Many investors tend to use a universal benchmark when gauging investment performance, and most default to Money Market rates, and to a lesser extent, cash rates that their banks provide in current accounts. There are many different money market fund options available, and the performance is roughly equal, because the underlying investment universe is relatively constrained.
In a world where the actual use of physical cash is declining, Money Market is still as popular as ever. But do money market funds have a place in modern investing, and should investors be using it in the long term?
Based on the chart below, a Money Market investment with Ninety One would have given investors an annualized return of 7.14% over the last 10 years.
The ZAR returns on Money Market has been pretty straightforward. Investors have had consistent returns over the last ten, five, and three 3 years. It seems that having invested in a money market fund has been a good investment. But let us dive a bit deeper into the other factors that investors tend to overlook.
Let’s assume an investor started with R1m in a money market fund at the beginning of 2016 and has remained invested for 10 years.
At an annual return of 7.14%, the value after 10 years would be worth R1,992,100*
Sounds great, right? Yes, but in reality, a different picture emerges.
It’s kind of like when car manufactures claim impressive mileage on new models, when the car is in a controlled environment, drives at a constant speed, and the outcome is quoted in the best world, best case scenario. Unfortunately, this is never the case.
To quote Benjamin Franklin:
“In this world, nothing can be said to be certain, except death and taxes”
And taxes there will be.
Before we proceed to the next table, let us just make the following assumptions:
- The investor is below 65 years old at end of investment term
- Initial investment: R1,000,000
- Final gross value: R1,992,100*
- Gross annualised return: 7.1349%
- Annual Interest exemption: R23,800
- Marginal tax rate: assuming a 45% income tax rate (the highest currently)
- Fully taxable money market interest
- Tax paid annually
* Inflation adjusted using official South African CPI figures
When committing to a Money Market fund, Investors tend to overlook two things. Inflation, and the net growth (after tax). In the previous table, we know that the value after 10 years of R1m, would be worth R1,992,000 ten years later, there is no doubting this, but if we look at the net return (after tax and exemptions have been taken account), money market has effectively provided this investor with 4.78% return per annum. Assuming the average inflation rate over the last 10 years was roughly 4.61%, the real return from money market is actually closer to 0.18% per annum.
Has this investment grown? Yes, technically, but this is before tax and inflation.
Has this investor made real capital growth? Not really.
For reference, the real annualized return at different income tax brackets.
Money Market should be used for short term cash savings. Investors are “saving themselves poor” when making use of Money Market. Nominal returns in money market funds can look attractive, but after inflation and tax, real wealth creation is often negligible over long periods
When deciding on an investment strategy, regardless of age, there are alternatives to use, and investors need to be comfortable with increasing and adjusting their risk profiles. Investors have the ability to blend their portfolios with cash, bonds, and equity, but purely relying on money market for long term capital growth is just not effective.
* Mags Heystek, CFP®, is a financial advisor at Brenthurst Wealth and is based in Cape Town.
Megan joined the Brenthurst Wealth team in March 2026 as an Administrative and Fiduciary Services Assistant at our Val de Vie Office in the Western Cape. Prior to joining Brenthurst, Megan gained three years of experience in the retail sector, where she developed management and client service skills.
I obtained my National Diploma in Financial Information Systems from the Cape Peninsula University of Technology in 1999 and have worked in the wealth management industry since January 2000. Over the years, I have gained extensive experience in various roles, including Portfolio Manager Assistant, Planner Assistant, and Paraplanner.
Esmarelda Isaacs-Andreas joined the Brenthurst Wealth Stellenbosch office in October 2025, taking on the dual role of Receptionist and Fiduciary Administrator.
I obtained my National Diploma in Financial Information Systems from the Cape Peninsula University of Technology in 1999 and have worked in the wealth management industry since January 2000. Over the years, I have gained extensive experience in various roles, including Portfolio Manager Assistant, Planner Assistant, and Paraplanner.
Ashley joined Brenthurst Wealth in January 2025 as Office Administrative Assistant and Receptionist for the Stellenbosch Office.
René Heystek joined Brenthurst Wealth in November 2023, as receptionist and administrative assistant in the newly established George/Garden Route office.
Michelle Heystek has built a career in the financial services over the last two decades, after obtaining her B.Com degree in Financial Management in 2005. Once she joined Brenthurst in 2006, she continued her academic journey, obtaining her Certificate in Wealth Management from INSETA in 2007, followed by a Postgraduate Diploma in Financial Planning from the University of the Free State. In 2008, she earned the Certified Financial Planner (CFP®) designation.
Anelle joined Brenthurst Wealth as a Receptionist and Administrative Assistant to Brian Butchart in the Cape Town office in December 2023. She has a wealth of knowledge from working as a liaison between Financial Advisers and clients at TMA and Absa Investment Management Services (Aims) since 1998. She obtained her B. com degree from the University of Port Elizabeth in 1997.
ADMITTED ATTORNEY | FINANCIAL PLANNER & HEAD OF BRENTHURST FOURWAYS
Sanet was appointed in April 2020, joining our Cape Town team as an Executive Administration Assistant to Renee Eagar. She has been in the financial services industry since 1990. Her previous experience includes positions at Sanlam, BJM and ABSA. She spent her last 12 years working at Alexander Forbes Private Client Wealth as a Senior Wealth Management Assistant. She has received numerous accolades over the years which include but not limited to, Alexander Forbes Client Service Excellence – Silver award in 2014,2015 and 2017. Sanet has also obtained her Certificate in Wealth Management (NQF 5) in 2012 and achieved “Best Student of the Year” from Moonstone.
Maria Smit is a Certified Financial Planner® with over 10 years of experience in the financial planning industry.
