Should You Save or Invest in Real Estate in 2020?
It’s no secret that most South Africans live paycheck to paycheck. In fact, many of us have experienced it firsthand. COVID-19 hit the South African economy hard this year and since then, more South Africans have been looking for ways to gain financial freedom.
This has sparked the question: Should I save or invest in 2020?
According to Old Mutual, only 15% of working South Africans are actually saving money. However, when you look at the rate of savings amongst all South Africans, that rate is a measly 3%.
This data was collected in 2017 when the South Africa Household Savings Ratio was at 0.2%. This same ratio for 2020 is sitting at 0.1%.
It’s safe to say that South Africans are saving even less now.
But is sticking your money in a savings account and calling it a day good enough? Will that actually earn you money? Not really.
In fact, according to Robert Kiyosaki, “savers are losers.” Here’s why:
These are the savings rates at some of the country’s major banks.
Standard Bank: 1.3%-3.5%
Let’s say you open a savings account with R5000 on January 1st in one of the higher interest rate accounts and earn 4% interest. At the end of the year, you will have only made about R1300.
However, if you invest that money in something lucrative like real estate, you could actually be earning money.
Here are the major differences between putting your money in a savings account versus investing in real estate: