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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.

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:

Saving money in a savings account:


  • Less financial risk


  • Can lose money due to inflation (if the inflation rate increases by the time you take your money out of your savings account, it will actually be worth less)

  • Lower ROI

  • Can take years to build wealth and decades to earn enough to retire comfortably- if at all

  • Interest earned is taxable, meaning you could be losing a significant portion of what you “earned” in income to taxes

Investing in real estate:


  • Higher ROI (average is about 10%)

  • Can invest less money, but make more off of that money

  • Real estate always appreciates in value, so you will continue making more money each year

  • Will help you earn a stable passive income


So...what does all of this mean?

It means that if you’re willing to put in the work to learn how to invest in real estate, your money will be able to work for you- instead of working for the bank. When you put money in a savings account, you are essentially loaning the bank your money, which they will “pay you back for” in interest. However, that interest is oftentimes eaten up by inflation and taxes.

On the other hand, investing in real estate can earn you thousands of rands per month almost instantly.

When you invest in a property, such as an apartment building, student accommodation or even a single apartment, you can earn passive income from the rent. Rental income oftentimes covers the mortgage you pay on the property and also puts a healthy amount in your pocket every month. When you own several properties, the rental income can start covering all of your living expenses and then some.

This is the key to building wealth.

If you’re ready for your money to actually work for you and help you build wealth, take this 10-minute survey. It will help you find out what kind of investor you are.

From there, you can book a call with us and get in touch with some of our students who can source you great deals!

Want to work smart, not hard? You can learn more about real estate investment by downloading my FREE ebook, checking out my blog or contacting me for a 1:1 consultation.