14/10/2025
𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿'𝘀 𝗾𝘂𝗲𝘀𝘁𝗶𝗼𝗻:
𝗪𝗵𝗮𝘁 𝘄𝗼𝘂𝗹𝗱 𝗯𝗲 𝘁𝗵𝗲 𝗯𝗲𝘀𝘁 𝗶𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗼𝗽𝘁𝗶𝗼𝗻 𝗳𝗼𝗿 𝗮𝗻 𝗮𝗺𝗼𝘂𝗻𝘁 𝗼𝗳 𝗥𝟭.𝟭 𝗺𝗶𝗹𝗹𝗶𝗼𝗻? 𝗪𝗼𝘂𝗹𝗱 𝗶𝘁 𝗯𝗲 𝘄𝗶𝘀𝗲𝗿 𝘁𝗼 𝘀𝗮𝘃𝗲 𝗶𝘁 𝗶𝗻 𝗮 𝗺𝗼𝗻𝗲𝘆 𝗺𝗮𝗿𝗸𝗲𝘁 𝗮𝗰𝗰𝗼𝘂𝗻𝘁 𝗲𝗮𝗿𝗻𝗶𝗻𝗴 𝟳.𝟯% 𝗶𝗻𝘁𝗲𝗿𝗲𝘀𝘁 𝗽𝗲𝗿 𝗮𝗻𝗻𝘂𝗺, 𝗼𝗿 𝗶𝗻𝘃𝗲𝘀𝘁 𝗶𝘁 𝗶𝗻 𝗮 𝗯𝗮𝗹𝗮𝗻𝗰𝗲𝗱 𝘂𝗻𝗶𝘁 𝘁𝗿𝘂𝘀𝘁 𝗳𝘂𝗻𝗱? 𝗔𝘀𝘀𝘂𝗺𝗶𝗻𝗴 𝗮 𝘁𝗶𝗺𝗲 𝗵𝗼𝗿𝗶𝘇𝗼𝗻 𝗼𝗳 𝗮𝗿𝗼𝘂𝗻𝗱 𝗳𝗶𝘃𝗲 𝘆𝗲𝗮𝗿𝘀, 𝘄𝗵𝗶𝗰𝗵 𝗼𝗽𝘁𝗶𝗼𝗻 𝗺𝗮𝗸𝗲𝘀 𝗺𝗼𝗿𝗲 𝘀𝗲𝗻𝘀𝗲?
While money market accounts may look attractive right now at around 7.3% per annum, we are likely moving into a lower interest rate environment. Over a five-year period, the decision between keeping funds in cash or investing in a balanced unit trust really comes down to what you want to achieve and how much risk you are comfortable taking on.
Let’s unpack the two options across a few important considerations:
𝟭. 𝗟𝗶𝗾𝘂𝗶𝗱𝗶𝘁𝘆
Money market products are generally highly liquid, although this depends on the specific type of investment you choose. Some may be daily-access accounts, while others could be fixed deposits or notice accounts where you need to give some time before withdrawing. This makes money markets an excellent option for emergency savings or short-term needs.
Balanced unit trusts, on the other hand, are also liquid in the sense that you can sell your units at any time. The difference is that the value you receive when you sell depends on market conditions at the time, so you may get back slightly more or less than you expect if you need to withdraw during a market dip.
𝟮. 𝗦𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲 𝗮𝗻𝗱 𝗿𝗶𝘀𝗸
Money markets carry very little capital risk, which is why they appeal to conservative investors. The trade-off, however, is that the returns are unlikely to beat inflation over the medium to long term, which means your purchasing power could decline.
A balanced unit trust is built differently. These funds are diversified across a mix of shares, bonds, property, and cash, which spreads risk across asset classes. They do carry more short-term volatility than money markets, but this is balanced by the potential for higher returns over time.
𝟯. 𝗚𝗿𝗼𝘄𝘁𝗵 𝗽𝗼𝘁𝗲𝗻𝘁𝗶𝗮𝗹
The numbers help to illustrate the trade-off clearly. If you invested R1.1 million in a money market account at 7.3% per annum, it could grow to about R1.57 million over five years (before tax). After tax and inflation, the real growth would be modest.
By contrast, if you invested in a balanced fund with a conservative long-term expected return of 9.5% per annum could see your R1.1 million grow to around R1.73 million. That’s around R160 000 more than the money market option and, importantly, the growth is more likely to keep you ahead of inflation.
𝟰. 𝗧𝗶𝗺𝗲 𝗵𝗼𝗿𝗶𝘇𝗼𝗻
Since you’ve specifically mentioned a five-year investment horizon, this already leans in favour of a growth-oriented investment. Money markets are most effective for very short-term savings. Beyond that, the opportunity cost of not investing in growth assets becomes significant. Balanced funds, designed for medium- to long-term investors, give you a better chance of building real wealth.
𝗖𝗼𝗻𝗰𝗹𝘂𝘀𝗶𝗼𝗻
If your main objective is to preserve capital and maintain immediate access, then a money market account is the safer option. But if your goal is to grow your wealth over five years, then a balanced unit trust is likely the better choice.
You’ll need to accept some short-term fluctuations in value, but history suggests that patience and diversification are rewarded over time.
Ultimately, the right decision depends on your personal goals, tolerance for risk, and whether you may need access to the funds before the full five years have passed. This is why it is important to discuss your particular needs with your Del Financial Services - Independent Brokers adviser.
