South Africans are favouring investments into residential property and other non-traditional financial assets over traditional savings products, according to the latest research by Old Mutual into the country's savings levels.
The growth in flows into residential property and other non-traditional financial assets have exceeded those in the traditional savings industry with the result that 'non-traditional' savings increased from 13% to 18% of total adjusted savings between 1996 and 2006.

Grey money accounts for a substantial portion of non-traditional savings in the country. This is the money that is mostly held in poor black communities and is kept at home or by small savings clubs and circulates outside of the formal financial system. In 2006, grey money holdings escalated to R33 billion from R11 billion in 1996.
Grey money is not a phenomenon unique to South Africa. It is evident in the United States, and it is where it is regarded by large financial players as a business growth opportunity.
Presenting the findings of this study in Johannesburg today, Derrick Msibi, the executive director at Old Mutual Investment Group South Africa (OMIGSA), says that South Africa's households have enjoyed accelerating real income growth in the past decade, but spending has risen even faster and as a result, the net personal savings ratio in the country has fallen to less than zero.
Msibi says that household expenditure has increased dramatically since 1996, but an increasing proportion is being spent o­n transport, housing, health and education. "Expenditure has also been diverted to cell phones, gaming and the lottery, leading to increased revenues in these sectors. The performance of the investment markets over the last decade has dramatically improved the net wealth of our households."
Another key finding of the study is that South Africa has a "savings hole" owing to the country's unique demography.
This "savings hole" - due to our unique demography - is the real challenge in South Africa because there is no similar structural challenge anywhere else in the world.