Nedbank revealed that its Retail and Green Savings Bonds had generated savings of R8 billion in just over two years.
Launched in 2012, the Nedbank Green Savings Bond enables South Africans to contribute towards the creation and development of the green economy, while saving for their future.
As such, the capital raised from this bond is channeled towards the financing of renewable projects in South Africa – at no cost to the investors.
“We are delighted to see the growth in Nedbank Green and Retail Savings Bonds. These recent innovations allow our clients additional savings opportunities, contributing towards increased awareness of the importance of savings.
Getting on top of our individual financial affairs is so important. It is something we are committed to helping our clients with,” said Anton de Wet, managing executive of client engagement at Nedbank.
In South Africa, the green bonds universe is still in its infancy and the government has adopted renewable energy as a platform, both to meet its international commitments to reduce greenhouse gas emissions as well as a way of developing a sustainable energy policy.
“The Green Savings Bond presents a hard investment case in that investors now have the opportunity to play a significant role in not only lowering the risk of climate change, but also investing in a sustainable solution. The important message investors need to hear is that backing green investments does not mean compromising on returns,” said Mike Peo, head of infrastructure, energy and telecoms at Nedbank Capital.
Can everybody invest in green?
An analysis of the profile of the Nedbank Retail and Green Savings Bonds investors revealed that 80% of the book was accounted for by savers older than 40.
Sasfin financial consultant, Gavin Came, said that this type of investment won’t suit all individuals as you need to diversify your portfolio as far as possible.
“A sophisticated or older investor (over 40 years) usually has money and can afford to put a big amount of money in one type of investment.
You need to consider what proportion of your assets would make up a bond like this. To be safe you shouldn’t put more than 5% of your money in one type of investment,” said Came.
Nedbanks’s profile also revealed that over 13% of the investors are between the ages of 20 to 39, with 7% under 19.
But Came advises young people to steer clear of bond investments because the interest rates are low for an age group who should be taking risks on more aggressive investments.
Financial planner, Louis van der Merwe, said this type of option would also not be suitable for investors who require access to their capital before the end of the investment term.
“As the returns will be in the form of interest, it would not be suitable for individuals with a high marginal tax rate and investments of more than R500 000 in fixed income instruments (bonds & cash).
This would also not be suitable for investors trying to achieve any capital growth as they will most likely reduce the value of their capital in real terms (after inflation),” he added.