Stupidity and Hydrogen - "Stupidity is more plentiful than Hydrogen and has a longer shelf life." - Frank Zappa.

The last few years have seen new products coming out from banks and lending institutions that are changing the way we perceive savings and investments. We've seen consolidated loans and 0% interest savings accounts, 20-year fixed-rate bonds and pension-secured mortgages. All this makes it all that more important to know what you're doing when financing so as to avoid costly mistakes. But lets stick to savings this week.

Credit where credit is due
Kudos for the bank that wants to help you and their marketing gurus. They have managed to market a 0% interest savings account with penalties for early withdrawal. When I heard about this, I thought that someone had lost his or her marbles. I've always admired this bank's approach to marketing their products but thought they had lost the plot on the latest savings product. Time and consumers soon proved me wrong. People have flocked to this product and I'm not sure if it is only because of the parallel 'Live like a Millionaire' competition that has received huge publicity. Again the marketing department managed to sell the sizzle and not the burger. The prize is two weeks of a wonderful millionaire-type lifestyle, not a millions bucks. Sizzle.

In essence, this savings account pays no interest with that mentioned penalty on early withdrawal in exchange for a chance at winning a million Rand each month.

Gambling and Savings
This very savvy marketing department understands that the average consumer prefers a remote chance at winning a million Rand in exchange for the interest they would normally receive from this type of account. Is the banking customer so disillusioned with the interest received that they would gladly forego this taxable income in the hope of the Big One? Or is it just our innate need to take that gamble? Never mind Monte, let's go down to the bank. I would love to have been there when this idea was presented to the board. "Yes, we're asking them for their money. No, we're not paying them any interest. Yes, it is like a lot like gambling, but here they get their money back. Great, isn't it?"

Mrs Balls Chutney in Space
Watch this marketing department. I can't wait to see what they have up their sleeve in connection with winning a trip to space. They have great ideas and obviously know how to capture our attention and more importantly our imagination and in this instance have proved that they understand the man in the street a lot better than I do.

Feeling Lucky?
A bit like the lotto, I think, except your chances are a lot better, a ticket costs R100, and you can get it back (with the required 32 days written notice) if you so desire. Do I recommend it? As a savings vehicle, anyone with a bond will receive much better interest savings by putting it in his or her bond account. But if you want the chance at that million bucks you 'gotta tatta' your money, 'tatta' your chance. As a friend said: "You can't win if you don't have a ticket". Have you got your ticket yet, or more importantly, would you open up a savings account anywhere else?

Article by: Dave Welmans - (www.thepropertygame.co.za)