FedGroup's 11.3% - Do you smell BS?

And that's the misleading part for me. Fedgroup is saying effective, but it is not the effective annual rate!
 
Strange why big investment houses like Investec require at least R100 000 to open up a basic notice deposit account and have +- 7.5% interest rates.Makes you think when all these smaller guys claim upwards of 10% and need a minium opening balance of R1000 etc.
 
ubercal said:
Strange why big investment houses like Investec require at least R100 000 to open up a basic notice deposit account and have +- 7.5% interest rates.Makes you think when all these smaller guys claim upwards of 10% and need a minium opening balance of R1000 etc.
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That is nothing but elitist tendencies, same way a glass of coke cost R30 at some fancy restaurant and only R12 at PnP, don't be fooled.
 
If they are retail bonds then high rates like that are real. The rate is calculated PA, there is no recapitalisation interest earned during the period, and is dependent on payout at maturity.
741031
Here is an example of a 5 year retail bond I took out with Nedbank in 2017
 
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Dairyfarmer said:
If they are retail bonds then high rates like that are real. The rate is calculated PA, there is no recapitalisation interest earned during the period, and is dependent on payout at maturity.
View attachment 741031
Here is an example of a 5 year retail bond I took out with Nedbank in 2017
Click to expand...

Nedbank replied to that "its simple interest"

www.iol.co.za

Does Nedbank think we’re simple with its 13-percent rate?

Nedbank is running large green adverts in the print media making an offer that seems almost too good to be true: interest of 13 percent a year on its Green Savings Bond.
www.iol.co.za www.iol.co.za
 
zerocool2009 said:
Nedbank replied to that "its simple interest"

www.iol.co.za

Does Nedbank think we’re simple with its 13-percent rate?

Nedbank is running large green adverts in the print media making an offer that seems almost too good to be true: interest of 13 percent a year on its Green Savings Bond.
www.iol.co.za www.iol.co.za
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That is how retail bonds work. A financial advisor can explain how the various rates work and where you can get your best returns depending on the amount invested, the term of the investment and the risk you want to take.

Retail bonds are generally long term investments (36+ months). You get a guaranteed interest rate and return, although there are rules regarding interest earned if you withdraw early. The rate is does not fluctuate. Ideal for investing when the rates peak as other interest rates will later fall, and the advantage of recapitalisation (compound interest) may be negated.

For example:
R1000 @ 7% pa compounded monthly over 60 months with no rate fluctuation = R1418
R1000 @ 7% pa compounded monthly over 36 months with no rate fluctuation = R1232
R1000 @ 10% pa on a retail bond (not compounded) over 5 years = R1500
R1000 @ 10% pa on a retail bond (not compounded) over 3 years = R1300

One advantage of compounded interest investments is the ability to add to the principal ad hoc, where as retail bonds are initial investment only.
 
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