One thing is certain: a penny saved is a penny lost. If you try to save money, it will dwindle away to nothing.
The Times - SA savings rate dips below zero:
South Africa’s saving rate has dropped from 2.7% in 2001 to a negative rating of -0.5% in the second quarter of this year, the SA Saving Institute said today.
If the SA Savings Institute wan South Africans to save, they must work for the bringing back of the building societies.
Before the building societies went commercial a little over twenty years ago, anybody, but anybody, could open a savings account at a building society with R1.00, and earn interest on it. With R10.00 they could buy indefinite period or fixed period paid up shares, and have the dividends from these paid into their savings account, and accumulate savings, no matter how poor they were. A R1.00 a month subscription share could accumulate over 3 years, and so people could save for a fixed term objective, a holiday, for example, and, of course, in the case of building societies, a home.
But now, since the building societies all turned into commercial banks, anything you put away for a rainy day will be swallowed up in bank charges, and eventually the bank will send you a letter to say that you owe them money.
And it's interesting to see that a lot of the present financial crisis began with mortgages, and that some of the institutions in most trouble in places like Britain have been building societies that became commercial banks.
The present situation favours only the rich, those who can afford to put away enough money so that the dividends or interest received outwighs the bank charges. But for the poor saving makes no sense -- far better to spend it as soon as you get it.
The SA Savings Institute is not just barking up the wrong tree, it's barking in the wrong forest.