Should you include government retail bonds in your financial planning strategy?
Financial planning involves all aspects of dealing with your money now and into the future.
It's vital to have short-term, medium-term and long-term goals as part of your financial planning strategy. To meet some of these goals, you may need to look at savings vehicles to help you get there.
So are government retail bonds worth considering?
Let's take a closer look…
Government retail bonds
What are government retail bonds?
, or RSA Retail Savings Bonds to give them their formal name, are bonds issued by the South African government.
In return for lending the South African government money, you’ll receive interest payments twice a year for the term of the bond you buy. Depending on whether you opt for fixed rates or inflation linked rates, you can invest your cash from between one to ten years.
Using government retail bonds as part of your financial planning
Government retail bonds can certainly play an important role in helping to achieve your financial goals.
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By locking up your cash for a set period of time, you know you’re going to receive a specific amount of interest over the term. This helps you to plan.
For example, they can be useful if you’re saving up for a specific thing, such as a deposit for a house or education for your children. You can put the money into government retail bonds, knowing how much it’s going to earn and have the peace of mind that it’s a very low risk investment.
Not only that, government retail bonds don’t have any fees or commissions unlike many other savings products.
But before you commit, ensure you won’t need the money before the bonds mature. You’ll pay penalties for early withdrawal.
So there you have it. Why government retail bonds are worth considering as part your financial planning strategy.
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