Depressing state of household savings in SA

According to analysis done by savings fintech start-up MyTreasury.co.za, the household savings rate in South Africa comes last when ranked against the G-20 countries.

This is distressing news during savings month as it means that too many South Africans are living in debt or eating into their capital.

These findings are consistent with the worrying picture painted by Old Mutual Savings Monitor: among urban working households, an alarming 40% of respondents said they have no form of formal retirement savings at all. Thirty-two percent of respondents said they would rely on government, with 38% saying their children will support them in retirement. The situation is much worse among the unemployed population.

In addition, many of those who manage to squirrel away some money aren’t saving wisely.

While 16 million do have savings accounts, they are emptier than they should be and, according to the latest South African Reserve Bank statistics, about 40% of this money sits in accounts that offer very low interest rates, if any interest at all.

A person who has savings could be earning as much as 10% on their money each year, and growing their wealth faster, just by switching to higher-interest paying accounts.

MyTreasury.co.za has come up with a novel way to boost savings. For those who’re currently saving, it suggests they grow their wealth by investing more wisely.

Warren Kopelowitz, chief executive of MyTreasury.co.za, explains: “Efficient saving can make a massive difference to your wealth.

“Moving your cash from a call account that offers 3% returns to a long-term fixed deposit with an interest rate of 10%, for example, would effectively double your wealth over 10 years.” – Moneyweb