RSA Retail Bonds are issued by the South Africa Government’s National Treasury as a way of financing the budget deficit of the government. If you have some money to invest, don’t store it under your mattress where the only thing it will accumulate is dust. Rather invest in something useful and buy RSA retail savings bonds.
What are RSA Retail Savings Bonds?
Retail Savings Bonds are a type of financial services and investment opportunity. That are used by personal investors, brokers, pension funds, banks, as well as foreign investors.
These bonds are under the responsibility of the Asset and Liability Management sector of South Africa’s National Treasury. The Liability Management unit of this department is charged with managing the liquidity needs of the government.
It was in the 2003/2004 Budget Review that the Minister of Finance declared that South Africa’s National Treasury would introduce new retail bond securities. To target a new source of funding for the government, to encourage the general public to save their money. And to increase the diversity of the market’s financial instruments.
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There are two types of Retail Bonds you can buy
RSA Inflation Linked Retail Savings Bonds and RSA Fixed Rate Retail Savings Bonds.
Each of these are geared to making it simple and accessible for the general public to earn market-related, secure returns on the money they choose to invest.
The inflation Linked Retail Savings Bonds will mature with interest after 3 years, 5 years or 10 years. And the RSA Fixed Rate Retail Savings Bonds have a maturity of 2 years, 3 years, or 5 years.
Who is eligible for RSA retail bonds?
There is certain criteria to qualify for RSA retail savings bonds including:
- You must be a permanent resident of South Africa
- Have a valid South African identification document
- You must have a South African bank account
- If you are under the age of 18, you must receive consent from your parents in writing before investing (unless you have been granted majority status or you are married)
How You Can Invest in SA Retail Bonds
So there are three basic steps to invest in SA retail bonds in the procedure:
- First, you need to register your relevant details at the National Treasury
- Then you can select the bond and maturity of your choice and apply for the retail bond
- Lastly, you will pay for the accepted application
Register your details at the National Treasury
To start the application process to register for your savings bonds, you can go directly to the National Treasury at 240 Vermeulen Street, Cnr Andries and Vermeulen Streets, Pretoria, 0002. Or call the department on (012) 315 5888.
Alternatively, you can visit any South African Post Office Branch, or the RSA Retail Bonds website. However, if you are under the age of 18 and have not been granted majority status you cannot apply electronically on the website. Because parental consent is required in writing for you to apply.
After the registration process, you will be given an investor number which can be used as a reference when you make payments to your RSA Retail Savings Bond bank account.
Apply and select the bond and maturity
Like the registration process, there are a number of places you can select the bond type and maturity:
- Any Pick ‘n Pay branch
- The RSA Retail Bonds website
- Any South African Post Office Branch
- You can also do directly to the National Treasury or give them a call
Pay for your Savings Bonds
You can make a payment for your savings bonds:
- At any Pick ‘n Pay Branch
- Online via internet banking (Absa, Nedbank, FNB, etc)
- Through a direct deposit at the bank
- At any South African Post Office Branch.
If you choose to pay by cheque, it must be made out to the place of payment. In other words, if you paid by cheque at Pick ‘n Pay, you must make it out to Pick ‘n Pay.
In summary we have learnt a bit about RSA Retail Bonds in South Africa but really only touched the surface.
The points we have covered are just to give you more of an idea on this type of savings investment.
Therefore do some in depth research before you decide to buy bonds. Because there are both advantages and disadvantages of buying RSA Retail Bonds.