Cash & Bonds South African Savings Account

Discussion in 'Other Asset Classes' started by alwayslearning2, 30th Nov, 2018.

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  1. alwayslearning2

    alwayslearning2 Member

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    Morning All,

    Does anyone have any experience in Savings accounts on other countries?

    A Family acquaintance (S.A expat) was talking about the high savings interest rates he was enjoying and seemed to think it would be easy for me as an Australian to open the same type of account.

    I've done some googling and couldnt find much online, thanks in advance.

    example;

    Absa | Savings and investment rates and fees investor plus acct 7.5%

    Tom.
     
  2. Trainee

    Trainee Well-Known Member

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    Exhange rate risk comes to mind.
     
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  3. alwayslearning2

    alwayslearning2 Member

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    Thanks Trainee
     
  4. The Falcon

    The Falcon Well-Known Member

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    Pull up a ZAR long term chart and have a look....
     
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  5. robboat

    robboat Well-Known Member

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    The higher the rate the higher the risk.....

    You can get close to 10% if you go looking at MFI's overseas....see this Cambodia MFI as an example:
    https://amret.com.kh/index.php/homeen/deposit#
    I use a more sedate bank - Fixed Deposit | ABA Bank Cambodia

    All depends on your "sleep at night" factor

    Sth Africa has current and future risks for overseas investors with government and state-owned enterprise debt moving steadily higher, widening trade and current account deficits, slow GDP growth and, more recently, rising corruption....
    TIA...
     
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  6. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    You arent really comparing cash rates. Cash rates mean risk free exposure.

    You are comparing a foreign "bank" and its FX risks plus transaction costs and fees (eg currency spread, transfer fees, uninvested delays) with a zero risk a capital insured ($250K) Australian bank. Its easy to confuse banks as being a safe and secure investment because thats what we have here. In some countries banks are as secure as a box on the street and its why they offer a high rate. They are perceived locally as high risk or face difficulty accessing funding on world markets.

    I understand SA bank transaction fees are massive and completely out of pace with the world standards. They fee everything in and out. Their banking system is not stable and robust and the banks need to pay high rates for this sovereign and market risk. In 2014 many SA banks hit a wall and needed a bail out. This blew rates out and remains so. Recent deposit rates by some has hit 10% + They are perceived as very high risk and must pay for money. They have low reserves and find it difficult to lend to the majority of people in a semi third world economy where tangible security is not as certain as other nations for the bulk of the population.

    Land is a poor form of loan security too as there is a push to "reform" land ownership and take land to give to dispossessed people. Mugabe did something similar and it ended badly. It remains to be seen how taking 30% of the land from its legal owners to hand to others will assist the economy.

    Cambodian bank rates seem on par with Australia. MFI rates have collapsed with a influx into microcapital lending markets there
     
  7. Noobieboy

    Noobieboy Well-Known Member

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    Yeah. People only look at interest rates without considering stability of the currency. Russian interest rates are 11%, people are not rushing to open accounts there. For what it’s worth I think RUSSIA is much more stable country than SA.

    Same think with Venezuela. Even if interest rate there was to be set at 10,000% no one will bother.
     
  8. Blacky

    Blacky Well-Known Member

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    I was just going to comment on Russia.

    We have an account ‘earning’ about 14% from memory. It’s only got about $10k in it. But I doubt we will ever see the money.
    The bank, and its owner, got into political difficulties and ultimately went bankrupt. The bank is still ‘open’ but is locked down so you can’t withdraw money (but if you have a loan with them you still need to pay it off).

    In my 10years in the region I think I can recall 5-6 banks in a similar situation.

    The interest paid is pointless if you’ll never see it!
    And unfortunately when it happens, it happens literally overnight so you don’t even have warning that the bank has closed its doors for withdraws.
    All ok one day - gone the next.

    How lazy we become in Australia with our secure banks!

    Blacky
     
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  9. hillsguy

    hillsguy Well-Known Member

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    I have been switching from bank to bank with intro offers to earn around 3% on the cash I have.

    Problem is that I have now run out of banks to choose.

    Currently with HSBC earning 3.10%.

    Any other ideas to get closer to the 3% mark ?
     
  10. Noobieboy

    Noobieboy Well-Known Member

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    Sorry to hear that @Blacky. It propbabily depends on what bank you use, I found state banks safe. I have an account in Russian 'Sberbank'. Opened it during my travels through east Europe since it was the only bank with branches everywhere, even in the middle of the Black sea.
    Didn't have issues with it, online transfers work fine, in or out. Might be worth calling the bank and seeing what is going on. Maybe they are just missing some documents, blood sample or a pledge of a soul?