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5 best ways to invest money in South Africa in 2023

From stocks and cryptocurrency to bonds and index funds, these are the 5 best ways to make your money grow.

Between the rise of meme stocks, geopolitical tensions causing havoc on industries, rising interest rates and talk of an impending recession, you might be wondering “what should I do with my money?”. Instead of getting wrapped up in investing trends, but finding the best way to invest money comes down to your risk tolerance, goals and how long you plan to hold your investments. We compared multiple investment options and chose the 5 best ways to invest money based on the return rate, liquidity, time horizon, and how much activity and knowledge you need to have to invest.

Find the best way to invest money in South Africa

We’ve rounded up the 5 best ways to invest money in South Africa depending on what type of investor you are, plus a bonus strategy during times of inflation.

Best way to invest money if you want to control your portfolio: Stocks

Stocks have the greatest variety of trading options because you can choose from emerging businesses you think will explode, companies that pay dividends, established businesses in industries that are resistant to downturns, and more. It’s easy and often free to open a stock trading account and start trading.

  • Where to buy: Online brokers
  • Risk level: Medium or high—depends on which stocks you invest in
  • Liquidity: High
  • Minimum: No investment minimums
  • Fees: Starting from US$0 depending on the broker

Best way to invest money if you want to be hands-off: Robo-advisors

Robo-advisors trade automatically based on an algorithm and invest your funds on your behalf. All you have to do is set up guidelines, such as your risk tolerance and preferred investment types, and the algorithm will allocate your funds and rebalance your portfolio accordingly. This is great for investors in South Africa who don’t want to dedicate the time and energy to building and maintaining their own portfolios.

  • Where to open: Brokers and financial companies like eToro, Moneyfarm and Sygnia
  • Risk level: Low, medium or high—but this largely depends on your settings
  • Liquidity: Medium
  • Minimum: Anywhere from R250 to R30,000 — depending on the robo-advisor
  • Fees: From 0.35% to 1%—depending on the robo-advisor

Best way to invest money if you are a conservative investor: Index funds

Index funds in South Africa offer one of the best risk/reward ratios for long-term investing, meaning they offer decent rewards for relatively low risk. That’s because major indices have consistently gone up in the past 90 years. For example, S&P 500 has averaged a 10% annual return during this time. If you invested US$500 USD each month for the past 30 years, you would now have about US$1 million USD to retire on.

  • Where to buy: Brokers
  • Risk level: Low, medium—depends on which funds you invest in
  • Liquidity: High
  • Minimum: No investment minimums
  • Fees: Annual fee of about 1% depending on the fund

Best way to invest money if you are a risk taker: Cryptocurrencies

Being a relatively new investment option among mainstream investors and institutions, cryptocurrencies are a high-risk, high-reward investment. What’s more, there are always new coins coming out or older ones getting the spotlight every now and then. Because of that, the rate of return could be way higher than investing in stocks in South Africa. But since cryptos aren’t currently regulated, you could lose your entire investment.

  • Where to buy: Brokers and crypto exchanges
  • Risk level: High
  • Liquidity: High
  • Minimum: No investment minimums
  • Fees: Starting from 0% depending on the broker and the exchange

Best way to invest money if you are close to retirement: Government bonds

Investing in government bonds can be one of the safest investments you can make. That’s because the chances of most governments across Europe or North America failing to pay off their debts are low — which is why this investment option comes with a relatively low return compared to other options like stocks and ETFs. Investors in South Africa who are close to retirement likely want to be exposed to low-risk investments, as they need to access the proceeds in the near term so market fluctuations can have a big impact.

  • Where to buy: Brokers and directly from the government via a broker
  • Risk level: Low
  • Liquidity: High
  • Minimum: No investment minimums with bond ETFs
  • Fees: From US$0 to 0.1%— depending on whether you buy bond ETFs or bonds directly

Bonus: Best way to invest money for inflation

Believe it or not, inflation can be a good time to get in on certain market sectors. Consumer staples, for instance, are typically resistant to volatile periods. We’ve compiled a list of the best inflation stocks and ETFs to buy, divided by market sector.

5 steps to start investing

Now that you have an idea of the best ways to invest your money, here’s how to start in South Africa.

1. Identify your goals, time frame and risk tolerance

  • Time horizon: Your time frame dictates your risk. The sooner you’ll need the funds, the more liquid you want to keep them. This way, a dip in the market (which always recovers, but we don’t know how long it will take) won’t destroy the retirement fund you’ll need in a year.
  • If you’re nearing retirement, typically a low-risk investment, such as bonds, is the way to go. You would earn less, but the risk is minimal compared to stocks or crypto.
  • If you’re younger, you have a long way to go before retirement so you might want to consider setting aside some funds for riskier investment options (like more speculative stocks or crypto).
  • Risk: Be honest with yourself about how much risk you can reasonably tolerate. If it is going to be impossible for you to watch your portfolio drop in a downturn, you’ll want to use a robo-advisor (which is immune to emotional investing!) or invest in lower-volatility assets like bonds. Remember, an easy way to hedge risk is through diversification — investing in different assets so that your entire portfolio doesn’t depend on the success of one investment.
  • Goals: Do you want to be highly involved in picking stocks? Are there some industries you aren’t comfortable investing in? Is your goal retirement or do you have other shorter terms goals? The answers to these questions, as well as those above, will dictate the best way to invest your money.

2. Decide how much help you need

Investors in South Africa who are just starting out or those who never had the chance to manage their portfolio may consider using a robo-advisor or consulting an expert. Investors who want to try their luck can always start by themselves, as many platforms have research tools and low barriers to entry. Make sure you use money that won’t impact your life if you lose it.

3. Choose your account type

Depending on your goals and investment time frame, you can choose several types of accounts:

  • RRSP. Retirement annuities, or RA, are pension plans that build your capital on a tax-free basis while any contributions you make can be deducted from your taxable income. Typically, RAs are an accompaniment to your employer’s retirement fund that you might likely have joined at the beginning of your job.
  • TFSA. You can open a tax-free savings account (TFSA) with many banks and financial institutions. A TFSA lets you grow your money tax-free. Contributions to a TFSA are not tax-deductible and you aren’t taxed on withdrawals. There is an annual contribution limit of R36 000 and some regulations around withdrawing.
  • Individual non-registered accounts. This is the most common type of account you can open with any broker and start investing your money as soon as your funds land. This account has no limits to depositing and withdrawing but gains are taxable.

4. Open your investment account

Depending on who manages your account, there are 2 types of investments accounts to choose from:

  • Standard account with an online broker. This is the most common option for those in South Africa who want to place their own trades and choose their investments. You will need to open a stock trading account, which is easy and usually free.
  • Robo-advisor. This option is for those who want an algorithm to manage their account based on parameters set by the investor.

5. Deposit and invest

Once you open and fund your account, it’s time to put your money to work. Make sure to choose the best way to invest, depending on your financial situation and goals.

Compare stock trading and cryptocurrency platforms

1 - 8 of 8
Name Product Number of Stocks CFDs Shares Markets
Access to global markets
Worldwide with exception.
CFD Service. Your capital is at risk.
Trade over 1,200 instruments online with Avatrade, including stocks, cryptocurrencies, forex, commodities and indices. The minimum deposit with Avatrade is US$100.
Worldwide with exception.
CFD Service. Your capital is at risk.
Trade over 2,500 financial instruments with one of the largest CFD providers in the world.
Zacks Trade
Access to global markets
Trade stocks, bonds, ETFs, options, and more on 90+ international exchanges. Offers customizable trading platforms with over 120 technical indicators for your charting needs.
Access to global markets
CFD Service. Your capital is at risk.
Trade a wide variety of instruments on the award-winning MT4/5 platforms with this Australia-based CFD and forex broker.
Access to US stocks
CFD Service. Your capital is at risk.
Enjoy $0 commission trading for stocks, options, funds, and more with this internationally-acclaimed discount broker.
CM Trading
CFD Service. Your capital is at risk.
Licensed international brokerage and CFD provider that offers advanced trading solutions designed for both new and experienced traders alike.
CFD Service. Your capital is at risk.
Enjoy fast trade executions at competitive fees with this award-winning retail forex broker.
Interactive Brokers
Access to global markets
CFD Service. Your capital is at risk.
Take advantage of low trading fees, multiple platform support, and an extensive list of asset classes across global markets, including stocks, options, futures, forex, bonds, and funds.

Bottom line

The best way to invest money depends on your financial goals, risk tolerance, level of involvement and time frame. There is no single best way to invest your money, but these five investment options (stocks, robo-advisors, index funds, cryptocurrency and bonds) are good places to start when you are deciding how to invest money in South Africa.

Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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