National Treasury has added another product to its consumer-friendly RSA Retail Savings Bonds, the Top Up Bond. Unlike the existing Fixed Rate and Inflation Linked Bonds, which require a lump-sum deposit, the Top Up Bond allows investors to make “top-up” deposits into the bond at any time during the term of the bond, which is three years.
The Top Up Bond, which was launched on Friday last week, is targeted at investors who want to save small amounts regularly, say once a month. The initial minimum deposit is R500 and subsequent deposits must be at least R100. Currently, the interest rate on the three-year bond is 8.75% a year, compounded.
Any individual with a valid South African ID number and a bank account in the Republic can start investing. Informal groups, such as social clubs and stokvels, which operate on monthly pooled savings, are also eligible to invest in the Top-Up Bond by providing their constitution and proof of banking details in the name of the informal group.
You can register online, on the RSA Retail Savings Bond website. You will need to complete the registration form and provide a copy of your ID and proof of your bank account. You will be given a unique number, which you can then use via online banking or at your bank branch to deposit money into the bond.
The interest rate is fixed for the full three years, and you are penalised if you want to access your money during the three-year term. (You have to keep at least R500 in the bond.)
You may “roll over” your investment once the three years are up, for a further three-year term at the new interest rate. Another feature is the Top Up Switch function, which allows you, at any time during the term of the bond, to switch a portion or the full amount in the Top Up Bond to either the Fixed or Inflation Linked RSA Retail Savings Bonds once the capital amount reaches a minimum of R1 000.