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[TOP STORY] RSA Retail Savings Top Up Bond coming April 1

‘Investors may start the investments with as little as R500, and every time that they have R100 they can add it to the investment…[and] receive interest quarterly’: Janet Brewis of National Treasury.

SIMON BROWN: I’m chatting now with Janet Brewis – she is from National Treasury. We are talking [about] retail savings bonds. Janet, I appreciate the early morning time. The retail savings bonds [have] a new product, a top up bond coming. I think on April 1 it’s launching….What is this top up? What differentiates it from the existing offerings on the platform?

JANET BREWIS: Good morning, Simon. Good morning to you and the listeners. Thank you for having me. The Retail Top Up Bond is a product that is launched by National Treasury, and what makes it different from the other product is that it’s designed to attract investors that [do] not necessarily have a large sum to invest. Investors may start the investments with as little as R500, and every time that they have R100 they can add it to the investment. This money will be added to the capital amount and will receive interest quarterly, being the end of March, June, September and December. Even the interest will be capitalised. You will not have the option to receive the interest. That interest will also form part of the capital and will receive the same interest as the original capital amount.

SIMON BROWN: A compounding impact. R500, R100 – those are good old-fashioned, small numbers, as you say. This a great product, bringing it to a wider market. Will it be at the same rates? I’m on the website at the moment. The fixed rate – two years, for example, at 7%; going up to 9.25% at five years. That’s obviously for the March rate. Will it be at the same rates and durations as the current offering?

JANET BREWIS: This interest rate will reset quarterly, and it will be derived from the fixed-rate nominal bond yield curve, which will still make it very competitive. Currently that rate is at 7.75%, as you can see on the website. We will announce the first rate applicable for this product on April 1, and thereafter it will be published quarterly on the website as well.

SIMON BROWN: Is this a term product? Your current existing ones on the fixed rates are two, three or five [years]. And then on the inflation-linked there’s a three- or five- and a 10-[year]. Will this also be a fixed term?

JANET BREWIS: Yes, it will be a fixed term. It will have a three-year term that will start with your first deposit date…. So three years from your first deposit date your investment will mature. And, as I mentioned previously, each deposit that you will add will then add it to the capital balance. [For] investors it’s important to note that each time you deposit money, an investor will receive with the first deposit a unique TU number that they will have to use each time that they make investments. But all of that will be provided once they have registered and they are ready to pay their first interest amount on their first deposit amount.

SIMON BROWN: ….So the right money goes to the right place. If I start this and, say, I’m putting in R100 a month, that money I put in at the end of year one would be there for two years to that expiry, and that’s important. So it’s not all linking through.

This obviously is going to be great for individuals, as you say – folks perhaps who’ve got smaller amounts who don’t have the bigger lump sums. What about informal groups? I’m thinking this is ideal for a stokvel or a savings club.

JANET BREWIS: That’s what makes this product so unique. It’s also designed to cater for informal groups, such as stokvels, perhaps, who can provide us with their constitution documents and have a bank account in the group’s name within the republic. They will be eligible to invest in this retail bond product.

SIMON BROWN: I was right up front when I said it starts on April 1. So next week sometime.

JANET BREWIS: Yes, it will start on April 1. All the information will be available on our website from April 1, as well as the first interest date applicable to this product.

SIMON BROWN: Perfect. And that website – folks, just go and find the RSA Retail Saving Bonds website. It’s a great product for the right person. A lot of you are thinking I don’t want to invest in savings products. Fine, then the product’s not for you. But for those who do like this sort of product, this is a really, really great-looking product.

That was Janet Brewis from National Treasury, talking [about] the SA Retail Savings Top-up Bond coming to market.



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