With the South African Reserve Bank (SARB) repo rate elevated, fixed deposits in 2026 are offering some of the best returns in over a decade. But are they better than unit trusts? We compare both options.
Fixed deposits in South Africa 2026
Major South African banks offer fixed deposits with interest rates ranging from 8.5% to 10.5% per year, depending on the term and institution. Capitec is particularly competitive, with rates up to 10.25% for 12-month terms. The minimum deposit ranges from R1,000 to R10,000.
Fixed deposits are protected by the Deposit Insurance Scheme administered by the South African Reserve Bank, up to R100,000 per depositor per bank.
Unit trusts (mutual funds)
Unit trusts pool money from multiple investors to invest in a diversified portfolio of assets (equities, bonds, cash, or property). In South Africa, they are regulated by the FSCA (Financial Sector Conduct Authority). Expected long-term returns from a balanced fund: 10–14% per year, but with higher short-term volatility.
Popular platforms: Allan Gray, Coronation, Stanlib, Sygnia (for low-cost index funds).
Risk and liquidity comparison
Fixed deposit: very low risk (deposit insurance), but your money is locked in for the term. Early withdrawal usually incurs a penalty (loss of some interest). Suitable for money you won't need for 3–60 months.
Unit trust: higher potential return over time, but value fluctuates with markets. Most unit trusts allow redemption within 1–3 business days. Suitable for long-term savings goals (5+ years).
Tax implications
Interest from fixed deposits is taxable income in South Africa. You have an annual interest exemption of R23,800 (under 65) or R34,500 (65 and older). Above this, interest is taxed at your marginal income tax rate. Capital gains from unit trusts are subject to CGT, with an annual exclusion of R40,000.
Recommendation for 2026
With interest rates high, a fixed deposit makes excellent sense for your emergency fund and short-term savings. For money you won't need for 5+ years, a diversified unit trust (or index fund) is likely to outperform over time. Consider splitting: fixed deposit for the short-term portion, index fund for the long-term growth portion.
