The answers to your 10 most googled money questions

We all have money-related questions we want answered, some of which we may be too embarrassed to ask our friends. According to Budget Insurance, the top money questions South Africans asked Google last year were: “What is bitcoin?, Where to sell Mandela R5 coins? and What is forex trading?”

To save you searching, Sowetan Money found answers to the top ten questions Google users asked.

1. What is bitcoin?

Crypto adviser Irlon Terblanche, explains: Bitcoin (upper case ‘B’) is a computer network on which bitcoins (lower case ‘b’) are generated and stored. Bitcoins are the first ever digital assets that cannot be copied, unlike music or pictures, which makes it the perfect form of digital cash. But, unlike cash, it can’t be counterfeited. 

The Bitcoin network is operated by individuals, with no one in charge. It is impossible for any bank or government to assume control of the network and since the supply of bitcoins is limited, people have come to believe its value can only increase over time. However, bitcoin investors have experienced volatility and there are safer investments you can use to grow your wealth with a better understanding of how the investment will perform and the risks you face.

2. What is bitcoin mining?

In the same way that machinery can mine through tons of rock to find gold, computers with specialized software continuously mine through billions of numbers to find a unique number that makes a group or block of bitcoin transactions satisfy difficult mathematical requirements (more specifically, cryptographic requirements, hence the term cryptocurrency). Miners compete with one another to find this number. The first miner to find it is rewarded with bitcoins and its block of transactions is added to a growing chain of blocks, called the blockchain. Competitive mining ensures that no one can successfully add fraudulent transactions to the blockchain.

3. Where to sell Mandela R5?

Consumers who have paid thousands of rands for Mandela R5 coins as an investment are not investors, but victims, the president of the South African Association of Numismatics says. (Numismatics is the study or collection of currency, including coins.) This is because these coins have no intrinsic value beyond their R5 face value. They are neither rare (22 million of them were minted in 2008) nor contain any precious metal. You’d be better off trying to sell them yourself on Bid or Buy than through the dealer who sold them to you in the first place.

4. What is forex trading?

Forex trading is the selling of one currency to buy another. Put differently, it’s about trying to profit from the movement between two currencies in relation to one another. For example, say the rand is trading at R14 to the dollar. At that rate, you'll pay R14,000 for $1,000. Should the rand fall to R14.50, selling your $1,000 will yield R14,500, resulting in a R500 profit. However, it’s high risk because movements can be sharp and unpredictable and trading can involve borrowing (gearing), which means you can lose money you don’t have.

5. Where can I check my credit status for free?

In terms of the National Credit Act, you’re entitled to a free credit report from each of the credit bureaus once a year, every year. The main credit bureaus are Compuscan, Experian, TransUnion and XDS. To obtain your free credit report, you’ll need to register on the bureaus’ websites and apply for your report online. Compuscan provides the most user-friendly service of all the bureaus. Experian, for example, will only send you your report on receipt of a copy of your identity document and proof of address.

6. What is a good credit score?

Each credit bureau has its own credit scoring model, which may be a component of the credit provider’s risk scoring model. Your credit score, a three-digit number, gives credit providers a view of your creditworthiness and guides their decision to grant you credit.

Unfortunately, not all bureaus display your credit score on their free credit reports. Compuscan does and tells you whether your score is good or not. Garnet Jensen, TransUnion SA’s consumer head, says a good credit score doesn’t guarantee you access to credit as your ability to repay the credit must be assessed. However, a good credit score indicates that you manage credit well.

7. What is a unit trust?

Think of it as a basket of different financial assets (such as shares, bonds and listed property). When you invest, your money buys you a portion, or unit, in the fund of your choice. You then own a piece of each asset in the unit trust fund. A unit trust is a strictly regulated investment where qualified investment managers make the investment decisions. Unit trusts are accessible investments: should you need to withdraw your money at any time, your total investment can be deposited into your bank account within two working days.

8. What is debt review?

Debt review, also known as debt counselling, is a legal process set out in the National Credit Act. Only a person who is registered by the National Credit Regulator as a debt counsellor can work as one. The purpose of debt review is to help over-indebted consumers satisfy all of their debts by way of a court-ordered repayment plan that reduces instalments to creditors and extends payment terms. If any of your credit was granted recklessly the court can set aside, suspend or restructure these credit agreements.

9. Which bank offers the best interest rate for savings?

The interest rates offered by banks to savers usually depend on the term (the longer you leave your money, the higher the rate) and the amount that you save (minimum amounts usually apply, and so do maximums). For example, Capitec is offering depositors 7.5% on amounts of between R10,000 and R24,999 if you leave your cash in the bank for seven to 12 months. But if you have R100,000, the bank will pay you 8% over the same term.  

10. Which bank has the highest interest rate for fixed deposit?

At the moment, African Bank is offering some of the best rates on fixed deposits of as little as R500 over 3, 6, 12, 24 and 60 months. For example, the bank is paying 7.45% for money held for  three months, and 9.02% for fixed deposits over 24 months. These rates can change at any time.