A savings account remains the benchmark investment for most people who want to preserve their assets in the medium and long term. The reasoning seems sound at first glance.
Your savings are secure, and based on reviews of the best South African savings accounts, you can expect an average return of 4.88%.
Looking just beyond the banks’ sales pitches, however, the picture is not so rosy.
Inflation is currently 5.9%. If you invest in an account that doesn’t beat inflation, you lose money.
This does not even take into account the fact that over the past 10 years the South African rand has depreciated by around 4.3% per year against the US dollar.
The direct result is that South Africa’s average wealth, measured by international standards, has depreciated by 4.3% each year for the past 10 years.
In concrete terms, if you have held your savings in a South African savings account for 10 years, it has lost around 46% of its international purchasing power. Since we haven’t even factored inflation into this calculation yet, it becomes quite apparent that the long-standing savings account may no longer be a viable way to preserve wealth.
the Revix Savings Vault allows you to save in an account denominated in US dollars, without having to rush, while offering a return of 12%. How is it possible? We’ll take a look.
DeFi has rewritten the rules of the savings account
For most people, the word cryptocurrency still only means bitcoin, but the crypto landscape has grown exponentially to become much more than bitcoin. Decentralized finance, or DeFi, is a comprehensive ecosystem of financial services that operates without any central authority and is accessible to everyone.
This new generation of savings accounts has largely been made possible by a specific type of cryptocurrency, called a stablecoin. Understanding stablecoins is essential to understanding savings vaults.
What is a stablecoin?
Stablecoins are different from traditional cryptocurrencies because they are backed by an asset, such as the US dollar or gold. In other words, they are simply token versions of the US dollar, gold, or other reserve assets. This keeps their prices stable, so they are not subject to the same level of volatility as other cryptocurrencies.
Stablecoins are designed to be a middle ground between traditional cryptocurrencies and fiat currencies like the US dollar. Although they are still a type of cryptocurrency and can be used as a form of payment, they don’t have a roller coaster of ups and downs.
A USDC-Based Savings Vault allows you to efficiently convert your savings into US dollars while earning a 12% return on your stablecoins.
This way, you avoid the depreciation you would incur if you held rand (+4.3% gain) while earning an additional 12% on those assets.
Assuming you get 12% on your balance Savings Chest, this double gain would result in a net return of +16.3% on your South African rand. Compare that to the actual performance of your average traditional savings account and the difference is staggering.
How to start saving and earning 12% in USDC
Cape Town-based crypto investment platform Revixsaw the value of bringing a USDC Savings Vault to South African investors very early on. For more than a year, Revix’s US dollar-denominated flexible savings account has offered an interest rate well above the market.
Now the long-standing trust Revix USDC Savings Vault has been enhanced to provide investors with an even higher annual return. This allows you to easily earn interest using your USDC assets, just like a high-yield US dollar savings account. The only difference being that you will earn a return far greater than any dollar savings account can offer.
From May 6, Revix’s Savings Vault will offer you 12% APY on your USDC. A minimum investment of 100 USDC is required to qualify, and there is a minimum lock-up period of 30 days so as not to attract fees. The T&Cs apply.