Local investments in South Africa
Grow your wealth and support the South African economy by investing locally. Read our guide to learn more about local investments.
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Local investments in South Africa allow investors to grow their wealth and support the local economy.
With a broad range of options—from stocks and bonds to real estate and mutual funds—investing locally also provides a way to build a diverse portfolio and spread the risk.
This guide will walk you through the key aspects of local investments. We explore the different types of investments, their benefits and how to get started.
What are local investments?
Investing is a long-term strategy for building wealth. You put your money into assets that can increase in value over time to generate a profit. Return on investment (ROI) is the common method for measuring the profit of an asset.
Local investments are assets you hold in your home country. They are the opposite of international investments, which focus on assets outside of South Africa.
Assets can include:
- Stocks and shares (equities)
- Bonds
- Funds
- Real estate
- Investing in small businesses
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Local investment options
There are several local investment opportunities available. Below are some of the main options:
Stocks and shares
Stocks and shares, otherwise known as equities, allow investors to put their money into companies listed on the stock market.
The Johannesburg Stock Exchange (JSE) is the largest stock market in South Africa. The JSE provides investors exposure to South Africa's top companies.
Stocks can often provide bigger returns than other types of investments. However, they also carry higher risks. Market ups and downs are common; investors should be prepared to ride these out.
Real estate
Property investments in South Africa can provide strong returns, especially in major cities. Average property prices in Cape Town have risen from R1,580,000 in 2020 to R1,900,000 in 2024 — an increase of over 18%.
Investors can earn returns through rental income and capital appreciation. But just like any other type of investment, market research is essential.
Understanding property location, growth trends, and market dynamics will improve your chances of success in real estate. Speak to our property experts to learn more.
Bonds
Bonds are fixed-income investments. While they typically offer lower returns than equities, they are a lower-risk alternative.
South African government and corporate bonds can generate stable returns. They are often an excellent option to include in an investment portfolio as they can provide a reliable income.
Funds
Investment funds are an excellent option for those looking to diversify. This is because they allow you to invest in a large number of assets at once.
Mutual funds and exchange-traded funds (ETFs) pool investors' money and use it to invest in a ready-made basket of underlying assets. Funds offer different strategies to meet an investor's needs and risk profile.
What can affect local investment performance?
Certain factors can affect the performance of local investments.
- Political climate: South Africa's political landscape can impact market stability. This is the same in any country.
- Economic growth and inflation: the growth of the economy and inflation rates can affect the real returns on investments. Higher inflation may reduce the purchasing power of your returns.
- Regulations: the Financial Sector Conduct Authority (FSCA) regulates South Africa's financial markets. Changes to regulations can affect local investments.
The benefits of investing locally
Boosting the South African economy
Local investments help boost the economy in several ways. For example, they fund the growth of South African businesses and create jobs. From small business investing to stock market and real estate investments, contributions help build the country's future.
Tax benefits
South African investors can benefit from various tax incentives, as the South African Revenue Service (SARS) states. This can increase the appeal of investing locally in South Africa.
For example, there is no capital gains tax (CGT) to pay on the first R40,000 annually. There are also benefits to investing in local businesses. This is because dividends from South African companies are also often exempt from income tax. However, a withholding dividends tax applies at a rate of 20%.
Additionally, tax-free savings accounts (TFSAs) allow individuals to invest without paying tax on returns. The current amount you can invest tax-free is R36,000 per year.
For more information, speak to one of our tax planning experts, who will advise you based on your situation.
Accessibility
Investing locally is often more accessible. Investors are likely more familiar with local markets and companies. They will also be more in tune with certain economic factors that could affect performance.
The risks of investing locally
Local investments in South Africa have their pros, but there are some risks to consider. A mix of international and local assets can help reduce your overall investment risk.
Market volatility
South Africa is classed as an emerging market. This can mean higher volatility, increasing the risk and the potential for losses.
Cash flow
Some local investments may lack liquidity. In other words, they could be harder to sell quickly. Understanding the liquidity of different investments can help you better manage this risk.
Political and economic risks
Economic and political shifts can affect market stability. When this happens, it can impact stock performance and currency exchange rates. Diverse portfolios with a mix of assets have a track record of helping protect against these risks.
Local investments: how to get started
To make the most of investing locally and get started, there are three key points to consider:
- Set financial goals: define what you want to achieve through your investments and your time horizons.
- Define your risk profile: how much risk are you comfortable taking? Understanding this is crucial.
- Diversify: investing in a mix of local and global assets is a wise investment decision. This can help protect your portfolio from certain risks.
Find life insurance policy with Holborn
Local investments in South Africa allow you to grow wealth while supporting the nation's economy. Whether you're new to investing or looking to expand your portfolio, we can help.
Holborn South Africa is a leading, award-winning financial service and wealth management solutions provider. We offer a wide range of services to help you grow and protect your wealth.
To learn more about local investments or to get started, speak to one of our experts.
Frequently Asked Questions
Local investments are those made in your home country. These often include real estate, bonds, shares or investing in local businesses. Investing locally can strengthen the South African economy. Meanwhile, it allows investors to put their money into well-known assets.
