Invest bonus for the rainy days

Thuli Zungu Consumer Line
You do not need large amounts of money to invest, as investing is not just for the rich.
You do not need large amounts of money to invest, as investing is not just for the rich.
Image: 123RF

Getting extra money or a bonus is very exciting.

For some, a bonus is an opportunity to pay off debt and school fees in advance while for others it brings visions of sipping cocktails on holiday.

But what about investing some of your bonus? Mellony Ramalho, African Bank's group executive, recommends investment. "Instead of blowing your bonus on gifts and holidays, why not invest it, which is an exciting and empowering experience?"

Ramalho said if you want to invest your money, you should not be scared to ask for advice from people who have been investing for years.

The key is finding a product that meets your objectives, the amount you want to invest, the kind of returns you want to see and the duration of your investment, she said.

"Investing is not just for the rich. You do not need large amounts to start investing but to understand some basic concepts and principles relating to investing," said Ramalho.

She said some consumers did not know the difference between an investment and a savings account. Ramalho said savings were low-risk funds that must be available when you need them, whereas an investment was an account opened in order to grow money over a long-term period.

"Investments involve greater risk, but yield much greater returns when left alone long enough to ride out the turbulence of the stock market."

Ramalho said the return on an investment was linked to the risk involved. "The higher the risk, the higher the potential return, while the lower the risk, the lower the potential return," said Ramalho.

She said there was also a notice deposit account on a short-term investment product where a consumer can withdraw their investment after giving a notice period of seven, 32 or 90 days. Then there's a fixed deposit account where the length of investment is set at either three, six, 12, 24 or 60 months.

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