It’s not uncommon for most people to have a significant amount of money at least once in their life. R50k is a lot of money by any metric; you might not want to waste it; you might want to put it in a place that will keep it safe while increasing its value. This is a guide on what to do with R50k in South Africa.
For this guide; we will focus on how you can keep your R50k safe while earning money from it. We will look at different assets that you can invest in.
Invest in ETFs
The best way to protect your money while earning a huge interest is to invest in ETFs. An EFT is a basket of shares that mirror the stock market. You will be investing in all the big companies like Absa, Sasol, Capitec while not carrying much risk.
The returns can be as high as 30% per year, especially if you invest in the USA S&P 500 with Vanguard. This might sound intimidating but it’s very easy. All you have to do is to open an account with EasyEquities, which is the best broker in my opinion. You will also earn money from dividends when the companies pay out.
Let’s do some quick math, let’s say you put R50k in ETFs for a period of 20 years and it has annual returns of 30%, you will have over R9million at the end of the period. This is why I highly recommend you to invest your money in ETFs and forget about it. Even if the ETF returns an average of 20%, all you have to do is wait an extra 10 years (30 years) and you would have R11million that you didn’t even work for.
Invest it in a fixed deposit
Do this if you just want to keep your money safe; protect it from inflation while earning just a bit of interest. Other than that; your money won’t really grow; South African banks currently offer a maximum of 8% per year interest on fixed deposits. The inflation rate is currently around 4%, so this means the money is enough to beat inflation in the long term but not for wealth acceleration.
Invest it in a business
This is a very risky option with a potential for high returns. Your principal is also not guaranteed, building a business is hard and requires a high level of risk tolerance. With a business; you can be able to increase your money by at least 40% each and every year. However, you can also lose all of it.
It’s better to invest in safer businesses like real estate but with R50k; you can realistically build two rooms; that’s if you already have the land. You can also just buy land in a good location and wait for it to go up in value and sell over time.
Conclusion
This was a guide on what to do with R50k in South Africa. Do you have any thoughts or questions? Comment below.
