With a single saving offering embedded in the account, account holders can opt for a single investment that covers short-term, long-term, and wealth-building opportunities at the same time.
A shift in thinking and services has accompanied increasing digitization and electronic delivery. The focus is now on reducing the want for different accounts and offering tailored solutions that achieve everyday needs while enjoying real benefits, says Jan Moganwa, Chief Executive Officer – Old Mutual Finance.
“Transactional accounts have always been popular because of the low cost and convenience they offer. By holding an account, users have been able to swipe for purchases, withdraw cash at ATMs, pay debit orders, transfer money, and satisfy most of their other financial needs. However, transactional accounts have not been traditionally associated with building up savings.”
The market gap has been bridged with a transactional account that offers the best of both worlds – an everyday account that also provides the financial returns found in a well-managed investment account.
“Now,” says Moganwa, the Old Mutual Money Account offering lets users decide how much they want to save every month. This money is then paid directly into the ‘save’ portion of the account.”
“The major advantage is that cash set aside for saving and investment is placed in an Old Mutual selected unit trust. This is a combination of income funds managed by professional market analysts and asset managers that offers the opportunity to increase returns above the levels offered by a traditional savings account.”
Instead of placing savings in a time-linked deposit account (which can be for periods that range from a few months to five years), unit trusts offer an opportunity to diversify personal savings and investments. Funds can be withdrawn or transferred between the Save and Swipe (transactional) account, whenever they are required happens in real-time and the balance remaining continues to grow. As money becomes available, it can be paid into the unit trust, where growth continues.
“Once you have decided what you can afford to invest – it could be as little as R50 a month – Old Mutual automatically places the money in the unit trust. Your money, along with deposited funds from thousands of other investors, is then invested in a basket of selected shares of companies listed on the Johannesburg Stock Exchange on behalf of the unit trust. This allows small investors to participate in the growth of listed companies and opens opportunities that many might not have been able to afford if they were going it alone.”
“The unit trust offers the chance to benefit from the share price of listed companies. Historically, although these values can rise and fall, these returns have always exceeded interest rates on traditional transactional and savings accounts. As the value of the shares grows, so the value of the units held by individuals also increases.”
The decision on whether to use the unit trust saving feature on the Money Account as a short-term home for savings, emergency funds, or even long-term benefits is up to the holder. Contributions can also be increased or decreased monthly to match personal cash flow. But, as is valid with all savings, the longer they are left in place, the better the returns.
“At Old Mutual, we believe that the Money Account offers real benefits for all. For people new to investing, the account provides opportunities to diversify and increase the chances of creating wealth.
“For those who are seasoned investors looking for a well-managed, effective way to invest discretionary funds, it offers an opportunity to put excess funds in an everyday account to work while you get on with life,” says Moganwa.
“The unit trust savings feature, when coupled with the functionality of a transaction account, makes the Money Account unique. Users can transfer funds between accounts, send money to anyone with an SA mobile number, pay other Money Account holders, tap and pay and save at the same time,” says. Moganwa.