It can be tricky to navigate the maze of investments available, but there are attractive options

Lihle Mtshali and Zweli Mokgata

Lihle Mtshali and Zweli Mokgata

We all know that it is important to save for the future. But how can someone like Agnes Makubela, a domestic worker who earns very little, put money aside?

"Though I get occasional short-term work, I consider myself unemployed," she said.

"All the money that I have goes to my daughter who just started high school this year.

"I would like to start investing, but I don't know where to start. If I could find a permanent job I would be willing to invest R300 or even R500 a month for my child's future and my own," Makubela said.

Savings products offered by life insurance companies lock people into a minimum period of five years. The danger of signing up for these products and then not staying the term has been highlighted in a number of rulings by the Pensions Funds Adjudicator. Many people have lost nearly all their savings to surrender penalties.

Under no circumstances should someone like Makubela let a life insurance salesman pressure her into signing up for an endowment or similar policy.

Makubela said that she has managed to put a bit aside in her Postbank account, but this is not ideal because current accounts pay little or no interest.

But she has the option of opening a savings account. There is a lot of confusion about the difference between savings and transmission accounts, said First National Bank (FNB) investments chief executive Robert Keip.

Any account that has monthly or transactional fees attached to it that eats away at the invested capital should rather be called a transmission account. This is an account into which salaries can be paid and from which debit orders can be deducted. Savings accounts are those accounts into which people put their money to use at a later stage. Savings accounts pay out reasonable interest, generally do not carry any fees or have limited transactional fees. Transactional accounts, such as current or cheque accounts, pay little or no interest at all.

Customers have a vast number of savings accounts from which to choose. Each of the big four banks offer more than one type of account. Some banks offer a minimum deposit of R10 and other investments go right up to a minimum deposit of R25000.

Banks try to encourage their customers to save by making it easier for them to withdraw their money at a moment's notice.

In the past customers had to wait 32 days before they could make a withdrawal from their account. Nowadays some accounts do not have a withdrawal notice period.