Long term savings account for the kids + best personal savings account ATM

AncientWisdom on 23/07/2014 - 02:05

Hi,

Since our first child was born we have been putting away $100 a month in a savings account. It's been over 3 years now and we have since had a second child. The money is currently sitting in a virgin money savings account (2.9% although I see they are offering 3.75% for new customers) but I am looking to move it into an account that will yield the highest interest when considering it is long term with steady deposits. Was also wondering if there are any tax benefits offered when done properly?

Aside from that I am looking into moving our personal savings from the current Westpac eSaver. My main beef with the eSaver is that you only get the top rate for 4 months and then it lowers to an average rate (2.9% currently). I was told I can call and ask for it to be put back every 4 months but I simply forget to do so. Therefore I am looking for an account with a solid constant rate. The Ubank USaver has attracted my attention with a current 3.8% if depositing $200 monthly. Is this the best current option? How has Ubank performed in the past? Is it always offring a high rate? Anything else I should now?

Many thanks for the help!

Financial

Comments

  • ethereal88 on 23/07/2014 - 07:05
    -6

    You won't make any money from an interest savings account unless its 5-6%+. Inflation is around 2.7% or so currently and add tax and poof, no that interest is barely keeping you treading water. I wouldn't bother savings money for your kids, spend it on yourself. They won't appreciate it at all beyond blowing it all on liquor and dope.

  • cuteseal on 23/07/2014 - 09:47

    uBank and their Ultra product has had the highest (non-promotional) rate for a while now, although the gap has closed significantly as interest rates have dropped across the board.

    They are not bad, just some quirks to learn to work with with the Ultra product, and also a bit of a hassle moving money into/out of the account.

  • [Deactivated] on 23/07/2014 - 11:00
    +2

    Got a mortgage?

    Save for your kids in your own offset account - will work out better for everyone. Nothing beats ~5% saving tax free!

    • AncientWisdom on 23/07/2014 - 12:01

      No mortgage unfortunately.

    • Riczter on 23/07/2014 - 12:16

      That's an interesting idea… So say I have a mortgage with an offset account, and i tell all my friends "hey i will beat your bank's saving account interest rate by say 1% if you let me hold your money in my account"… would i benefit from that???

      • Hunter80 on 23/07/2014 - 12:21

        Your friend will,
        1. Better interest rate,
        2. No tax to on interest income.

        • Riczter on 23/07/2014 - 12:26

          but wouldn't my mortgage repayments be substantially lower as well? And save a fair bit on interest?
          and sorry to hijack the thread, just curious..

        • p1 ama on 25/07/2014 - 09:27

          @Riczter:

          Yes, but here's where the risk/return issue comes in. They will benefit from that because they get a higher return, but that's ONLY if your credit rating is as good as a bank's, which it's not.

          I'm not saying that you're a bad friend or that you're untrustworthy, but if you go bankrupt, they can't get their money back and there's a much greater chance you'll go bankrupt than any bank in Australia.

          In fact, if I were them, I would just buy AAA rated bonds from blue chip companies, higher return and lower default risk than you.

  • A4444 on 23/07/2014 - 12:20

    please keep all your savings together in one online savings account instead of keeping separate accounts (know as mental accounting bias in behavioural finance where people have tendency to keep money in different pots).

    just move to a different online savings account after introductory rates (every 3-4 months) are over in that account. either open a new account with the same bank or a different bank whoever is offering the best rate.

    if you really need to apportion the kids portion of savings just add how much have you contributed on their behalf and pro-rata the interest earned on that out of total interest received in your account. doesn't have to be real exact calculation down to cents, even if done annually will give an idea of savings on behalf of kids.

    wish you all the best

    • AncientWisdom on 23/07/2014 - 12:36

      My main worry was calculating compound interest. Also our savings are constantly getting touched (they do not just sit there piling up) which makes things more difficult.

      I am still considering whether I should revise my stance on moving savings account every few months.

  • donbot on 25/07/2014 - 10:12

    Rams does 4.11% ongoing if you deposit $200 and make no withdrawal during the month. No promo period guff to worry about, just got to make sure you make that deposit each month.

    Sounds perfect for what you're after.

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