 All roles lead to the property show brought to you by the private property.co.za. The show is happening on the 27th to the 28th of August 2022 at the Santon Convention Center. Remember you can also join virtually from anywhere you are in the world. Tickets are available at thepropertyshow.co.za. And thank you so much for joining us for the Private Property Show podcast tonight. My name is Stumi and tonight we are talking saving and investing in the time of rising interest rates. But before we jump into our conversation, remember to engage with us and interact with us, send us your comments, your questions, anything that you would like to know or something that you may be struggling with currently in the property space. Send us those questions and you can stand in line to win 500 rand cash and the winner will be announced tomorrow. And also remember you can scoop those tickets to the to the property show that is happening in Santon. So tonight we are talking in interest rates and that they're rising and in fact I have somebody who is going to take us through this. I'm sitting with Tammi Kaile who is the head of savings and investments from Apsa Bank. Tammi, thank you so much for joining us, good evening. Thank you to me and thank you and hello to the listeners as well and the viewers. Thank you. Let's let's go straight into the conversation and talk about our interest rates. You know interest rates have been rising at a rapid rate in South Africa and a lot of people are asking themselves why is the Reserve Bank doing this? Do you maybe want to take us through some of that rationale? Yeah, thanks. Thanks for this. I think what what we need to do is, you know, as as viewers and as people look at what's happening globally, you know, first and foremost, I mean, I think you can see, you know, that the interest rates are rising all over. And that's also being informed, you know, by the level of inflation going on, you know, globally as well. I mean, I think as you can see today, you know, it does announce that the inflation rates inflation rather went up by 7.4 percent. You know, whereas the previous month, it was 6.5 percent. You know, this is out of the of the reserve Reserve Bank's mandates and their mandates generally is to is to maintain inflation between 3 and 6 percent. You know, already at six and a half and then seven 7.4 percent. It's already quite significantly high. Now, the banks mandates generally is driven by making sure that they contain inflation and interest rates is one of the levers there. Many that they utilize, but then one of the major ones is is interest rates. You know, so so where inflation goes up, interest rates tends to go up, you know, and also as inflation goes down, then, of course, interest rates will also tend to to follow that particular trend. And that really is the driver. I mean, I think everybody can see, you know, if we talk about why inflation is going up, you know, because that's that's what's what's really is happening. Again, if if viewers look at globally, you know, the supply chain, everybody's been talking about, you know, the last couple of months, you know, last eight months or so, you know, constraint that's been felt there globally, but also recently, you know, the conflicts that are currently happening in Europe, you know, between Russia and Ukraine. I think they're also making matters a lot more worse than than we all anticipated. And as a result, you know, you know, economies are trying to to contain this inflation and interest rates, you know, increases usually would be the one that gets to be utilized most. Sure. And with all that is happening, what is the best way one can save and make sure that they have some even savings that they can use in times of need? Yeah. So I guess with interest rates going up, it really is depends on depends on which side of the fence you are you are at. You know, so if you are on the side of of borrowing fence where you've got quite a lot of debts, with interest rates going up, naturally, this will negatively impact you because, you know, the cost of that loan suddenly goes up, you know, and and if you're on the other side of the fence, you know, where you are, you've got savings and you are investing, you know, interest rates generally are very welcome, you know, think, you know, as as they go up, you know, the benefits for you as a consumer will also, you know, increase in terms of the returns that you get. And so it depending on I think some some consumers may be, of course, be on both sides of the fence, you know, sitting in the middle of the fence, you know, because they are doing a bit of borrowing, but also doing a bit of saving and investing, you know, so I think that's that's the first thing, you know, you've got to have to have a look and see where you're sitting, you know, and and then a decision of what you want to do, you know, going forward, you know, will all be driven by the goals that you have your financial goals, you know, you know, for yourself. I think that will be the starting point that you will have to look at, you know, as a consumer. And then of course, you know, looking at where the interest rates are best positioned, you know, for you and the amount that you have and also in terms of accessibility of those funds as well, does play a significant role in where you would put the funds, you know, as well for us. Yeah, and talking about putting the funds in different places, if someone has disposable cash currently, where would you say is the best place to put them? Would they maybe put it in a house loan or a home loan, rather, savings or investment account, or even maybe try and acquire new properties and maybe a new investment? What would you advise someone to do in these times? Well, firstly, it's a good problem to have, you know, so when you when you have extra cash, I think, you know, consumers are really struggling right now with the rising as I think we've spoken about the rising in in petrol prices, you know, and and just the living costs, you know, generally, you know, have been on the increase, you know, in the last last while, you know, so that's the that's the first thing. And if you do have, you know, some money that's left, I think, you know, it is important that you utilize that quite wisely. It's important that you put it away for for some rainy days, you know, I think what we normally call emergency funds. Now, in terms of that decision, you know, around where do you do it? And again, back to those who are sitting in the middle of the fence, who have a bit of borrowing, but also have a bit of savings. And I think, you know, the question that gets sent to be asked, which is similar to your question is, you know, do I put it in my home loan, or do I, you know, save it, you know, in a savings account or an investment account? You know, I think these things depend, you know, I think we always encourage both that you must do, you know, servicing of your debts whilst you're also doing a bit of saving, because saving really is a is a is not easy, you know, it's not easy to save. And so it's important that that behavior of saving gets to be encouraged and gets to be, you know, adopted fairly early on, as soon as you can. At the same time, if you look at the APSA, you know, home loan as an example with, you know, with the flexor reserve, what it does help you with is that you can actually put extra money that if you need to access it at a later stage, you will then, you know, have access to it. Now, the good thing about that is because, you know, as you put extra more money into that home loan account, you are reducing the capital that is utilized to calculate, you know, your interest rate. So what it does is it saves you a bit more interest, interest costs or interest expense. But what it also does is that it reduces, you know, over time, of course, you know, the time it takes for you to repay or settle your your home loan as well. So there is the benefit of putting it into a home loan account, you know, so that you almost, you know, benefit as I've just indicated. But at the same time, putting it into a savings account, a bit in a savings account, you know, so that you've got something on the side that will help you for some kind of images that you might be experiencing. Sure. No great tips there. And thank you so much for sharing that. And one of the other things that you normally hear people do is using a credit card as a savings account where people now put money and then use it at a later stage. Would you say that this is wise? So two things to that. You know, if you look at the credit card offer, including the Apsa credit card, I think mainly, you know, with us, the Apsa credit card, both gold and platinum and premium, rather, you know, what they offer is the 57 days, you know, free interest, you know, for you. So if you spend, you know, the limits or the funds that are available to you from a credit card point of view, and you repay that within the 57 day, you know, you don't pay any interest out of that, you know, that spend. That's a huge benefit already. You know, it means that you get to use those funds for free. That's a starting point, a very wise and savvy approach to using credit. But to put extra money, you know, beyond just, you know, above your limits, you know, I think what, you know, what that does for you is that you don't get any extra interest, you know, out of the credit card if it sits with a credit balance, you know, which is your own money. You know, so they will encourage, you know, consumers and customers that they actually look at the alternative, you know, which is to put it into a separate savings account where you get to end interest out of as well. Sure. And where can one get a prime rate in terms of investing and savings? And if what, how does one even qualify for it? How can how can one make them make sure that they are ready and they are a good candidate for it? Yeah, so, so I think, you know, with prime, you know, prime is currently at point 25, as we speak. And, you know, if you, if you were to put it into an investment account, you'll have to just really think about, you know, where you can get a return that is that significant, you know, and I think there are a lot of options that you can have. You know, the one, you know, if you want to put it into a banking environment, you know, you can have a fixed deposit, you know, that you can put in for at least about three years, you know, 36 months, you know, behind it, you know, if you've got a lump sum, you know, that does give you, you know, the benefits, you know, of an interest that is higher than than prime. You know, so I think, you know, it might be worth a while to, you know, for a consumer to look into that as an option. The other, you know, so, you know, if you want to really get, you know, returns that are significantly higher that way, you might also want to, you know, look at, at investing in equities, you know, I think, you know, apps, stop brokers, you know, do offer for you to be able to, to invest in, I think the returns, you know, do have an upside, but of course they do have the downside, you know, that, you know, when you put it into equities, you know, because you could lose your capital, but at the same time, the returns that you could get, you know, if things go well, you know, can far exceed, you know, a prime rate that we're looking at as of today. So, so again, it all depends firstly on the, on the consumer's appetite, you know, for risk. But I think if you want something that's safe and secure and capital guaranteed, you know, a fixed deposit, you know, is one of the products that you could really consider. And I think you would need to consider somewhere between, you know, two years and above and as well as three years, you know, so I think it will give you a very sizable. And what's nice there, you know, just maybe if I may add to me is that, you know, those are above inflation, you know, so what you're getting, you know, at fixed deposits, you know, at 8.25 as an example, you know, you know, you're getting far better than what inflation is sitting at 7.4. So you get real growth, you know, because that's one of the things that consumers would want to look out for as well. Line, so Tommy, we were talking about some of those factors to consider when you are investing. You were going? Yeah, yeah, I was I was saying, you know, I think time is quite an important thing that people tend to understate. And I think give yourself time to view your investment, making sure that it's still giving you what you're looking for. And then of course that it's still, you know, fulfilling the goals, you know, that you had set for yourself, you know, in the in the first place, that's the one aspect, you know, for us. And then then the second, you know, piece is is also around risks, you know, appetite that you have, you know, so if you are happy to take some risk and some returns, you know, then you might actually look into into things like equities as we've stated. But if you if you're wanting something that's secure like capital guaranteed, but also with an upside, you know, of interest benefit that you would get, then you would look at things like our fixed deposits, you know, and and our tax receivings, savings account, you know, as well, which are easily accessible on our websites, you know, and our banking app at the same time as well. So and of course, you know, I think if you want to do anything that's you know, further than that, I think what we generally do encourage, you know, consumers is to engage with our financial advisors, you know, I think people tend to shy away from speaking to a financial advisor, assuming that it is quite costly. But the reality is that having session is not is not what costs you, you know, I think it's worth, you know, having those conversations and get guidance, you know, as much as you can. Ultimately, it's your decision, but you do need to get guidance that the last piece for me would be, you know, an assessment of whether you've got any emergency funds, you know, so it's no use, you know, taking all of your money that you already have and putting into investments that might end up not being too secure. And you don't have, you know, emergency funds and should any emergencies happen, now you need to go tap into that investment as well. Again, you know, so we want, you know, we do tend to encourage that consumers do look into that as well. You know, so those there's a couple of things that you can look at, but those are the core that I think, you know, would be important for anyone to start to considering, you know, before they make a lifelong, you know, decisions around their money. Yeah, and just speaking about financial advisers, would it be wise for somebody to look for an independent one or should would would absent be offering some of these services and how would one go about procuring services like that? Well, I think it's important that you get a financial advisor that you are comfortable with. I mean, as a consumer, you know, somebody you are, you are comfortable to open up and provide them as much information as they are asking, you know, in order for them to be able to give you the best possible assessment and and maybe still or guiding, you know, so I mean, I think ourselves as APSA, we have financial advisers available across the all of our branches in our branch network, and they actually even, you know, be in a position to come to your location to have conversations in our around this as well. You know, so I think we do encourage and they come actually free of charge, you know, there is no fee for an engagement point, you know, so when assessment needs to be done, I think it's important that, you know, as I've indicated that consumer take and fund consumers take advantage of this. And and I think a decision thereafter can be made. But I think to your question is it important? I think it's super critical because there's so much information that's out there and it can be overwhelming, you know, for me as a person who works and I do not necessarily have the time to consume all the content that's available on on on the websites, you know, around investments, you know, and I do need to speak to someone. You know, if you're not calling us directly, you can even engage with the advisers in as as I've just indicated. Sure. You know, talking about education, it's very important that we we teach young kids as well to start this from a young age and are they any maybe young children or even young adults tailored products and how can maybe parents, you know, educate their children in terms of how not to succumb to to brand pressures and, you know, peer pressures on how they they spend their money and really just contribute to to building the family wealth and building wealth, you know. So so it's interesting you bring that point to me because I think children and and, you know, and kids are really impressionable right, you know, at a very young age and and when they look at their parents, they they see heroes, you know, you know, I think, you know, yes, there is a lot of pressure from peers and at school and wherever that they they engage with with with their peers. But I think at home, there is an even more significant, you know, influence that can that can be achieved. You know, so I do encourage, you know, at all times that, you know, parents do engage, you know, on the financial management, money management, you know, topics with with their children, I mean, as early as they can understand, you know, you know, when you talk about money, I think it's also important, you know, that's the the conversations with children, you know, are tailored in decision making, you know, for the family decision making for them as kids, you know, at all times. And I think that's important, you know. And then the second thing for me is is really just, you know, encouraging them and also making them aware that money is not infinite. It is it is finite. At some point, it does come to an end, you know, especially you spend it, you know, haphazardly and without really planning and and controlling yourself. So we think that that's important. It's important also to make it fun, you know, if you don't make it fun. And that's when, you know, they tend to switch off and they start to do their own things. And I think it's important that we do apply those principles. And then, of course, it's important that you almost create a separate account, you know, specifically for them. Let them have experiment and experience the use of a card, the use of of an account. You know, you know, we've got a mega you account, you know, that we have as upser that that that is tailored, you know, for for children. And that can be utilized to put money in, you know, and also the core contribution and utilizing chores, you know, to try and encourage them to know that, you know, money doesn't fall, you know, off the sky, that you've got to work for it, you know, and so give them chores, you know, give them some kind of reward and let them see that going in into the account, you know, allow them to play with the tools like the app, you know, the mobile app, the banking app from an upser point of view. And and I think that that in my mind is a starting point to making saving a culture in their lives, you know, as a as a way of living in their lives was, you know, to to leave it and they start when they are older. I think there's a lot more difficulties, you know, that you in that you would encounter, you know, as an adult, you know, in in starting to save when you had not been used to to it. So those will be probably the, you know, the key, you know, items that I would really think, you know, parents would need to consider, you know, in money management, just make it part of the life and day to day, you know, engagement with your with your kids or your children as well. Great stuff. Thank you so much for that. We've spoken extensively about the investment vehicles that apps are offers for saving an investment. So any last words or advice that you would give anybody who wants to get into the space of investing or even maybe pivot the investment journey because they've been investing and now they really just would like to take it to to to a new level or new horizon altogether. Any last words? Yeah, so the reality is the cost of living is really escalating, you know, someone thinking might not have enough, you know, money to save. You know, you might look at alternatives, you know, like, you know, getting additional income stream, you know, on the side, which could actually be helpful to supplement, you know, to cover, you know, for some of the expenses. I think that's at the at the level of, you know, wanting to get yourself from one paycheck to the other. I think as a starting point, but someone who already are saying I've invested, I've got enough, I've got a surplus, you know, that I really want to see what I can do. I think again, Apsa offers the ability to buy property for investments, you know, and I think that that also can be taken advantage of and and be done, you know, and also other alternative businesses that can be done. But I think the key thing for me is that, you know, we've got products that allow us to invest for long term. You know, I think about tax free savings products that, you know, we have in our space that allow you just to invest, get the returns, but at the same time, you know, not pay tax out of that, those returns as well. You know, I think it's almost a double benefits that you get to achieve. And I think that consumers must think about that, you know, but actually the last part, you know, that for me is even more critical is that have a look at your at your financial, you know, situation and review it with the aim, you know, to see whether there are any opportunities to open up capacity for saving. You know, I think we always talk about just have a look at your bank statement, you know, just see whether is there anything that you think, you know, you should be not be paying for that is actually in your statement. You know, that's one of the one aspect of reviewing, you know, your financial life and also then speaking to an advisor, you know, to try and get as much, you know, as much guidance from them as well. Tommy, thank you so much. Such great insights that we have received from you tonight. Thank you so much for joining us and sharing your your wealth of knowledge because it's definitely a wealth of knowledge. Have a good evening. No, thank you. Thank you to me and thank you to the viewers and listeners. Thank you so much. So review your spend and look for that opportunity to save as well as invest some of that disposable income. Thank you so much for joining us for today's episode, right here on the private property podcast till the next time we see you every week day, 7 p.m. Have a good night.