To grow or not to grow? That is the question for the RSA bond and investors in it, which is offering its holders a real 3.8% a year for 10-year money. It is the lowest risk investment that can be made in rand over the next 10 years, one made without the risk of inflation reducing the purchasing power of your interest income and without risk of default.

If you wished to invest in a 10-year US treasury inflation-protected security (Tips) you would have to pay Uncle Sam 13.3c per $100 invested for the opportunity. Thus investors willing to accept SA risk are being compensated with an extra 4% real rand income each year for the next 10 years. This real risk spread was a mere 2.3 % per annum a year ago.

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