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Your Money Is Safe in the Bank – But Is It Actually Growing?

South Africans love fixed deposits. They are predictable, comfortable and don’t give you heart palpitations when markets have a bad day.

But safe and growing are not necessarily the same thing.

Consider this simplified example.

Two people each invest R1 million and both earn R100,000. Assume both are under 65 and pay tax at a 41% marginal rate.

The first earns R100,000 as bank interest. After the R23,800 annual interest exemption, R76,200 is taxable. At 41%, that’s approximately R31,242 in tax, leaving R68,758.

The second investor realises the same R100,000 as a capital gain. After the R40,000 annual CGT exclusion, R60,000 remains. Only 40% is included in taxable income, resulting in approximately R9,840 tax at the same 41% rate.

Same R100,000 return. Tax of R31,242 versus R9,840.

Suddenly, how you earn your return becomes rather important.

Of course, this is a simplified illustration. Unit trusts aren’t tax-free: they can produce interest, dividends and capital gains, each taxed differently. And unlike a fixed deposit, a growth investment can fluctuate and returns aren’t guaranteed.

Fixed deposits are excellent for emergencies and short-term needs. But over 10 or 20 years, being too conservative brings another risk: tax, inflation and lost growth can quietly erode your purchasing power.

Your bank balance may look perfectly healthy while your money is slowly becoming less powerful.

So perhaps the question isn’t simply, “Is my money safe?”

It should be:

“Is my money doing the right job?”

If you have substantial cash sitting in the bank, contact me and let’s run the numbers.

Name: Hansie Myburgh
Address: 14 Lelie Street, Northmead, Benoni, 1501
Contact Number: 071 471 2501  |  011 425 1318
Email Address: hansie.myburgh@sfpadvice.co.za