which may discourage
  • foreigners/young people to invest.
  • Penalties are charged for early withdrawals, if the savings is less than 12 months old
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