You Don’t Need to Be Rich to Invest — You Need to Start

One of the most common things we hear from people who aren’t investing yet is some version of: “I’ll start once I’m earning more,” or “Once the bond is paid off, then I’ll really start saving.” It feels responsible — like you’re being sensible by waiting until you have a meaningful amount to invest.

But investing isn’t really about how much money you have today. It’s about how much time your money has to grow. And time is the one thing you can never get back once it’s gone.

The Magic of Compound Growth

Compound growth simply means that the returns you earn also start earning returns of their own. In the early years, this barely seems to make a difference. But given enough time, the effect snowballs — and the difference between starting now and starting in five years can be enormous.

Now imagine waiting five years to start that same R500/month investment. You haven’t lost much in monthly contributions — but you’ve lost five years of compounding at the end of the timeline, which is when the snowball is at its largest. Those five years can be worth more than all the years of contributions combined.

Inflation Is Quietly Eating Your Savings

If your money is sitting in a regular savings account earning little to no interest (or interest below the inflation rate), it isn’t standing still — it’s losing purchasing power every year. South Africa’s inflation rate has generally hovered in the region of 4–6% in recent years, which means cash that isn’t growing faster than that is effectively shrinking in real terms. Investing in growth assets — even modestly — is one of the few ways to stay ahead of this.

Where to Start: TFSAs, RAs and Unit Trusts

You don’t need to understand the entire investment universe to get started. For most South Africans, the journey begins with a small number of well-established, tax-efficient vehicles:

• Tax-Free Savings Accounts (TFSAs) — any growth, interest or dividends earned inside a TFSA is completely free of tax, for life. There is an annual contribution limit (currently R36,000 per tax year) and a lifetime limit (currently R500,000). For long-term goals, a TFSA invested in a diversified unit trust or ETF can be one of the most powerful tools available — especially the earlier you start, since the tax-free growth compounds over decades.
• Retirement Annuities (RAs) — contributions to an RA are tax-deductible up to a limit set by SARS (currently up to 27.5% of your taxable income, capped at a maximum amount per year). This means a contribution can effectively reduce your tax bill while building up retirement savings that are protected from creditors and grow tax-free until retirement.
• Unit trusts — pooled investment funds where your money is combined with other investors’ and managed by a professional fund manager according to a stated mandate (e.g. equity, balanced, income). Unit trusts offer instant diversification, can usually be accessed without long lock-in periods, and are available with low minimum monthly contributions — making them an accessible entry point for new investors.
• Exchange-Traded Funds (ETFs) — similar in spirit to unit trusts, but traded on a stock exchange like a share. ETFs typically track an index (such as a major share index) and tend to have lower fees than actively managed funds, making them a popular building block for long-term portfolios.

RA vs Savings Account: Why It’s Not Either/Or

A common misconception is that a retirement annuity and a savings account are competing for the same job. They’re not. An RA is locked away until at least age 55 and is designed specifically for retirement — you can’t access it for an emergency, a deposit on a car, or a holiday. A savings account, TFSA, or unit trust investment outside of retirement vehicles gives you accessible money for medium-term goals and emergencies.

The healthiest approach usually involves both: an emergency fund and accessible investments for flexibility, alongside a retirement annuity that takes advantage of the tax benefits and enforces the discipline of not touching your retirement savings early.

Starting Small Is Still Starting

You don’t need a lump sum to begin. Most unit trusts and TFSAs can be opened with a modest monthly debit order, and many providers allow you to increase your contribution over time as your income grows. The goal isn’t to get the amount perfect on day one — it’s to get the clock started, build the habit, and adjust as you go.

The Bottom Line

The best time to start investing was years ago. The second-best time is now — regardless of how much you have to put in each month. A clear plan that matches your investments to your goals, your timeline and your tax situation will do far more for your future than waiting for the “right” moment that never quite arrives.