Why the Restart option makes Fixed Rate RSBs special

An investor looking to maximise the rate they receive on a savings product faces three real dilemmas:

• A fixed-rate bond gives certainty over its term — but what if rates increase before the bond matures?
• A floating-rate or inflation-linked bond captures any rise in rates or inflation — but pays less if rates fall.
• A longer term usually pays more, on either a fixed or floating basis — but the longer you commit, the larger the move in rates against you can be by the time you mature.

Forecasting interest rates is something even the professionals struggle with. South Africa has had its share of impressive rate moves over the years, and the risk of further large changes remains high.

The best of both worlds

Fixed Rate RSA Retail Savings Bonds, with their option to Re-start, give the best of both worlds — the only retail investment in the SA market that does this.

• A Fixed Rate bond gives a guaranteed rate over its 2, 3 or 5-year term.
• Should rates move higher, once the bond has been held for a year, you can reset (re-start) the contract at the new prevailing rate at no cost.
• When you re-start, you are free to choose any of the 2, 3 or 5-year terms, regardless of the original term of the bond.

The result of this option to re-start is that investors can enjoy the benefits of rates moving lower (the lock-in) and rates moving higher (the re-start).

How it works in practice

Suppose you bought a 5-year fixed RSB in early 2021 at 6.50%. Two years later, in 2023, the prevailing 5-year rate is 11.50%. You are sitting on three years of remaining term at 6.50% — five percentage points below the new rate.

Re-starting hands you 11.50% on the same capital for a fresh 5-year term. Re-starting costs nothing: there is no fee and no interest is forfeited, so the full value of your bond rolls into the new one. Re-start wins decisively.

Because it's free, the decision is simple:

Once you've held the bond for a year, re-start whenever the prevailing rate is higher than your locked-in rate.

Even a small step up is worth taking, and you can re-start again later if rates keep rising (each new bond needs another 12 months first). The Ex Post Restart Performance tab backtests this rule on every Treasury rate since 2004.

The Bond Club tool monitors your bonds, flags those eligible for a re-start, and tells you which ones are worth re-starting now.

Re-start versus early redemption

Don't confuse re-starting with cashing in early. Redeeming a bond before maturity does carry a penalty of one interest payment (a month for monthly-interest holders, six months otherwise). Re-starting is different: your money stays invested and simply moves to the higher rate, at no cost. That's what makes the option so valuable.

The 20th-of-the-month cutoff

Treasury operates re-starts on a monthly cycle. Your re-start request must reach the registrar on or before the 20th of the calendar month to be processed in that month — anything received from the 21st onwards is held over to the following month's cycle, and you spend another full coupon period at the old rate before the new rate takes effect.

The practical rule: when you decide to re-start, do not wait. A re-start that crosses the 20th costs you up to a full month of the rate differential you were trying to capture. The Restart Decision panel on each Fixed bond's deep-dive view shows the exact day count to the next cutoff.

See current rates

The Rates & Yields page shows the prevailing 2/3/5-year rates against the same-tenor Government bond yields and against historical RSB levels — the three numbers you need to decide whether to re-start now.