Interest rates look set to come down in the next few months. That’s welcome relief for borrowers, but it’s bad news for savers. Lower interest rates means lower returns on your cash investments. But there’s a simple and effective way to protect your income: invest in a fixed deposit and secure a higher rate.
Running the My Treasury Savings Optimiser reveals that Sasfin offers the highest returns on a 1 and 2 year fixed deposit. By investing your cash now in the highest performing fixed deposit, you can grow your investments at a preferential rate, even after the Reserve Bank cuts interest rates.
Let’s take a closer look at the economics and the effect on your pocket.
Interest rate cuts have already been priced into the bond market. Analysts at Goldman Sachs are predicting even steeper cuts than had been anticipated, expecting rates to be a full 1% lower by this time next year. Goldman’s revised forecast warns that the first cut could occur as soon as next month. In other words, experts now predict interest rate cuts to be steeper and occur more quickly than had been expected. That’s significant because it means rate changes will have a more substantial effect on your cash investments and that investors needs to act quickly to fix a higher rate.
How exactly could this affect your savings? Suppose you have R50 000 in a call account earning the average nominal rate of 5.5%. If Goldman’s prediction is accurate, that rate is likely to fall to 4.5% by next year. However, if you fixed your cash in the Sasfin 12 month deposit (the top ranking one year deposit on the My Treasury Optimiser) you would earn an nominal interest rate of 8.65% over the next year. That’s nearly double what you would earn in a current account.
An additional feature of the Sasfin fixed deposit account is that you can receive your interest income monthly or you can let the interest accumulate, and your return will increase to 9%.
The Sasfin fixed deposit account is also notable for its relatively low minimum deposit requirements. The best performing bank accounts tend to have high minimums, often requiring an investment of at least R100 000. By lowering the requirement to R50 000, Sasfin Bank has made it possible for more people to earn the highest rate over a 12 month or 24 month period.
With analysts predicting interest rates to fall sooner than anticipated, securing the highest rate for your cash is the smart investment move. Enter your contact information below and a banker will call you to discuss getting much better returns with a high-interest fixed deposit.
- You can access your capital after 12 or 24 months
- Interest can be earned monthly or re-invested to achieve a higher return of up to 9% over 12 months or 9.4% over 24 months
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