A road trip to financial freedom
Where do we go for the best interest rate in town?
By Lizelle Steyn
Updated 23 September 2026
Image: Tim Gouw
There was a time in my life when I loved cutting through Cape Town peak traffic on a red Vespa, but there were some close calls, especially when the Southeaster swept in. Eventually I ended up walking everywhere instead of taking the Vespa.
The truth is I’m moderately conservative in my life and money decisions. A case in point is the portion of my portfolio that I know I’m probably going to use within the next three to four years. All of that goes into interest-bearing funds or fixed deposits.
It’s true that the equity market - also known as the stock market - produces the best returns over the long run. But don’t expect it to always shine over shorter periods like 3 years. There have been negative and mostly flat 3-year periods in which the JSE battled to beat inflation. For stability of your capital amount over the short term, cash is king.
So, where do you put the shorter-term part of your portfolio? Where are the highest interest rates at an acceptable level of risk?
Your first decision - fixed deposit or staying flexible?
Because you are locked in for a fixed term at a fixed rate, fixed 3- or 5-year deposits normally offer the highest interest rates. This is compensation for 1) the inconvenience of not having access to your capital, and for 2) running the risk of inflation unexpectedly shooting up. Also, because fixed deposits are normally offered by a single bank, you need to be compensated for 3) the risk of the bank defaulting, i.e. not being in a position to pay back the full capital and interest as agreed. This is called counterparty or default risk. In South Africa, if your bank deposit is R100,000 or less, the risk of default is not an issue, as our Reserve Bank will step in, should the bank run into solvency problems.
Besides our SA banks, National Treasury also offers attractive fixed deposit rates at a lower risk than the banks. Below is a comparison between Treasury’s SA Retail Savings Bonds and the fixed deposits offered by GoTyme (formerly TymeBank).
The rates offered by GoTyme and the RSA Retail Savings Bonds have been consistently attractive over the past few years (and they treat someone with R1 the same as someone with R1m).
| Criteria | TymeBank Fixed Deposits | RSA Retail Savings Bond |
|---|---|---|
| Rate level | 8.75% for 12 months; 9.25% for 24 months; 9.75% for 36 months | 8% for 2 years; 8.25% for 3 years; 8.75% for 5 years |
| Rate certainty | Guaranteed rate up-front when you sign up for fixed deposit | Guaranteed rate up-front when you sign up. You have the option to re-start the rate and term once you're 12 months in. |
| Amount limits | R1 (effectively no minimum). No maximum either | Minimum of R1000. No maximum limit anymore. |
| Accessibility | Your capital is tied up for the length of the contract | You can withdraw after 12 months, but with a penalty fee. It used to be that only over 6o's could receive their interest monthly; now everyone can. |
| Counterparty risk | Low risk up to R100k deposited. Low-medium risk for amounts over R100k. Whether you get your capital back depends on the strength of GoTyme. | Low risk. The SA government has never defaulted on its debt. The five-year bond is slightly riskier than the two-year bond. |
| Inflation risk | If inflation shoots up sharply, your longer-term deposits could lag inflation | The re-start option reduces the risk of lagging inflation |
Source: Websites of the respective fixed deposit providers on 22 September 2026
Remember the rates on offer change all the time, so please double check these figures should you come across this post weeks or months after it was published. Walter from RateCompare can help with this. He does all the hard work to keep us up to date in terms of which institution is offering the highest interest rates on fixed deposits ranging from three months to five years.
Is GoTyme safe?
If we look at GoTyme’s 2-year rate of 9.25% vs the 8% offered by our government for a fixed deposit with the same lock-in, does it mean that GoTyme is riskier? Yes, the government is considered a more reliable counterparty than a private sector bank, because it can raise taxes to meet its obligations. A bank would therefore need to offer higher rates to compensate for the higher counterparty risk. But that’s only one reason for the difference in rates. Another reason for GoTyme’s higher rate is its efficient use of technology and low operational expenses. Read more about GoTyme (formerly TymeBank).
When a fixed deposit is not for you
A fixed deposit is not for:
- An emergency fund (you would need access to your money within days)
- Someone who doesn’t know how soon he or she will need the capital
- Anyone who doesn’t want to rely on a single bank or government to stay solvent
- Someone with a strong view that interest rates or inflation will rise significantly and surpass the fixed rates currently on offer
If any of the above applies to you, you might be better off in a money market or other interest bearing fund.
Staying flexible with money market funds
Money market unit trust funds don’t offer a guaranteed rate. They trade in all sorts of different cash instruments available in the money market and issued by banks and other large institutions. Because of the variety of institutions backing these financial instruments, the counterparty risk is low. It’s highly unlikely that more than one bank will default at a time. If one bank gets into trouble, as happened with African Bank in 2014, only a small portion of your money market fund will be affected. Money market funds claim that their yield (income) doesn’t drop quite as quickly as that of a notice deposit when interest rates drop rapidly, as was the case in 2020, but down they’ll go inevitably. In contrast, as interest rates tick up, their yields will tick up too. The risk of not keeping up with inflation is low.
When choosing a money market unit trust fund, look for two things: 1) a large fund that’s been around for a while and has long established connections on the cash trading desk and 2) a fund with a low total investment cost (TIC), preferably not more than 0.3%. Generally, the large fund with the lowest TIC will give the highest return among money market funds. The Allan Gray Money Market Fund returned 7.3% for the 12 months to 31 August 2026. Its current yield and the manager’s view and expectations of slightly higher rates ahead are on the fund’s minimum disclosure document, also called the fact sheet, which is updated every month. The NinetyOne Money Market Fund is currently the largest in the country, with a similar return to that of Allan Gray, even though it has a higher TIC. I find Allan Gray's client service more attuned to direct investors.
Unlike fixed deposits, money market unit trusts give you quick access to your capital. The money should be in your bank account within 4 days of giving a withdrawal instruction.
What about other interest-bearing unit trust funds?
Money market funds form only one category under the greater group of unit trust funds that the Association of Saving and Investing in SA (Asisa) classifies as SA Interest-Bearing. The money market category is the least volatile and the unit price of the funds in this category normally stays constant at R1 per unit. In other words, your capital amount stays constant, similar to a fixed deposit. Unlike a fixed deposit, your income varies from day to day.
The funds in SA interest-bearing categories other than money market funds take on more counterparty and other risk in an attempt to outperform money market funds. Their response to interest rate changes are not as straight-forward as that of money market funds. For example, when interest rates in SA rise, some instruments in the fund will drop in value. Therefore their capital value and income vary from day to day. Checking their minimum disclosure documents (fund fact sheets) for their lowest and highest annual return since inception gives you a good idea of how volatile their returns are and whether you would be comfortable with this. But bear in mind that older funds will show greater variety in returns in their track record simply because they've typically been through greater up and down interest rate cycles. Interest-bearing funds other than money market funds normally suit investors that want to beat the money market and can take on slightly more risk. They’re not ideal if you’re investing for less than a year as they can have negative monthly returns.
Below are two examples of unit trust funds in the short-term interest bearing category:
| Criteria | Allan Gray Interest Fund | Truffle SCI Income Plus Fund |
|---|---|---|
| Recent performance | The latest published 1-year return is 9.2% (to Aug 2026) | The latest published 1-year return is 10.5% (to Aug 2026) |
| Rate certainty | Not guaranteed. The level of income the fund is able to offer changes daily. The capital value of your investment fluctuates too, although not dramatically. | Not guaranteed. The level of income the fund is able to offer changes daily. The capital value of your investment fluctuates too, although not dramatically. |
| Amount limits | Minimum lump sum investment of R50 000 on Allan Gray platform. No maximum. | Minimum lump sum investment of R10 000. No maximum. |
| Worst 12-month return | 9.2% (for year ending Aug 2026) | 6.2% (the fund has been in existence for longer and has experienced the global dip in interest rates during the COVID pandemic) |
| Maximum drawdown | Value dropped 1.7% from 7 to 8 October 2026 | N/A |
| Can you request your income monthly? | Yes | Yes |
| Total investment cost (TIC) | 0.76% | 0.61% |
| Positioning for expected inflation and interest rate changes | The fund recently increased its exposure to floating-rate notes to benefit from inflation risks and rising interest rates. | The fund's floating-rate construction and absence of duration largely insulates the portfolio from interest rate volatility |
| Counterparty risk | Low. You are invested in various instruments issued by diverse SA lenders. Highly unlikely that all of them will default at the same time. | Low. You are invested in various instruments issued by diverse lenders. This fund also invests in foreign fixed income instruments. |
Source: Minimum disclosure documents (fund fact sheets) of the respective funds - measured up to 31 August 2026
The above unit trust funds - like money market funds - offer quick access to your capital. The money should be in your bank account within 4 days of giving a withdrawal instruction.
So, who has the best interest rate?
Guaranteed rates: GoTyme currently offers the highest interest rate on 1-year and 2-year fixed deposits and has removed their R100,000 limit on the size of the investment.
Non-guaranteed, variable rates: If you can live with some uncertainty around the return you will actually receive over the coming year or two, it’s worth doing your own research on short-term interest bearing unit trust funds.The two funds compared in the table above are only two examples in this category.
The best rate is the rate that beats inflation by the biggest margin over your investment period at the level of certainty and risk of capital loss that you are comfortable with.