Andile Jonas, Head of Marketing at Momentum Savings, contemplates the best place to make your money grow.

If you had a bit of biology or science at school, you will know we need nutrients for fertile soil. Nitrogen, potassium and phosphorus are some of the elements needed, if I remember correctly. That is, if you’re not starting with the drawback of sand or clay. You need air for root growth. The soil must supply these essentials in the life of the plant.

Equally, we should be careful where we plant the seeds when we want our capital to grow. There needs to be nutrition and water and proper sun.

A bank account is a safe haven for money you need to get you from month to month, I agree. The risk to your money is low, but that means the growth is also quite low. It may not be the best place for long-term growth. Another major reason to be cautious is that you are promised a certain growth, but that is not what will end up in your pocket. You are taxed on the interest you earn, depending on the tax rate you usually pay.

According to the South African Revenue Service, if you are younger than 65, only the first R23 800​ you earn in interest is exempt from income tax. If you are older than 65, this amount is R34 500.

You will be surprised at how quickly this catches up with you.

That is why long-term money needs a better place to flourish. These are the aspects you should consider:

• You need access to the growth that investment markets enable you with.
• You need tax benefits and tax-free growth.
• You need advice on what your money goals or priorities should be.

Anyone who has passed Investments 101 will tell you that in the long term, your money needs to grow at a rate that matters. That’s why it needs exposure to various assets, like shares, bonds, cash and property, in percentages that work for you.

The “work for you” means you take on the risk you are comfortable with. That is why you will speak to a financial adviser. They will ask you how conservative you are – will you get upset at losing R100 or are you comfortable to sacrifice some certainty for more growth?

The good news is that even when investment markets fluctuate, in the long term they “correct” themselves. You lose some, you win some, but in the long term, with proper advice, you win a lot.

A financial adviser will look at what your needs for long-term growth are – are you saving towards a deposit on a home or car, for an anniversary holiday, or do you need peace of mind that your retirement will not be a time of constant worry about where the next expense will be paid from?

Depending on what you tell them, they will recommend a fund or funds that strike the best balance between your risk appetite and growth needs.

At the same time they will explain that certain products lend themselves to tax-free growth, for instance, a retirement annuity or a tax-free investment, and what their benefits are. These investments are almost always the first to consider because of the tax benefits.

The reason is that government rewards you if you contribute towards your retirement. Every year when you submit your tax return, you get money back in your pocket for investing either through your retirement fund at work, or in a retirement annuity or both. The percentage that you get back is the same as the tax rate you usually pay, your so-called marginal tax rate.

If you invest R1 000 and your tax rate is 25%, you get a full 25% back, and your investment of R1 000 “costs” you only R750.

By the way, it’s a fallacy that you need a lot of money to be able to speak to an adviser. Any adviser worth their salt will guide you from a young age because they should see your potential as a saver and someone who takes their money matters seriously.

You can’t do yourself any bigger favour than starting to think consciously about the best bed to grow your money.