You do not need a large lump sum to begin investing.

Sean Kelly, Director at Parity Wealth Managers, recently explained how investing R1,000 every month for 20 years could grow to nearly R600,000, assuming an average annual return of 8%.

The investor would contribute R240,000 over the full period. The balance would come from investment growth and compounding, where returns remain invested and begin generating returns of their own.

What the calculation assumes

The figure is mathematically reasonable. Depending on the timing of the monthly contributions and how the return is applied, the final amount would be approximately R580,000 to R590,000.

However, the calculation assumes that:

• R1,000 is invested every month without interruption.
• The investment averages 8% a year over 20 years.
• Returns remain invested.
• No money is withdrawn.

It is an illustration, not a guaranteed outcome. Markets fluctuate, and investment fees, taxes and the chosen product can reduce the final amount.

Inflation also means that R600,000 in 20 years will buy less than R600,000 does today.

A possible starting point

One option for beginners is an exchange-traded fund, commonly called an ETF.

An ETF tracks a collection of shares, bonds or other assets. This allows an investor to spread money across several investments instead of relying on the performance of one company.

The Johannesburg Stock Exchange says ETFs can provide diversification at a relatively low cost, although their prices still rise and fall with the underlying investments. 

Could a tax-free account help?

Qualifying ETFs, unit trusts and certain other investments can be held inside a tax-free investment account.

Returns earned in these accounts are exempt from income tax, dividends tax and capital gains tax.

From 1 March 2026, South Africa’s annual tax-free contribution limit is R46,000, while the lifetime contribution limit remains R500,000. Contributions exceeding either limit attract a 40% tax penalty. 

An investment of R1,000 a month totals R12,000 a year and therefore falls below the current annual limit.

Be careful when withdrawing money. If it is later returned to the account, SARS treats it as a new contribution, which counts towards the annual and lifetime limits.

Before making the first investment

Beginners should first decide what the money is for and when it may be needed.

Money required for emergencies or short-term expenses should remain readily accessible. Longer-term money can be invested according to the investor’s goals and tolerance for market fluctuations.

Before choosing a product:

• Understand what you are investing in.
• Compare platform, fund and advice fees.
• Ask how quickly the money can be accessed.
• Check whether the provider or adviser is authorised.
• Avoid promises of unusually high or guaranteed returns.

The Financial Sector Conduct Authority provides a searchable register of authorised financial service providers. 

The Bottom Line

R1,000 a month will not automatically become R600,000. The example shows what may be possible when a manageable amount is invested consistently and given enough time to grow.

The best starting amount is not necessarily R1,000. It is an amount you can afford to invest regularly without neglecting essential expenses, expensive debt or emergency savings.

*This article provides general information and does not constitute personal financial advice.