We have two questions for you to ponder on:

1. If you could save ten thousand per month with a 10% interest rate, how long would it take to save one million rand?
2. If you had a debt of one million rand, with a 10% interest rate, and you paid ten thousand rand every month, how long would it take to pay it off?

Many young South Africans face a tough financial choice—should they save and invest, or take on debt to afford their lifestyle now? While loans and credit can seem tempting, there’s a powerful financial tool that can work in your favour: compound interest. If you start saving early, compound interest can help you build wealth without working harder—just smarter.

What is Compound Interest?

Compound interest is when you earn interest on both your savings AND the interest you’ve already earned. Think of it like a money tree—if you plant the seed and nurture it, it doesn’t just grow a little every year, it keeps growing faster because the branches sprout new leaves, and those leaves sprout even more!

How Does Compound Interest Work?

Imagine you save R1,000 in an account with 7% interest per year.

• In the first year, you earn R70 (7% of R1,000), bringing your total to R1,070.
• In the second year, instead of earning interest only on R1,000, you earn 7% on R1,070, which is R74.90. Now you have R1,144.90.
• By the fifth year, your money has grown to R1,402, and by ten years, it will be over R1,967—almost double without adding another cent!

Why Compound Interest Beats Debt

Many young South Africans take out loans or use credit cards without thinking about the long-term impact. But here’s the catch—debt works against you the same way compound interest works for you.

When you borrow money through a loan, you will pay back more than you borrowed because of interest. This means you're paying extra for things you've already bought. Instead of growing your money with interest like in savings, you're losing money by paying interest to the lender.”

How to Start Earning Compound Interest

• Open a High-Interest Savings or Investment Account – Banks and investment platforms in South Africa offer accounts designed to grow your money over time. Shop around for the best interest rates.
• Start small but start now – Even saving R100 or R500 a month can make a huge difference. The earlier you start, the bigger your returns.
• Stay consistent – Keep adding to your savings and let time do the rest!
• Avoid Debt – Instead of relying on credit, try to save for big purchases. If you must take out a loan, choose low-interest options and pay them off as quickly as possible.

The Future is Yours

Many successful investors and wealthy South Africans didn’t start with millions—they used compound interest and time to grow their savings. The sooner you start saving, the sooner you let your money work for you, instead of working harder for money!

Answers to the top 2 questions:

1. 6 Years

2. 18 Years

Can you see the magic of compound interest? Ready to plant your own money tree? Start saving today, and watch your wealth grow!