"SA's safest investment" first appeared on iafrica.com on 17 March 2010. It is the 6th most read "Financial fitness" article of the past year. Liked it? Get your finances in shape in 2011 - bookmark http://personalfinance.iafrica.com/.

If you're afraid of risk, but realise how important it is to save and invest money, you can buy government retail bonds if you have between R1000 and R5-million available.

Government retail bonds were launched in 2004 to encourage people to save and offer attractive interest rates if you put your money away for either two, three or five years.

Safer than the bank

This is a very low risk investment as you are investing money directly in the South African government, which has a good credit rating. In fact, investing with the government is probably even safer than investing in a bank. Banks do go under (remember Saambou?), but governments rarely do.

Your return is guaranteed for the investment term and interest is paid every six months. The current interest rate is 8.75 percent for two years, nine percent for three years, and 9.25 percent over five years. If you bought retail bonds today, your return would be locked in at that rate. However, new rates are announced every month in order to keep returns in line with the market.

The only "risk" you run in buying retail bonds is that you might be able to get a better rate somewhere else. If you want to preserve your capital, you should shop around for good rates and compare fixed deposits, money markets, and other bank products.

No costs involved

Remember that a properly diversified portfolio should include exposure to different asset classes at different risk levels, and you should always make investments that suit your own financial needs and goals.

There are no costs involved with retail bonds, which can be bought at any post office or Pick n Pay. You can also buy them online at www.rsaretailbonds.gov.za.