Magnus Heystek: Why SA’s middle class is quietly being crushed

South Africans are being told everything is fine. Magnus Heystek says it’s a dangerous illusion. In a wide-ranging conversation with Alec Hogg, the veteran investment strategist warns that falling GDP per capita, rising taxes, weak property returns and flawed retirement structures are steadily hollowing out the middle class. From Regulation 28 and retirement annuities to Cape Town’s housing bubble, offshore investing and why optimism may be masking long-term decline, Heystek lays out the uncomfortable maths many would rather ignore. This is not fearmongering, he argues, but survival planning for a country at a financial crossroads..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..Watch here:.Listen here:.By BizNews reporter.South Africans were raised on a familiar promise. Go to school. Get a job. Buy a house. Trust the system. Do the right things and, eventually, you will be safe.But according to investment strategist Magnus Heystek, that script no longer works. In fact, he argues it may never have worked at all.In a wide-ranging conversation with BizNews founder Alec Hogg, Heystek delivered a sober assessment of South Africa’s economic reality. Not the headline optimism of a stronger rand or buoyant markets, but the quieter data that shows a steady erosion of middle-class wealth and purchasing power.Heystek has long been branded a pessimist, even a fear-monger. He rejects that label. His view is simple. Look at the numbers, not the narratives.South Africa’s GDP per capita has been declining for more than a decade. That is not an abstract statistic. It means the average person is getting poorer year after year. Taxes continue to rise, while disposable income shrinks. After income tax, VAT, fuel levies, medical aid and retirement contributions, there is little left for meaningful wealth creation.The consequences are visible everywhere. Middle-class families downgrade medical cover. Cars are driven longer. New vehicle sales have collapsed from nearly a million units a year to around 400,000. Property values outside the Western Cape have stagnated or fallen. When assets are priced in dollars, the loss of purchasing power becomes brutal.This is why Heystek believes the middle class is quietly being hollowed out.Recent market strength, he says, has created a dangerous illusion. The government of national unity has calmed sentiment. The rand has firmed. Resource shares have surged. But much of this improvement has little to do with domestic reform.South Africa has benefited from a global commodity boom, a sharply weaker dollar and extraordinary returns in global equity markets. Gold shares are up more than 180 percent. Local resources stocks have surged. In dollar terms, the JSE has performed strongly.Yet foreign investors are not rushing back into South African equities. They are buying bonds, not shares. That distinction matters.The economy itself remains weak. Manufacturing is shrinking. Imports have collapsed, creating a misleading trade surplus. Growth is not broad-based, and it is not sustainable without structural reform.Heystek warns that South Africans may be mistaking a cyclical upswing for a turning point. That is how false dawns begin.Property is another sacred cow he is happy to challenge. Buying a house, especially outside the Western Cape, has long been sold as a cornerstone of financial security. Heystek argues it can be a trap.Large mortgage bonds lock families into decades of repayments in a country where income growth is uncertain and municipal services are deteriorating. At the same time, Cape Town property, once a genuine long-term winner, now shows signs of excess. Prices have run far ahead of fundamentals, driven by speculation and the belief that the Western Cape is immune to national decline.Johannesburg, by contrast, offers value. Large homes at a fraction of Cape Town prices. Infrastructure that, while strained, could recover with competent local leadership. But this is a conditional argument. Without governance reform, the risk remains high.Crime, infrastructure failure and political instability remain unresolved national threats. Heystek is blunt. South Africa is a phenomenal country burdened by a failing state.This reality shapes his views on retirement savings. Retirement annuities, he says, are oversold. The tax benefits are real but often misunderstood. What many investors are not told is that they surrender control of their capital, often for life.Regulation 28 restricted offshore exposure for decades, severely limiting returns while global markets surged. Although these limits have eased, the damage is done. Many retirees now discover that their pensions are fully taxable, turning perceived tax savings into long-term tax traps.Heystek believes discretionary investments are essential. Money you control. Money that can move across borders and asset classes. Money that gives you options.This flexibility is especially important for younger South Africans. Careers are no longer linear. Jobs change. Countries change. Income streams fragment. Many young professionals freelance, hustle and build multiple income sources. For them, traditional pension structures often make little sense.The encouraging sign, he says, is that financial literacy is improving. Platforms that allow direct investing have empowered a new generation. Some young investors now have portfolios he never imagined owning at their age. The difference is discipline, education and early exposure to markets.The past year has rewarded those who stayed invested. Markets defied forecasts of collapse. Doom proved costly. Wealth was created on a scale not seen in decades.But Heystek cautions against complacency. Political risk remains acute. The government of national unity is fragile. A shift towards more radical alliances would quickly change the investment climate.His message is not to flee South Africa, but to prepare honestly for its risks. Many of his clients live locally but invest globally. Not because they hate the country, but because they love their families.If he could advise his 30-year-old self, Heystek says he would focus earlier and harder on equities. Fewer distractions. Fewer speculative detours. Less listening to tips at braais. More patience, more compounding, more discipline.The lesson is uncomfortable but clear. Optimism without preparation is dangerous. In South Africa today, realism may be the most responsible form of patriotism.

Magnus Heystek: Why SA’s middle class is quietly being crushed

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