How to grow your money by lending it to the government

Julie Brownlee, Fsp Invest, 05 Nov. 2015

Tags: government retail bonds, money, saving, saving with government retail bonds, bonds,



If you’re looking for ways to save, putting your money in the bank isn’t your only option. You could consider government retail bonds.

Government retail bonds give your money the chance to grow over the years. And you’ll know how much you’re going to make.

So how do government retail bonds work?

Read on to find out…



What are government retail bonds?


Government retail bonds are bonds the South African government sells to the South African public.

When you buy government retail bonds, you’re lending the government money for a fixed term. In return for this, you’ll receive interest payments twice a year until the bond matures and the government gives you back your initial stake.

The bonds you can buy are for varying number of years. For fixed rate bonds, this is two, three and five years. When you buy the bonds, you decide how long you want to lock your cash up for.

The longer it is until the bond matures, the better the interest rate.


The plus points of investing in government retail bonds


Government retail bonds are a great option if you’re saving for a longer-term goal and don’t need access to the money until sometime in the future.

You can also help your money grow faster by reinvesting your interest payments. This means your interest payments will earn interest. The longer it is until the bond matures, the more beneficial this option is.

You don’t have to pay any fees to buy government retail bonds. You just need to register, which you can do online at the RSA Retail Savings Bonds website, and purchase them, which you can also do online.

You can also use your tax-free savings account to purchase government retail bonds through, meaning your interest payments will be free of tax.

So there you have it. How to grow your money by lending it to the government.

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