It’s hard to admit but you don’t get much for your Rand these days. That monthly wage of 500 to 1,000R doesn’t stretch as far as it used to. Thanks to rising inflation it can barely cover a weeks’ worth of food and with prices set to rise there are genuine concerns about how we’re going to finance our future when we retire.
That’s why a lot of Africans have started setting some of their monthly wage aside. This is then invested with hopes of some sort of financial return further down the line.
When it comes to investments the main goal is to beat the rate of inflation to prevent your money from depreciating in value faster than you can invest it. With the annual rate of inflation currently increasing by 6.33% per year across the country with Kenya having the highest annual inflation at 8.36%, trying to find an investment plan that will cover this can often be quite difficult.
The first choice that many tend to opt for is investing money into stock options but with recent reports that African stocks are now trending at an all-time-low and leading stock giant JALSH down 431.62 points, stocks options are currently an incredibly unstable commodity.
A safer option would be to invest in a bank via a savings account but with inflation sitting so high you would have to put gradually more and more cash in each month as you compensate for rising inflation before you saw any return in interest on your investments.
Another option is to invest in a Notice Deposit scheme with your bank; this plan requires a lump sum deposited into your account or a deposit once a month to grow your initial investment. These can come with quite a high and competitive rate of interest, plus the minimum amount you can deposit into these accounts is 250R so even if your monthly wage is not particularly high you can still afford to put some of it away. Although the downside is they require 32 days’ notice before you can remove any money so you don’t really have that much control over it.
Outside of individual investments there’s an option to invest as a group if you and a few family members or friends want to save together. This option is called a Society Scheme and it’s a group savings account that anyone in your group can pay into.
A great benefit of Society Scheme accounts is that they earn a higher rate of interest than standard savings accounts so you’ll earn more for your investment which in turn keeps you ahead of the inflation rates.
One final option worth considering is that African citizens can use IRA investment plans to fund their future. These Individual Retirement Accounts can be comprised of anything from stock options, property and even gold bullion if you can afford it.
These tend to be quite popular as their ability to accrue interest is based on the initial source of investment i.e. stocks or gold.
When it comes to your future being able to afford your everyday living expenses is incredibly important. Once you retire that’s all you’ll have to live on so it pays to plan this sort of thing out as early as you can.
We’ve only covered a few investment options, there are countless other choices out there, when you go to pick your investment option just make sure you do as much research as you can before you sink any of your hard earned cash into it.