Liberty Corporate Customer Update | March 2011
The fact that South Africa's repo rate was kept on hold at 5.5% last month is good reason for those who are borrowing money to rejoice. More borrowing encourages economic growth, and hopefully job creation comes with it... but in a country which desperately needs to build a culture of saving, having low interest rates does little to help those who are trying to grow their hard earned cash. That's just one of the reasons why it's so important to save from as early in life as possible, for as long as possible. You never know when the tide is going to be working with you, but the power of compound interest (earning interest on your interest), especially over a long time, is always huge. Read here for a great example of how you can make the future count by saving today. As we go through life, there's no telling where the lightening will strike, so we need to be prepared and able to weather the storm at a moment's notice. Find out here if you are a spender, giver, builder or saver and then go to The Money Attitude Quiz to see what it means for your daily attitude to living life - and some insights into how to balance today's needs with tomorrow's retirement goals. The importance of saving tends to spill over into economics too. Internationally, those countries with high national savings rates tend to have strong economies and great stock markets, since there is plenty of excess cash available to pour into investments. Those with low savings rates suffer from weak economies and poor stock markets, because of a shortage of available capital. South Africa's household savings rate is one of the worst in the world. A lack of savings is indicative of the state of the welfare of a country's people. The absence of a strong savings culture in South Africa has resulted in our household savings rate declining to a dismal 1.5% of GDP in 2009. While Australia, Japan, and the US all have household savings rates of under 4%, China boasts the highest household savings rate in the world of 38%, followed by India with 34.7%, and Turkey with 19.5%. Savings help consumers to fund future financial commitments without having to go into debt. They are also used by companies and the Government to fund growth opportunities through infrastructure and development. China, for example, is able to finance most of its own growth, because it has one of the highest savings rates in the world. It's never too early to start, and if you're sorry you didn't start sooner, why not read this article so you can teach your kids Rands and sense from early on. And if you want to know exactly how much is enough to save for a comfortable retirement, click here. How many of us live in the moment, rather than save for the future? Sure it's important to enjoy that holiday time with the family, and to buy a new car when it's needed. But the future arrives far sooner than you think, and there are always those rainy days to consider, which tend to come around more often than we'd like. Don't let them arrive before you're ready. Until next time Liberty Corporate
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