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More South Africans dabble in risky investments to get by

Young people between the ages of 18 and 29 have exhibited greater appetite for risky financial behaviour than other age groups.
On the upside many have come to appreciate the value of saving after being tossed into a whirlwind of uncertainty by the pandemic. Image: AdobeStock

South Africans looking for greater financial returns are now buying into riskier investments – some even going as far as gambling – to deal with mounting financial pressures, according to the Old Mutual Savings and Investment Monitor (OMSIM) released on Wednesday.

The report, which has come out during National Savings Month, indicates that gambling is now seen by some South Africans as one way to make ends meet.

The research reveals that 44% of working South Africans have admitted to taking part in online gambling. More alarmingly, 76% of young people aged between 18 and 29 have admitted to doing the same.

More than a third of respondents said they gamble to meet their monthly financial commitments, with the data indicating that this is more prevalent among low-income workers.

“Risky behaviour is highest among young Gen-Z investors. Age modifies this approach, with only 33% of people aged 50 and above saying they would choose risky investments,” Old Mutual’s head of knowledge & insights Vuyokazi Mabude says.

“However, many high-income earners, including older earners, exhibit risky investment behaviour, probably because they have the means to do so.”

Price pressures continue

The release of the Old Mutual research follows Statistics SA’s release of the country’s latest Consumer Price Index (CPI) figure, which shows that inflation reached 7.4% in June – a 13-year high.

South African consumers have been faced with mounting cost pressures since the Russian invasion of Ukraine in February. Since then, the price of fuel and food has skyrocketed, leaving consumers with less cash in their pockets.

Read: Inflation: What it is and how it affects you

Adding to the financial picture for South Africans is the finding that 52% of respondents have reportedly dipped into their savings, while 40% admitted to borrowing money from friends or family just to be able to make ends meet.

Unfortunately, there seems to be no end in sight for cash-strapped consumers, with the South African Reserve Bank (Sarb) expected to announce further interest rate hike on Thursday.

A Reuters poll of economists indicated that the Sarb is most likely going to increase interest rates by 50 basis points to 5.25% in its attempts to slow down inflation.

Read:

Not all bad news

However, the Old Mutual research shows that it is not all gloom and doom for South Africans as some consumers seem to have learnt the valuable lesson of saving after being tossed into a whirlwind of uncertainty during the height of the Covid-19 pandemic.

The research shows that 39% of respondents have now saved up the equivalent of more than three months’ income in order to protect themselves in the event of losing their jobs.

A further 37% reported developing an emergency saving funds to shield them from rainy days.

Others have gone as far as seeking alternative sources of income, taking up more seasonal employment to get them through each month more comfortably.

“Overall, the 2022 OMSIM research has shown that South Africans have learned from some of the harsh lessons of the Covid-19 period,” Mabude says.

“The shock of losing or facing reduced income caused many to relook and re-evaluate their finances. Positive changes were made and have impacted the attitudes towards savings – something that will stand them in good stead while they face the new challenges presented by 2022.”

Listen to Old Mutual’s head of financial education John Manyike speaking to Fifi Peters about report: 

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The national lottery is a tax on people who can’t do math.

if it’s voluntary to buy a ticket how is it a tax, Sensei? You aren’t compelled by law to buy a lottery ticket.

Plus: if you don’t have a ticket you have zero chace of winning. If you do have a ticket, the chance is small but there. It’s better than zero …… no?

It is a tax because the revenue goes to an institution that the government controls and it is used for social projects. Your odds of winning the lotto is one in 14 million and you have to spend R50 million on lotto tickets to have a reasonable chance of winning.

People who get wealthy through saving tend to be successful and keep their savings over time. After 5 years, 95% of people who have won the lotto are poorer than before they won the lotto. Some develop drug habits and some even end up in jail. For them, winning the lotto was a curse.

Incidentally, that is why BEE is a waste of resources. The benefits won’t last long, because the “lucky break” and the reliance on handouts poisons the mentality of the beneficiary. If the BEE project ends today the “empowerment” will disappear like fog. There was no empowerment, to begin with. It is a redistribution project that unfairly benefits the lucky political elite financially, not mentally.

Something bad happens in the mindset of people who depend on luck instead of prudence and frugality. It is not about the cost of the lotto ticket. It is about the damage to the mindset of the individual who buys that ticket.

Unless you use the money you would have given to the beggar on the street corner to buy your lotto ticket. Then, his mindset will go down the drain and you will have the millions. That is the way to go. You win twice. Don’t use your own money. Use the beggar’s money.

True Sensei but I happen to believe that the the SA ANC version of the lottery is a crooked, licenced monopoly and, like much the ANC does, wrong and amoral. Take your example of a frail care hoe, Why shouldn’t they be allowed to run their own lottery to raise funds?

Such a thing has a place, in SA it’s place has been subverted by the ANC regime to steal money from the desperate (and some gamblers).

There is currently no incentive or stability for young people anywhere in the world to believe in. This plus the meta universe has resulted in risk taking on a short term basis….hence inventions like Bitcoin! And there is no going back now – just a future full of more uncertainty resulting in escapism and risk taking.

PS. Buying a Lotto ticket is rather like giving your money to an institution to play with on your behalf. It’s all a game of chance with risk of failure or success – and nobody knows the odds!

End of comments.

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