How Investec made us Wait an Extra Year to get a Million

I have been a strong advocate of Investec and espescially their Instant access cash investment product called the Moneyfund Traker. However this time, I have felt a bit let down by them. I am talking specifically about their Tax Free Fixed Deposit and how investec made us wait an extra year to get a million.

By "us" I mean the investing community taking advantage of their tax free fixed deposit

The Tax Free Savings Account

I have written an article on myshares.co.za about how to make the best of the Tax Free Savings Account that we are so generously allowed to take advantage of as South African citizens. I think they are a great tool to enhance your portfolio for long-term wealth and to take advantage of a small tax break.

I looked at their tax free option and saw it as a risk-free and stable choice in the context of the poor equitiy growth in local times. You have a fixed 12 month deposit after which your investment matures and you can withdraw taxfree. Although taking advantage of compound interest is what we want, so we reinvest yearly. The one catch it you must drop the max yearly deposit amount of R30k (R33k since 2017 March) on the first of March.

So how did Investec make us wait another year to become a millionnaire

In 2016, the interest rate on their tax-free fixed investment was 8.54%.

So based on the calculation starting on the 01 March 2016, we would have a million rand in our Investec account 15 years later on the 01 March 2031. See the table below:

Year

Date

Deposit

Cumulative Deposit

Interest Earned

Cumulative Interest

Total

Interest Rate

0

2016-03-01

30000

30000

0.00

0.00

30000.00

8.54

1

2017-03-01

33000

63000

2562.00

2562.00

65562.00

8.54

2

2018-03-01

33000

96000

5598.99

8160.99

104160.99

8.54

3

2019-03-01

33000

129000

8895.35

14494.34

146056.34

8.54

4

2020-03-01

33000

162000

12473.21

21368.56

191529.56

8.54

5

2021-03-01

33000

195000

16356.62

28829.84

240886.18

8.54

6

2022-03-01

33000

228000

20571.68

36928.30

294457.86

8.54

7

2023-03-01

33000

261000

25146.70

45718.38

352604.56

8.54

8

2024-03-01

33000

294000

30112.43

55259.13

415716.99

8.54

9

2025-03-01

33000

327000

35502.23

65614.66

484219.22

8.54

10

2026-03-01

33000

360000

41352.32

76854.55

558571.54

8.54

11

2027-03-01

33000

393000

47702.01

89054.33

639273.55

8.54

12

2028-03-01

33000

426000

54593.96

102295.97

726867.51

8.54

13

2029-03-01

33000

459000

62074.49

116668.45

821942.00

8.54

14

2030-03-01

33000

492000

70193.85

132268.33

925135.85

8.54

15

2031-03-01

8000

500000

79006.60

149200.45

1012142.45

8.54

In 2017 Investec reduced the interest rate

In 2017 Investec reduced the interest rate on the 12 months fixed deposit tax free savings account to 8.36%

Oh noooo!!! All our long term plans, shattered. What hurts the most is that Investors were not even warned about it in any way except for looking at the website on the day. Shame on you @Investec.

So now it will not take 15 years, it will take 16 years to have 7 figures next to our names. I can't blame you if you shed a tear like me.

See the table below with the calculation extended out to 34 years:

Year

Date

Deposit

Cumulative Deposit

Interest Earned

Cumulative Interest

Total

Interest Rate

0

2016-03-01

30000

30000

0.00

0.00

30000.00

8.54

1

2017-03-01

33000

63000

2562.00

2562.00

65562.00

8.36

2

2018-03-01

33000

96000

5480.98

8042.98

104042.98

8.36

3

2019-03-01

33000

129000

8697.99

14178.98

145740.98

8.36

4

2020-03-01

33000

162000

12183.95

20881.94

190924.92

8.36

5

2021-03-01

33000

195000

15961.32

28145.27

239886.25

8.36

6

2022-03-01

33000

228000

20054.49

36015.81

292940.74

8.36

7

2023-03-01

33000

261000

24489.85

44544.34

350430.58

8.36

8

2024-03-01

33000

294000

29296.00

53785.84

412726.58

8.36

9

2025-03-01

33000

327000

34503.94

63799.94

480230.52

8.36

10

2026-03-01

33000

360000

40147.27

74651.21

553377.79

8.36

11

2027-03-01

33000

393000

46262.38

86409.65

632640.17

8.36

12

2028-03-01

33000

426000

52888.72

99151.10

718528.89

8.36

13

2029-03-01

33000

459000

60069.02

112957.73

811597.91

8.36

14

2030-03-01

33000

492000

67849.59

127918.60

912447.49

8.36

15

2031-03-01

8000

500000

76280.61

144130.20

996728.10

8.36

16

2032-03-01

0

500000

83326.47

159607.08

1080054.57

8.36

17

2033-03-01

0

500000

90292.56

173619.03

1170347.14

8.36

18

2034-03-01

0

500000

97841.02

188133.58

1268188.16

8.36

19

2035-03-01

0

500000

106020.53

203861.55

1374208.69

8.36

20

2036-03-01

0

500000

114883.85

220904.38

1489092.53

8.36

21

2037-03-01

0

500000

124488.14

239371.98

1613580.67

8.36

22

2038-03-01

0

500000

134895.34

259383.48

1748476.01

8.36

23

2039-03-01

0

500000

146172.59

281067.94

1894648.61

8.36

24

2040-03-01

0

500000

158392.62

304565.22

2053041.23

8.36

25

2041-03-01

0

500000

171634.25

330026.87

2224675.48

8.36

26

2042-03-01

0

500000

185982.87

357617.12

2410658.35

8.36

27

2043-03-01

0

500000

201531.04

387513.91

2612189.39

8.36

28

2044-03-01

0

500000

218379.03

419910.07

2830568.42

8.36

29

2045-03-01

0

500000

236635.52

455014.55

3067203.94

8.36

30

2046-03-01

0

500000

256418.25

493053.77

3323622.19

8.36

31

2047-03-01

0

500000

277854.81

534273.06

3601477.00

8.36

32

2048-03-01

0

500000

301083.48

578938.29

3902560.48

8.36

33

2049-03-01

0

500000

326254.06

627337.53

4228814.54

8.36

34

2050-03-01

0

500000

353528.90

679782.95

4582343.43

8.36