Start with what you’ve got and save, says Absa Investments

Absa Investments today (Tuesday, July 12) in Savings Month make a call to South Africans to begin saving now.

The investment arm of the country’s largest retail bank said the rate of bad debt growth was slowing but challenged consumers to go one better and lift the rate of household savings – a figure that has hovered around zero for the last decade.

“In many respects, it’s never been easier to save,” added Sylvester Kgatla, Head of Product at Absa Investments. “Our web-based platform, My Absa, even allows clients to open a unit trust account online.

“For as little as R100 a month, a saver can build up a nest egg in a safe, well-regulated unit trust. All you need is to develop the regular saving habit and then give your nest egg time to grow in the market.

“As our new advertising slogan points out ‘You’d be surprised what you can accomplish when you start with what you’ve got’.”

As an example, a unit trust account focused on domestic equities, opened in mid-2011 with a R1000 lump sum and topped up monthly by a R100 debit order would grow to R9500 by mid-2016, assuming modest average annualised JSE growth of 9% over the five-year period.

“Interest rates at a 30-year low have allowed many South Africans to pay down debt,” noted Kgatla. “Once personal debt is down, the next step is to build up your personal savings.

“Many of those in full-time employment have benefited from pay increases. At the same time, the economy achieved 4.8% GDP growth in the first quarter of the year, suggesting that we are putting the recession behind us.

“This is a great platform from which to start saving. Our savings tip is to go to work on a household budget today. See where savings can be made, allocate a monthly sum and create a savings plan. Savings Month is a great time to start.”