If you are stumped about where to save money there is an increasing array of simple, low-cost ways to save with low or no minimum investment requirements, and no penalties for withdrawing funds early.

Many of the newest offerings use technology to keep the costs low and to make savings easy via your computer or mobile phone, with some having built-in advice which guides you in setting your savings goals.

Dominique Collett, head of AlphaCode which identifies, partners and grows early-stage financial services ventures, says we don’t save for retirement and blame black tax, Eskom charges, high unemployment, a rising tax burden and inflation - but we must stop living beyond our means and drive a savings culture to break the cycle of intergenerational debt.

“South Africans don’t save not only because of debt but due to the widespread lack of financial education, too many choices and complex products,” she says.

David O’Brien, managing director of Cape Town-based financial wellness company Meerkat, agrees that consumers face a number of obstacles to saving.

Banks, the Post Office, insurance companies, unit trust companies, linked-investment services providers, stockbrokers and pension funds all offer savings products.

None of them will tell you that you’re in the wrong “shop” nor that they are not the right “shop” for you, O’Brien says. 

For example, taking savings advice from a financial adviser selling savings plans for a life assurer opens you up to penalties, as the insurance industry structures its savings plans as contracts which lock you into monthly premiums over many years in order to build in the cost of remunerating their intermediaries.

Contractual savings are also not suitable if you earn an income from multiple sources or your income varies each month, he says.

Consumers are also bombarded daily with ‘buy now, pay later’ advertising, causing you to spend more than what you earn and keeping you from saving.

Most concerning, however, is that the vast majority of South Africans have no emergency savings, which should be your first priority, O’Brien says .

Some of the low-cost investment options available include Franc, a low-cost investment platform, OUTvest, which offers goals-based advice and passive investment, two stokvel plans by StokFella and Meerkat, and Livestock Wealth, which offers an opportunity to invest in agriculture.

The Franc app was built to make investing simple and affordable by giving its members access to the money market and an exchange-traded fund through their mobile phones. Following an easy risk assessment and based on the goal(s) you set, Franc will help you pinpoint where to invest your money.  

Franc offers two investment options selected for their credibility and low cost. They are the Allan Gray Money Market Fund, which has returned an average of 7.87% interest over the past year, and the Satrix 40 exchange-traded fund. 

Franc has no minimum investment amount and you can withdraw your money any time without incurring any penalties. There are also no hidden or complicated fees, just a 1% fee for everything. So, for R100 you invest, you pay R1 and will have access to all Franc’s services, with no other cost at any point. 

OUTsurance’s offering OUTvest gives you a do-it-yourself digital front end, low fees and intelligent goal-based calculators. Clients benefit from passive investment strategies. You can also invest via its website and phone app or speak to an adviser through a call centre. 

StokFella makes it easier for stokvels to manage their monthly payments and claims online via a mobile phone or StokFella website, while you can earn more interest through the StokFella Club Account when you manage your stokvel book through it. Stokfella also offers a mobile phone app that allows peers to collectively set money goals, save, manage, communicate and be more efficient in growing their money.

Meerkat’s newly-launched online savings stokvel, which you access via a web application from your phone or desktop, puts the power of goal-setting in your hands where you can allocate your savings into goal buckets in your chosen order of priority. The first bucket is always an emergency savings bucket and thereafter you can create and rename the buckets for goals such as buying a house, saving for your child’s education or even an overseas holiday.

You can start saving as little as R5 and you are not forced to save each month, although you are encouraged to do so. If you need money, you can withdraw it without penalty. Your savings are invested in a money-market fund managed by Taquanta Asset Management and you receive a return equal to the inflation rate plus 1% after costs. 

With Livestock Wealth you can invest your money in agricultural assets as they grow on a farm rather than unit trusts and shares.

Through a web and mobile application, potential investors can buy vegetable tunnel gardens, macadamia trees in orchards as well as cows online from R576. Livestock Wealth has pioneered investment in cows since October 2015 and currently has over 2,000 cows at various partner-farms. These are valued at over R40m and managed as an investment portfolio on behalf of 2,000 local and international investors.