Start a risk-free investment with guaranteed growth

Looking at the economy right now, it’s hard to know where to make your next investment. Politics, international ratings and rampant corruption are affecting many investments negatively and it’s understandable to be sceptical about the future and any potential investment.

If you’re looking at a short-to-medium term investment (5 years or less) and like the sound of guaranteed growth or best return on investment with no risk, then a fixed deposit may be just the investment vehicle for you! This category of investment is often overlooked as people either don’t understand them or consider them inferior compared to other investments.

What is a fixed deposit investment?

A fixed deposit investment is simply a type of bank account into which you deposit your money for a set period in return for a guaranteed growth. It’s important to understand that your money will be tied up for the full period and that you won’t be able to access it, not even in an emergency.

Unlike a notice-period account, where you simply give notice that you need the money, a fixed deposit investment is a fixed term that you agree to upfront and then leave your money for the full term. The investment interest rates offered are usually worth the inconvenience as they are higher than ordinary savings accounts and there is absolutely no risk of losing your capital.

This is different to other types of investments in which your money is invested in shares or commodities. Long-term investments like Unit Trusts or a Retirement Annuity can (and often do) lose capital over a short period, although the ultimate growth over many years is what makes them attractive. What this means is that your R1 000 that you invest this month could only be worth R950 the following month and it could even drop to less. However, the opposite is also true in that that your investment could grow. There’s no month-to-month guarantee on such investments and withdrawing your money at the wrong time could cost you.


Deciding if a fixed deposit investment is right for you

If you’ve got any savings that you only need to use in a few months’ time, you should certainly consider investing with a fixed deposit. You can decide on the period that best suits you, from 3 months up to 5 years.

This would work particularly well if you’re saving for a specific goal, such as an overseas holiday. You may already have R10 000 saved up, but knowing that your trip is only a year from now means you could store your cash in either a 6- or 12-month fixed deposit account. Besides the great interest that you’ll earn, your money will be out of your account and harder to access once temptation rears its shiny head.

When receiving a cash windfall, such as an inheritance, some people also use a short 3-month fixed deposit as a holding area while they consult with their financial advisor and decide on their investment strategy. This keeps the money safe and allows one to take a little time in making the best decision, with the knowledge that their money is still growing.

A fixed deposit is great for any short-term investment where you simply cannot risk losing any capital.

Invest with African Bank

African Bank offers the best return on investment in South Africa on their 60-month Fixed Deposit investment and it’s super quick and easy to start your investment with them. All you need is your ID, and you can open your account online or at your nearest branch. You’ll need to decide upfront how much you wish to invest as you only have a 7-day window in which to make your initial deposits.

Once invested, it’s a matter of sitting back and forgetting about your money. There’s no need to check up on it or to log on to your account. You can be rest assured that it’s growing and ultimately working for you!

Despite the tough economic times, it really is possible to invest with no risk and earn guaranteed interest!

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