South Africa: Access Bonds Can Boost Emergency Savings, but Mental Discipline Is Vital
[Daily Maverick] For this strategy to work, you need to mentally demarcate that money even though the bank does not.
Access bonds can be a smart choice for building an emergency fund, but mental discipline is crucial. By keeping that money in an access bond, you save on interest payments, making it a tax-free, virtually risk-free investment with an excellent return of around 10%. For instance, with R200,000 in an access bond, you could save R20,000 annually in interest.
However, the strategy hinges on your ability to resist the temptation to dip into the fund when needed. While the bond provides a valuable return, it's essential to remember that it's not free money; you're avoiding an expense rather than earning interest. So, while access bonds offer a compelling alternative for emergency savings, the key to success lies in your mental fortitude to keep the money untouched until truly necessary.
Written by urgent.news from AllAfrica Health's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
