During periods of high inflation, central banks like the South African Reserve Bank respond by raising interest rates. This increase in interest rates affects consumers, making borrowing more expensive and impacting earnings. However, it also presents an opportunity for local businesses and individual investors. Investing in fixed deposits during these times can be a smart financial strategy. By leveraging higher interest rates, you have the potential to see returns that outpace inflation.
Investing in fixed deposits offers several advantages. Firstly, during inflationary times, the purchasing power of money diminishes. By placing surplus funds into a fixed deposit, you can preserve the value of your money and take advantage of the higher interest rates. Secondly, fixed deposits offer higher yields compared to periods of low interest rates. When overall interest rates are high, fixed deposits provide correspondingly attractive rates. By locking in a relatively high rate for the duration of the deposit, you can benefit even if interest rates subsequently decline.
Apart from the potential for higher returns, fixed deposits also provide stability and peace of mind during turbulent economic times. These investments are considered low risk because the principal is safeguarded, and the interest rate is predetermined. This makes them an excellent option for conservative investors who want to protect their capital and earn steady returns without exposing themselves to market volatility. In addition, including fixed deposits in your investment portfolio can help diversify your holdings, providing a more balanced approach, especially in times of economic uncertainty.
To get started with fixed deposits, it’s important to consider carefully various factors and find a customised, holistic solution that suits your unique needs. Sasfin offers a range of cash investment products designed to optimise growth while aligning with your investment goals. In the current environment, you can combine medium- and long-term products such as Notice Deposits and Fixed Deposits to invest surplus cash and plan for future expenses. For more flexibility, consider Call Deposits to address any unexpected financial needs.
Discover more about Sasfin’s cash investment products and start your investment journey today at sasfin.com.
About Sasfin
Sasfin contributes to society by going beyond a bank to enable entrepreneurs and investors to grow their businesses and global wealth, supporting job creation and sustainable socio-economic development as well as a culture of savings. Our personal touch, digital platforms and agility allow us to compete effectively. Sasfin was listed on the JSE in 1987 and is a bank-controlling company that comprises three business pillars: asset finance, business and commercial banking, and wealth. The group has regional offices in four South African provinces and eight cities. Sasfin is a B-BBEE level-1 contributor.
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