Connect with us


Where To Invest A Spare Thousand?

For the cautious investor, RSA Retail Bonds offer a slightly better rate than competitors – but are you simply swapping the risk of volatility for the risk of illiquidity?

Eamonn Ryan




Introduced in 2006 as a means of encouraging South Africans to save, RSA Retail Bonds have found a niche market in the low- to middle-income sectors. A means of enabling government to disintermediate the banking system by funding its annual budget deficit directly from the people, they offer a better rate of return than savers could get from a traditional fixed deposit bank account.

But is it for you?

So they’re not for everyone, and certainly not for any entrepreneur burdened with liquidity or cash flow challenges, because their major weakness is they tie up capital for the duration of the term, which is two, three or five years.

Chris Hamman, Sanlam Investment Managers portfolio manager, recommends the product for the entry-level market. You won’t find your financial adviser recommending it though, because he earns no fees from it.

“Wealthier individuals typically save by their own discretionary efforts through private client wealth advisers, where they have access to a far wider range of products,” he says. There are no tax advantages as interest is taxable on both types of bonds, retail and government.

Vivienne Taberer, fixed income portfolio manager at Investec, says: “For the entrepreneur, this investment is very good if they have capital they don’t need for a while, but if a business or wealthy individual needs flexibility it is not to be recommended. You would be better off in the money market, which offers greater flexibility, albeit at slightly lower returns.”

Pros and Cons

But for lower income groups, these bonds have the advantage of enforcing saving and yielding returns. In addition to being for a fixed duration, they cannot be used as collateral for any loan, ensuring the investment is safe.

Bonds have a place in any savings portfolio, and RSA Retail Bonds in particular boast a number of advantages: for no risk (they are after all backed by government) they offer a better return than you could get from a bank, and as a direct investment there are no hidden costs or commissions.

Hamman explains that the average private investor cannot access government bonds in any other way outside unit trusts, and retail bonds offer advantages over those too. Government bonds are sold only in units of R1 million.

To encourage private investors, government made them readily accessible at no cost; available in amounts as low as R1 000; and for sale over-the-counter at any post office, Pick ‘n Pay, Boxer or Score stores countrywide, as well as electronically via the Internet, or by telephone from the National Treasury Helpline.

“The system is made to be convenient, transparent and safe, with interest paid twice a year. And if you can prove you’re a pensioner, the payments can be more frequent,” says Hamman.

“The drawback is their illiquidity. The concept is that you buy a bond and hold it to maturity. While you may redeem them early, there is an early settlement penalty.

On the positive side, you cannot lose money – which you can in the equity or bond market. For instance, the JSE’s All Bond Index last year delivered a negative return. That is the major difference,” says Hamman. He adds that they ought not to be compared to other listed investments but to the fixed deposit market.

Is the return worth it?

RSA Retail Bonds offer competitive rates compared to both fixed deposits and the bond market: whereas government bonds currently pay 8,50% for R1 million or above, amounts as low as R1 000 invested in retail bonds offer 8,75% (two years duration); 9% (three years); and 9,25% (five years).

This is also better than money market rates: you would get 6,79% on call for larger amounts, while one year money market rates are 8,15%.

Taberer says the relative attractiveness of RSA Retail Bonds therefore depends on two factors: your risk appetite (which should be low as these are above-all safe investments) and your time horizon.

Comparing them to unit trusts, retail bonds have zero-costs while unit trusts attract costs of about 1% that over time eat away at the ultimate return. The flip side is that unit trusts offer liquidity.

“The difference really boils down to mindset – if you are going to invest in RSA Retail Bonds you had better be certain you don’t need the capital for whatever duration you select, because you are surrendering flexibility for a yield enhancement,” says Taberer.

A further characteristic of RSA Retail Bonds is that they offer a fixed rate, whereas other rates vary with market rates. Hamman explains this can work for or against you, depending on the direction rates move.

“It’s a niche market for lower- to middle-income families, and not something that will become huge,” he says. But for someone who already intends tying money up for a fixed term, it offers the best rate available.

Before becoming a financial writer and freelance journalist in 1997, Eamonn Ryan was a legal adviser, company secretary and alternate director at listed company Cashbuild Limited from 1988 to 1997. Since becoming a financial writer, he has focused on the business and financial sectors, as well as personal finance, writing for Finweek, The Star Business Report, Sunday Times Business Times, Business Day, Mail & Guardian, Entrepreneur, Corporate Research Foundation (which brings out a series of books each year ranking SA’s best employers and best managers), as well as a host of once-off and annual publications such as ‘Enterprising Women’ and ‘Portfolio of Black Business’. He also writes media releases, inhouse magazines and sustainability or annual financial reports for various South African corporates and financial services groups, including the Ernst & Young annual M&A book.

1 Comment

1 Comment

  1. Bridget McNulty

    Feb 20, 2012 at 18:57

    Can you make multiple deposits, or is it a once-off investment? Are the rates still as good, now that it’s 2012?

You must be logged in to post a comment Login

Leave a Reply


(Infographic) The 10 Things You Should Cover In Every Investment Pitch

If you want to wow potential investors, you need to cover your bases.

Matthew McCreary




If you’ve ever watched Entrepreneur’s original series, Elevator Pitch, then you’ve probably seen smart founders make dumb mistakes while pitching their ideas to potential investors. They might flub an answer or get tongue-tied, or they might just be a little boring. Other times, you might notice that something seemed off about a pitch, but you can’t quite put your finger on why.

Investors are gambling every time they put money into a new project or idea. Your job when pitching is to prove to them that you’re worth the risk. That means you’ll need to not only show them the possible upside of what they have to gain, but also be clear about what they could possibly expect to lose and their odds. In other words, you need to give them a holistic view of what you do, not just the one good idea.

You might have pitched an investor yourself and thought you crushed it, only to hear that the investor isn’t interested. If that’s the case, there’s a chance the pitch was missing one of 10 essential elements.

This infographic by Buffalo 7 breaks down 10 slides you should have in your next investment pitch deck. If you’re not presenting formally, though, you can still keep track of these aspects in your head and make sure you cover each one. They include:

  1. The vision, where you concisely explain your idea.
  2. The problem. Why is your vision necessary or helpful?
  3. The opportunity. What is the market size, and how can you position yourself to earn a share of it?

Related: How To Pitch Your Business, Product Or Idea To Industry Experts

This is just the start, though. Check out the infographic below to see the rest of the slides you need when pitching investors.


This article was originally posted here on

Continue Reading


‘Shark Tank’ Investors Reveal Top 5 Tips To Make Your Business Famous

Is your business worthy of fame? If so, pay attention to what the Sharks have to say …

Eric 'ERock' Christopher



Shark Tank

Shark Tank enters its tenth season as popular as ever. Over the past decade, millions of people have watched fascinated as entrepreneurs pitched their business ideas and startups in the hopes of winning an investment and support from self-made millionaires and billionaires.

The multi-Emmy® Award-winning reality-based show has had a tremendous impact on the business world and has been a major influence on the increased popularity of becoming an entrepreneur. Over the years, the show has evolved into one of the world’s top platforms to launch a business and recently reached an astonishing $100 million in deals offered in the Tank.

I was recently invited to attend a private event hosted on the set of Shark Tank to celebrate their 10th season and met with all the Sharks and most of the guest Sharks for the current season. This year’s guest list includes luminaries:

  • Charles Barkley, Hall of Fame NBA star and TV analyst
  • Alex Rodriguez, legendary baseball player and businessman
  • Rohan Oza, an iconic brand builder and marketing expert
  • Sara Blakely, founder and owner of SPANX brand
  • Matt Higgins, the co-founder and CEO of RSE Ventures and vice chairman of the Miami Dolphins
  • Bethenny Frankel, TV celebrity, author, and founder of Skinnygirl brand
  • Jamie Siminoff, the CEO of RING, who rejected an investment offer in season 5, but went on to sell his company to Amazon for a whopping $1 billion.

My better half was also invited, and we arrived promptly on time at Studio 24 inside of Sony Pictures Studios in Culver City, CA. We were greeted by the cordial staff who informed us that the Sharks were still filming the last takes of the day. After several minutes, we were invited to chat with the Sharks on the main floor where nervous entrepreneurs excitedly pitch their companies to the investors under the bright lights of the studio set.

I was curious to know what excited the Sharks the most about their tenth season and what they believed to be the best advice for an entrepreneur to help make their business famous.

1. Create an ingenious product

When asked, Lori Greiner said, “It’s a mix, right? Of smart marketing and ingenious product. For example, Scrub Daddy was a technology. So, taking that one sponge, which was revolutionary, changed the whole sponge arena. We now have, to date, 20 different SKUs, and we have 30,000 new retail locations and 170 million in sales. That’s what takes it from one idea to a global brand.”

Of course, skillfully promoting your product on a platform like QVC is another excellent way to make your business famous. The day after the Scrub Daddy episode aired, Greiner helped CEO Aaron Krause sell their entire inventory of 42,000 sponges in less than seven minutes on QVC.

Related: 6 Great Tips For A Successful Shark Tank Pitch

2. Leverage social media marketing


During my chat with Bethenny Frankel, she stressed, “Social networking is so important. Also being a little bit disruptive now … and you have to be creative. You have to be creative. The President was the most disruptive candidate that there’s probably ever been in history. He got people’s attention, and young entrepreneurs need to get people’s attention in some way. So be a little disruptive.”

Matt Higgins responded, “I’d say that you have to understand social and digital marketing. You can’t survive unless you understand Instagram, Snapchat or all the tools out there. You have to be contemporary.”

Barbara Corcoran claimed, “Every one of us successful entrepreneurs, for the last two years, were phenomenal at social media. It’s true. No exceptions.”

No smart entrepreneur will deny the power of social media when it comes to making your company famous. With more than 2 billion people worldwide using some form of social media, any business can put their business in front of a large audience, especially if they can create content that goes viral.

3. Build a community

Daymond John stressed the value of building a community. “You’ve got to build a community,” stated John. “Nobody needs to buy anything new in this world. They only buy it because there’s some form of community and/or need that you are supplying for them.”

John speaks from experience. He built a successful clothing empire by creating a vast community of his own via his clothing brand FUBU. John wisely invested in celebrity endorsements, making him an early pioneer of modern influencer marketing.

If you lack the resources to build your own community from scratch, you can leverage the power of others. Partnering with influencers who have cultivated their own communities allows you to introduce your product or service to larger audiences. In fact, some consider Shark Tank to be the world’s largest business influencer platform.

4. Devise a publicity hook to win earned media coverage

Barbara Corcoran also said, “I’d say you need a publicity hook. Some hook, angle or gimmick that grabs the attention unfairly from your competitors.”

Remember, Shark Tank is a unique combination of reality television, business acumen, and entertainment. Doing something unique, different, or disruptive can get you significant media attention and abundant free publicity… especially if you’re able to leverage that publicity and captivate the show’s producers, who decide your fate as to whether you’ll appear on the show.

Regardless if you want to appear on Shark Tank or not, being featured in the media is a way to differentiate your business from the competition and reach a broader audience. Be creative and willing to take educated risks when it comes to getting noticed by the media. You should always be actively building relationships with media representatives and ask for their insights when formulating your plan.

Related: Shark Tank Funded Start-up Native Decor’s Founder on Investment, Mentorship And Dreaming Big

5. Know your strengths and stay focused

When I asked for billionaire Mark Cuban’s insights, he thoughtfully replied, “Knowing your unique advantages, play to that, and your strengths. And focus. You know, what happens is very often people start with an idea, get a little bit of traction, then it gets hard. And when it gets hard, they start looking for other things to do as opposed to playing to their strengths. Because businesses aren’t supposed to be easy. You know, if they were easy everybody would already be rich, and we’d all be sitting on a beach somewhere. And so, when it gets tough, you gotta dig in and work hard. I’d say the final thing I’d add is that sales cures all. There’s never been a business that succeeded without sales. So, if you focus on selling … if you’re able to sell … and that’s something that is one of your core competencies, then you’ll be okay.”

These are wise words from one of the world’s few billionaires.

This article was originally posted here on

Continue Reading


The Best Way To Get Your Teenager To Start Investing Right Now

Jeff Rose advises a young fan on where to start his investment journey.




In this video, Entrepreneur Network partner Jeff Rose talks about receiving a letter from a young investor, who is looking for advice on how to begin investing.

Rose talks about the act of actually doing the investing versus worrying about reading books or asking others about the process. Taking action gets the most results, since you are able to make mistakes and start the learning process. Taking action also leads to more experience, which is to say if you begin investing as a teen, you will be much more savvy about investing as a twenty-something.

In answering this young investor’s concern about investment direction – the fan hopes to balance short-term gain and long-term gain, as well as to establish some padding for a future business – Rose turns him in one specific direction: A Roth IRA. When he was younger, Rose didn’t even know what a stock was until far into his college years; during this time, he discovered the Roth IRA and learned of its compounding power, as well as the accessibility of an initial investment.

As another route, Rose also mentions starting a business. This path, Rose explains, will help you achieve the most return on investment.

Related: Making International Investing Simple And Transparent – CybiWealth Digital Platform

Click on the video to hear more tips for a younger investor.

This article was originally posted here on

Continue Reading



Recent Posts

Follow Us

We respect your privacy. 
* indicates required.