Your biggest fear as a recipient of a personal injury or medical negligence claim is likely the possibility of losing your payout due to bad decisions. On decisions you’ll need to make is how you invest your compensation. A careful balance must be struck between achieving the best possible return and The stories of people losing their settlements to scams or poor advice are common—and understandably rightening.

As a result, many recipients choose to keep their money with the bank because, as the saying goes, “at least my money is safe there.” But is that really explore a few of the most common investment options available to settlement recipients. Each one is assessed for its advantages, disadvantages, an long-term income and capital security.

Option 1: Keeping Your Money with the Bank Banks offer savings products such as cheque accounts, savings accounts, and fixed deposits. These are low-risk options that prioritize the safety of y your needs, you can keep funds fully liquid (for instant access) or lock them into a fixed deposit to earn higher interest.

Advantages: Perceived safety: South Africa’s large banks are generally seen as stable. Government protection: The SARB’s Corporation for Deposit Insurance (CODI) now insures qualifying deposits up to R100,000 per depositor pe Predictable income: Fixed deposits pay a locked-in rate, protecting income if interest rates fall. Flexibility: Immediate-access (e.g., savings) accounts benefit when rates rise.

Disadvantages: Limited income: Interest rates on savings accounts are often too low to cover monthly needs. Liquidity constraints: Capital is locked in fixed deposits until maturity, with penalties for early withdrawal. Inflation risk: Returns may not keep pace with rising living costs. Bank accounts provide peace of mind but are often inefficient income generators. For larger settlements, CODI’s R100,000 cap means most of the pay

Option 2: Money Market Fund Unit Trusts Money-market funds are collective investments that buy short-term, interest-bearing instruments from banks and the government. They are designed t provide regular income.

Benefit from rate hikes: Returns rise with interest rates.

No guarantees: These funds target stability but are not insured. Deny

Rate sensitivity: Income falls when interest rates decline. Limited growth: Not designed for long-term capital appreciation.

Money-market funds strike a balance between safety and flexibility. Many South African funds have delivered positive rolling 12-month returns  ANCHOR must remember there is no guarantee.

Option 3: RSA Retail Savings Bonds Offered directly by the South African government, these bonds come in 2-, 3-, and 5-year fixed-rate versions, and an inflation-linked option. Minimum in zero, and interest can be paid monthly in certain series.

Advantages: Government guarantee: Backed by the SA government. Fixed income: Rate locked for the term. Low cost: No fees or commissions.

Disadvantages: No upside from rising rates: You’re stuck at the agreed rate. Reduced flexibility: Withdrawals before maturity are limited and penalised. Provides a level of capital security, but your investment has to remain locked in for a specified period.

Option 4: Income Fund Unit Trusts These invest in bonds, credit instruments, and money-market assets. They take slightly more risk than money-market funds to achieve higher interest

Advantages: Higher potential income. Diversification across issuers and instruments. Monthly income options.

Disadvantages: Moderate volatility: Values can dip during interest-rate changes. Market sensitivity: Bond values fall if rates rise Income funds provide regular income over a medium- to long-term horizon. This is achieved by investing in assets that are subject to market fluctuatio

Option 5: Annuities Insurance companies offer annuities funded by a lump sum. Life annuity: Pays guaranteed income for life. Living annuity: Lets you control investments and withdrawals, but your capital can run out if badly invested or due to extreme market events. If the withdrawal rate is too high, this will also negatively impact your capital.

Living annuities can be passed on to beneficiaries in the event of death.

Disadvantages: Irreversible commitment (life annuities). Inheritance potential conditional (life annuities)

Market risk: Returns are not guaranteed. Gains or losses depend on the performance of the underlying investments (living annuities).

Annuities provide stability but must be chosen carefully with professional advice.

Fixed bonds: none; Inflation-linked: strong

Moderate (investment-dependent)

Option 6: Balanced Investment Portfolios Balanced portfolios typically combine shares (equities), bonds, property, and cash to achieve both growth and stability. The goal is to spread risk while still delivering growth that keeps ahead of inflation. Unlike single-asset investments, they are designed to provide a sm income-generating and growth assets.

Advantages: Diversification: Risk is spread across different asset classes. Your payout is not tied to one type of investment, reducing the impact of any single market shock. Inflation protection: Equity exposure helps returns keep pace with or exceed inflation. Flexibility: Portfolios can be adjusted to your risk profile. You can choose a conservative, moderate, or more growth-focused mix depending on taking on risk. Growth potential: Offers higher long-term returns than cash or bonds alone.

Disadvantages: Market volatility: The value of your investment fluctuates with markets, which may feel unsettling. It can be stressful if you need to withdraw a downcycle, for example, during the global financial crisis, the COVID-19 pandemic, the Tech bubble, etc. Time commitment: Best suited for investors who can leave funds invested for at least 3–5 years.

Complexity: Requires professional advice and active management to set the right balance for your situation and match your personal risk toler

Who should consider this option? Those with a mix of medium- to long-term goals and who do not need to access their full payout immediately, and who can tolerate some ups and do example, a conservative balanced fund might hold 40% shares, 50% bonds, and 10% cash — aiming to provide steady income while still growing your investment over time.

Manage Consent Balanced portfolios are a strong choice if you want your investment toCookie grow and keep up with inflation, but they are not ideal for short-term needs. Th willingness to tolerate some ups and downs.

is essential to work with a qualified and registered financial advisor who has experience in this area. The right advisor will not only guide you in struct also help you understand the tax implications of each option—ensuring your payout is preserved and works for you over the long term. It is always a good idea to consult with a financial advisor to help you develop a personalised investment strategy that aligns with your specific needs

Quick comparison table of investment options available Option

Moderate (investment dependant)

Medium (can withdraw, but values

Moderate High (market dependant; best over 3 to 5