Real Estate Investor Magazine South Africa November 2014 | Page 36

FINANCE

BY YVETTE FOURIE

Got Cash?

How to make it grow...

M

any years ago, I worked as a broker in the
insurance industry. I obviously had to learn
everything about the different products and
their structures. But, because of my inquisitive mind,
I do a lot of research and try to think outside the box
as far as I can. This has helped me many times in life,
not only to solve difficult situations but also to discover
things that have been “occulted” from the public, which
means it has been “hidden or cut off from view by
interposing something else”.
I’ve discovered something really interesting that I
believe will be of great value to many people.
The truth about savings
The best way to share what I have learnt is by using an
example.
Let’s say I want to save R55,282.85 through a
normal endowment savings plan that offers compound
interest with an expected growth of 10% per annum. If
I stick to a static investment amount over the five years,
and don’t take inflation into account, I would have to
save R716.36 per month to reach my goal.
However, if I instead put just R200 a month into my
R1 million bond account, on which I am charged 10%
interest, I would have saved R55,282.85 in interest over
five years!
Apples with apples
Let’s say I put the whole R716.36 into my mortgage
bond each month for five years. The savings then would
be R181,893.52!

Let’s flip it again. To save R181,893.52 in a normal
savings plan, I would need to put away R2,356.99 for
5 years!
Remember, you won’t be able to access the savings
unless you have a flexibond or access bond from which
you can withdraw the extra funds you have put into the
bond. So make sure you get an access bond.
Magic of compound interest
What if I told you that if you apply the principle of
compound interest to your bond, as it is applied to any
form of savings, that you would bring down your bond
term to as little as seven years and retain your capital?
What if you could save your entire bond repayment
per month for the remainder of the bond term, being
13 years?
Let me tell you! If you saved the monthly instalment
of R9,650.22 in a normal savings plan for 13 years, you
will have saved a whopping R2,991,377.52! With this
you can buy another two properties cash, giving you
three properties – instead of one - in the same amount
of time!
Makes you think doesn’t it? The sooner you start
applying these principles the better. Don’t wait to say:
“If I knew then what I know now...”. You can apply
certain principles when repaying your mortgage that
will save you millions, give you more leverage on your
cash and make it grow. To find out how save money on
your mortgage, visit www.mortgagerecovery.co.za and
navigate to the Mortgage Deflator.

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