Hi,
I have about $30k (perhaps could make it $35k) of saving that I am looking to do something with. At the moment, I'm thinking about putting it into a CommBank (which is my bank) term deposit for 12 months when the rate goes up to 3% tomorrow. Does anyone have any better (relatively safe) ideas? I have no mortgage or rent; secure full time job at about $65k. Potentially looking to buy property in the next year or so.
Cheers
JC
Rabodirect has yet to announce the rate cut, so factor in that one is coming soon. Besides this 3.25% includes a bonus component, and will last 4 months. Standard rate is 2.3%.
Rabodirect has now announced the rate cut. The High Interest Savings Account is now 3% (with bonus) and 2.05% (Base rate).
ING Direct is steady 3%. Isn't ING better then? Of course if you deposit at least $1000 every month, which you can withdraw though.
Just so you know, ING has dropped its rate to 2.75% last week.
@bluesky: Haven't received any email yet. Thanks for info. Is it 2.75% even if you qualify (i.e. deposit $1000 every month)?
If you are allowed to withdraw, you can set up a regular transfer to send $1000 to your regular bank account, and another to send it back every month. It doesn't have to be a 'new' $1000
You will lose 2/30 days interest on $1000 though, which is 0.18% of $1000, $1.80 a year
@rememberme: Yup, but it will also mean that I lose interest on 'that' $1000 too. The solve purpose of savings accounts is to hold money there so that you can earn interest. Where else I would put the money which I withdraw from there until I have any alternate investment destination?
@virhlpool: They will both be maintained automatically with the regular transfers of the same $1000
That way you always get your bonus interest and don't have to worry about depositing every month.
Neither one has fees.
If you can deposit $1000, by all means just do that.
@rememberme: But, ING pays interest per day (not sure of UBank), so no point having an account if you can't have enough money in it.
Another possibility: ING 12-month term deposit is 3.05%.
Before Ubank get around to rate cut, you can also jump on their 3.01% rate for 3 or 6 months.
Interesting. I wouldn't be living in any property that I buy. At the moment, I'm a bit worried about the amount of rentals that are vacant, and bit worried about the market going south soon.
I'm unsure about investment loans etc. I purchased to live in for a year (that way I get a 50% reduction on stamp duty as a first home owner - I also have an owner occupied loan because im living in it for a year). The inner suburbs are still well and truely in high demand - specifically the inner west - generally with decent quality tenants. I don't think it can really go extremely pear-shaped at the low end of the market - but thats just my opinion. Even if the property didn't appreciate in 30 years you would still be well and truly ahead because at the end of the day you'd have a place that you own outright and I can almost guarantee that the amount that you put in wouldn't be anywhere near the final value of the property - and the tax benefits would make it even better.
Many overseas Chinese are getting rejected for apartments now. Apartment prices have been going down.
While other arguments might be valid, I don't see rentals going downward anytime soon unless the flow of immigrants is slowed down. A big % of total immigrants eventually settle down in Sydney and Melbourne and it keeps demand of housing increasing. I guess at least 200k immigrants arrive to the country each year, if not more (and it probably doesn't even include work visa holders, intl students, holiday visa holders, and some others). It means that each year, there are a very good number (assured) people in the market looking for either rental property or for purchase. If someone is saying that rents or even property prices will go down, please explain me the logic.
Problem is that migrants just buy a house. The government doesn't allow anyone who is deemed a financial burden on our society so they only grant a visa to people who already have a large sum of cash. Locals also see little sense in renting a house when the interest rate is kept very low by their banks. They just buy a house or an unit with mortgage, expecting at least some gain in future.
@motor89: I disagree. Firstly, your understanding of Aus skilled migration (through which most intl migrants come) is totally wrong. The factors govt look into while inviting anyone are - skill/education, age, English, basic health criteria. A lot of people come as students and then they turn into permanent settlers if they qualify. There's no single question asked about income or assets or saving. Hence, most of the migrants are skilled but not rich. Even if they are 'somewhat rich' in their currency, they have to start from scratch when it comes to 'getting there' in terms of AUD. So, migrants buy a property after they have enough savings for the initial payment and qualification for loan. Until then, they rent a property and it could be easily 3-5 years at least. Except those on investor visa, they don't arrive with a lot of free cash in hand. Also, it is a strong reason to say that property prices can't go down if the flow remains at this level. I could be wrong.
Be cautious about property, especially apartments. It's the price of land that appreciates for capital growth. As apartments don't have land, they don't appreciate as much. Don't invest until you've talked to a friend who has done and is doing the same.
Couldn't agree more, they definitely don't appreciate as much as houses, but they require much less commitment. I would also steer well clear of new builds, buying off the plan and inner city apartments.
By less committment you mean they are cheaper?
Perhaps if you are referring to maintenance, but you pay for someone else to maintain it in 'body corporate' fees.
Why would you stay clear of new builds, buying off the plan and inner city apartments AND prefer old buildings? Any reasons? Just trying to understand.
Not really. While apartment owner is not a land-owner directly, but indirectly the apartment-owners of a building are collectively land-owners of the land beneath the building. No? And that's why apartment price varies with location too given everything else the same (as the land price varies with location). After XX number of years, if all apartment-owners of a building decide to sell it off or demolish it, won't they get money from the sale of land?
Apartment are bad investment unless you want just rental with a chance of huge capital loss.
With apartment developers build new one all the time And your old one no one wants and after 20 years most people stay away from it.
A house with land is better as building depreciate but land value usually appreciate .
I wouldn't say that. I have an apartment inner west with parking that cost 340, getting 560 rent. People are always going to pay for convenience.
It's a bit sad this got negged into oblivion. I guess those non-property guys don't want to hear it again, while the property guys don't want the competition. I agree with this advice. In my experience "Potentially looking to buy property in the next year or so." continues interminably as a moving target
Throw 10 in a vanguard fund, 10 in term deposit, 5 in high-interest savings account and 5 in shares. Give or take your personal preferences and situation of course.
If buying vanguard, you get lower fees by buying the ETFs through a stockbroker, rather than giving your money to vanguard directly.
The disadvantage is that you pay the brokerage fee like you would with any share purchase, so you can't afford to add $100 every week.
Don't buy shares directly, you will be better off in the long run by investing in an index fund like the Vanguard Australian Shares Index Fund, unless you have insider knowledge of a particular company.
edit:
Also protip if you really want to do a term deposit, don't put all your money in one big deposit, break it up into 5x $1000 or whatever the minimum is, so you can break your term deposit on a portion without affecting the rest
The guy says he is looking to buy a property in the next year or so, so he should not be investing in shares etc, Bad Advice! Term deposits and cash accounts are you only real risk free option with your property purchase objective in a year or so.
After all the fees and expenses, what's ROI per year of Vanguard typically?
Depends on what you are investing in.
Vanguard is all about passive investing, they don't research the best companies on the ASX to buy, they just buy the index.
The reason to choose Vanguard specifically is because their management fees are very low, not because they have good performance. Their performance matches the index they are following.
By investing in an index, you have mathematically the lowest risk. There are many 'managed' funds where professional fund managers take your money with the promise to beat the market (the index), but it has been proven in the long run that they fail to do so because
- to beat the market they invest heavily in only a few companies, one bad year takes many good years to recover
- their fees are higher
Dumb question - but what's vanguard? I'm in a similar position to OP (but we have 90k between my partner and I).
Interest rate in term-deposit and high-interest savings account is almost the same.. isn't it? 3% approx.
Yeah thats true, in fact some high-interest accounts are better than term deposits. I guess the benefit of term-deposits is the fact you can't access them and lock that money in. The temptation to draw down from high-interest accounts is there
In my opinion, we are on the verge of a recession. With the eastern states only being supported by a building boom. When supply outstrips demand, then the eastern states with also go into a recession. If I am correct, then an investment in a cash-like product is best. If Australia loses it's AAA credit rating, then a recession is even more likely. I hope that I am wrong.
Sorry, what do you mean by 'cash-like product'? (I'm not very financial-savvy.)
Investments such as cash in saving accounts, term deposits, etc where the risk of losing your principal is low.
Is the government guarantee on bank deposits still running? The government website is unclear
Vanguard will still be better over the long term.
@rememberme: Sorry, somehow I missed your message, or would have replied sooner. But glad that spaghettiman has done so above. Website: http://www.fcs.gov.au
With experience you don't worry about recession, losing rating or all the head line stories that sell papers.
you hedge your investment with risk management so Doesn't matter if we have war, recession or crisis you can be sure it generate you adequate return over a long period of time
It doesn't mean your asset don't lose value during bad times
You just be able to mange that volatile and in the long run you comes out ahead.
The guys that lose are the over everage and don't have the cash flow to sustain a down turn.
You don't make Investment decision on some thing about to happen or some prediction that may or may not come to pass, you make it so it dance in the storm and weather crisis.
'In the long run we are all dead.' -John Maynard Keynes
hehe! But not 'dead poor' - Thanks to OzB.
I just did a Rabo 5 year fixed interest fixed term deposit. I hope that I live that long. I would hate to be penalised for early withdrawal !! :))
That in a difference perspective :-)
with investment and compounding (the eighth wonder of the world) , the longer you in it the more money you make.
It would make more sense to wait for the recession, put it in savings accounts or term deposits, wait for it to hit bottom, then go vanguard… thats what im gonna do… up there for thinking, down there for dancing… :)
good idea but the trouble is when? how do you know when something has bottom
After decades of investing I still can't and I can tell you most expert can't either ..
The only time you can tell when something is a bubble is after it bursts not before and the only time you can tell something has bottom is after the recovery -:)
And the other thing if you not experience behaviour finance will stop you buying during a crash because you will be running scare as things are keep dropping, you get into the mind game what if it dropped further, or after u bought it dropped more, fear uncertainty and doubt kicks in with added headlines u be unable to make decision.
@Hearthstone: You can't tell whether the market is about to bust. We can't predict the top of the market, but what we can do is recognise expensive assets and avoid buying them. The idea of Ozbargain is to seek products at the best price (and usually most ozbargainers tend to seek quality products). Why buy overly expensive items in the hope that they may become more expensive in the future. Wait until they are good value.
As the market continues to climb, don't worry - you avoided buying an over-expensive item, some suckers are paying even more than what you wouldn't pay, but that's OK as you can buy when you're certain that it is good value.
It's odd that we tend to search for bargains in consumer spending, but spend more than the real value when buying investments.
At the moment the P/E (price-to-earnings) ratios, which give you the real value of shares, make it clear that stocks are expensive. When the market crashes, you can use the same P/E ratios to determine when to buy. It's all about value.
@brownbag: It's for stock market. How abt real estate? Everything looks expensive now, at least in Sydney.
@Hearthstone:
I agree, it is much easier to overpay than it is to buy a bargain when prices are falling.
He already lost even if he is right this time
He predicted housing crashes and recession for nearly a decade now, he sold his house in Sydney way back and said he buy back cheaper
His house in Sydney would have double or triple in price
So he is now renting without a house and even if house price drop 30% he still lose.
And people think they can predict the future and get the timing right
Have always made money on property no matter which part of the cycle I buy in. Never listened to the naysayers and it's served me well. I like apartments myself for various reasons.
It's important to remember that it is not a short term investment though.
You can't predict a housing crash in isolation, in the USA some cities have $5k homes for sale, and others are more expensive than ever.
At the end of the day houses still have a fundamental value that they won't drop below
As mentioned in my comment above, irrespective of recession or rating or anything else, I don't see property rentals or prices going downward anytime soon unless the flow of immigrants is slowed down (which doesn't seem likely). A big % of total immigrants eventually settle down in Sydney and Melbourne and it keeps demand of housing increasing. I guess at least 200k immigrants arrive to the country each year, if not more (and it probably doesn't even include work visa holders, intl students, holiday visa holders, and some others). It means that each year, there are a very good number of (assured) people in the market looking for either rental property or for purchase. If someone is saying that rents or property prices will go down, please explain me the logic. Just check the number of immigrants and other visa holders arriving each year and that will answer many of your concerns.
It is impossible and dangerous for us to give advice without knowing your objectives and financial situation.
You couldn't be more wrong. Random people on the Internet are the best source of informative opinion with which you should base your life decisions.
Like a good paediatrician, I stand corrected.
Yeah, being a bit silly, but I often post questions on the net. Armed with information from randoms on the internet I might be able to ask the right question of an expert, or do further research on an idea that has been thrown out there. Sure, it's not always pertinent to me and its often incorrect for my circumstances but it is a good starting point.
Very true. Forums are a good place to get ideas on what to research. But you need a healthy BS meter.
if something's impossible, then it probably doesn't matter whether it's dangerous or not.. ;p
I do agree it is dangerous for you to action stuff you don't understand but nothing wrong with asking the questions, get the information and do more research or get pointers where you can start your investment journey.
I made a 40% return on the stock market before it went down slightly. You could play it safer than me and invest in blue chip or dividend stocks.
Problem is you're just as likely to lose %40
Watch the market and buy in correct time, ie Brexit, avoid quick gain.
More gain = more risk.
40% over how many days/months/years?
About 19 days.
Damn! That's about 80% a month and 960% a year hey. I know it doesn't work that way though as it's not perpetual return. lol.
ETFs
I just viewed one 'cash' ETF, performance - 2.45%, vs index 2.02%. In that case I am better off with Ubank.
Hmm what about CFDs?
Sure, if the poster is comfortable with either huge returns or owing more than the principal.
If you can save like that you better off start educating yourself about finance and build the knowledge to investment confidently.
You have master half the art of getting rich already, ability to save and spent less than you earned
Investment is actually not that hard, thought not easy either
Like anything else it required time and education and experience, start now when you are young by the time you hit 40 you becomes very experience and can make good return for your money.
Two good asset to start are stock markets and properties
Most people do well in those asset with experience.
Good luck, if you have specific questions PM or post and if I can help I reply though I don't go here that often most of my time are on investment sites and forums.
what are some good investment sites and forums for one to start with and progress further into. Would be good for me as I've just started a undergrad in commerce
thanks. in advance to any replies :)
http://www.aussiestockforums.com/ has some very good knowledge people on stock market investment
https://www.propertychat.com.au/community/ for properties, it used to be somersoft forum
if you interest in finance and investment generally, subscribe to Australia Financial Review (AFR) paper
good habit of reading them regularly after a while you build very good financial and investment knowledge.
And the classic principles books like
The richest man in Babylon
The Wealthy Barber
The Millionaire next door
you can't go wrong following these simple but powerful advice
What are the investment sites and forums that you spend most of your time on? Thanks.
fool.com
Rams 3.15% not intro rate
Rams has yet to reduce rate given the recent RBA rate reduction. So, best to factor one in, if putting into RAMS.
You're rite, but given the rise in term deposits, I have my fingers crossed.
And no one has yet mentioned non-concessionary super contribution
can you get that back if you want? I thought that money into super was stuck there until retirement. However I am fairly uneducated on the subject of super and happy to be corrected.
Yeah it's pretty much locked in.
Keep the money aside for a mobile home and a steady supply of viagra
Will not be a good idea, as OP is looking to buy property next year or so.
Just out of interest -
UBank USaver with Ultra 2.87%
ING Savings Maximiser 2.75%
Bankwest Smart eSaver 2.45% (TD is 3%)
Mebank (3.35% hoop jumper special) not dropped yet
RAMS Saver account (3.15%) not dropped yet
RABO 5 year Term Deposit 3.30% p.a.
Mebank (3.35% hoop jumper special) not dropped yet
Made me laugh …. how true :-)
Thanks for the summary too.
ArabBank has 3.1% TDs for 3 months as well. Not really sure about this bank but looks like it's backed by the gvt
I looked at them a few years ago when they had top %rates. I think the prob was they had extra fees making them unattractive.
Heritage 4 month term deposit 3% p.a.
Thanks - this bank has never even entered my consciousness, until your comment. Website says it is a customer-owned bank. Does one have to be a share/stake holder before being able to have a term deposit there?
I don't believe so. I know about it because it was local to the town I grew up in =)
The (home loan) referral promo is also fantastic - https://www.ozbargain.com.au/wiki/heritage_bank_referrals
I'm also amused that crown gift cards are processed by Heritage. Seems even Casinos know where to save money!
They've had the best rates occasionally (and generally the lowest fees), but other banks can beat them by a small margin.
you can get 3.25% here without locking it in for 12 months: https://www.rabodirect.com.au/high-interest-savings-account/
handy if the right property comes along for buying…