Inflation eats away at the value of your money over time—and for South Africans facing rising fuel, food, and utility prices, its impact is very real. But investing is one of the most effective tools to counteract the effects of inflation and preserve your purchasing power.
Inflation means that what you can buy for R1 today may cost R1.10 next year. Keeping money in a savings account that earns less than the inflation rate is essentially losing value in real terms.
Investing in growth assets such as equities, property, and inflation-linked bonds can offer returns that outpace inflation over time. For example, the JSE has historically delivered long-term returns well above the average inflation rate, despite short-term volatility.
Local investors can also hedge against inflation by:
- Using Tax-Free Savings Accounts (TFSAs) to shield returns from tax erosion.
- Investing globally to reduce dependence on the rand and local inflation dynamics.
- Reinvesting dividends to boost compounding effects.
Understanding inflation helps you invest with purpose. The goal isn’t just to grow money—it’s to grow faster than the cost of living.