What Savings Account Has The Highest Interest Rate ATM? (Seeking The Highest Risk Free Returns)

Hector on 06/09/2022 - 21:00
Last edited 07/09/2022 - 13:38 by 1 other user

I’ve got a healthy offset saving me 1.89%.

This is an after tax return as ozbargainers know; the pre-tax equivalent return is 3.78% (since marginal income for me and my wife would be in the top tax bracket)

The offset savings pay down principal, and are illiquid; our home loan provider doesn’t allow us access to those funds

So we are looking for the highest risk free (truly risk free) investment to get more liquid cash flow. Nothing exotic. Not expecting unrealistic returns. Cannot handle any loss of capital (need these funds for a home reno).

Best rate I can find is a Virgin Money saver at 3.6% if I promise not to take money out for 35 days, execute 5 transactions, and put $2,000/mo in (250k max).

Are there others? ETFs? Term deposits? (The latter two unlikely to be truly risk free)

Thanks

Financial

Comments

  • Quantumcat on 06/09/2022 - 21:03
    +2

    Install solar on your house if you haven't already

    • kipps on 06/09/2022 - 21:06
      +2

      This. Solar yielded me over 20% per annum in Qld, paying for itself in about 3 years.

  • Hector on 06/09/2022 - 21:05

    I need to save up for that ! (+ battery)

  • AustriaBargain on 06/09/2022 - 21:08

    Warren Buffet is still buying more Apple shares despite already being Apple's single biggest shareholder, so he seems to think they fit your bill.

  • Hector on 06/09/2022 - 21:09

    Can’t handle any volatility for this particular investment.

    (The time horizon to use the funds is ~1 year, so can’t handle any loss… no time to earn it back)

  • Almost Banned on 06/09/2022 - 21:20
    +1

    Almost nothing in life is risk-free, and certainly nothing with decent returns.

    • mskeggs on 06/09/2022 - 22:03
      +1

      The example given of an Australian ADI with a balance under $250k is backed by the government, so almost risk free.
      The risk of a bail in would be extremely small, and if it occurred would likely mean that OP has much bigger problems than paying for a renovation!
      But in the next line they mention ETFs and Term deposits, and suggest term deposits might be too risky!

      So who knows what OP's risk appetite is?

      • avoidfullprice on 07/09/2022 - 08:09
        -1

        suggest term deposits might be too risky!

        I chuckled at that too!

        So who knows what OP's risk appetite is?

        Based on post, zero. Risk free. Wouldn’t even keep a mortgage or a credit card.

        Almost like asking for high salary stable job requiring no qualification and no conditional KPIs to meet. Public servant job will have too much risk and not enough pay according to description.

        Best bet is having a nigerian prince handing over the cheque at door step.

        • Hector on 07/09/2022 - 08:26

          I need the money for a home reno. If I have $1.3m say, getting to $1.35m is useful. Going below $1.3m isn’t useful. Hence risk free.

          I need the cash liquidity in the next 12 months (instead of paid down principal, locked into the offset).

          Term deposit can be risk free (depending who offers it), but has a long lockdown, and sometimes with early redemption you earn no interest.

  • Broke-Ken on 06/09/2022 - 21:58
    +2

    You need 3 Honda civics running spoon engines, with T66 Turbos and NOS….. ;)

  • AustriaBargain on 06/09/2022 - 22:11

    Use your money to buy the publishing rights from unpublishable amateur scifi novel writers for $250 each, and publish them as ebooks on Amazon. One of them is bound to be turned into an unwatchable show on Netflix.

  • Jimothy Wongingtons on 06/09/2022 - 22:24
    -1

    Where’s uncle rekttrading these days

  • Stingo on 07/09/2022 - 07:19
    +2

    If you can't withdraw from your offset account it's not really an offset account. Could you get a proper offset account at a fair price for your credit needs? Really offset accounts have the effectively highest risk free return and they are tax free to boot. To beat it any other investment would need to exceed your mortgage rate after tax. An offset account is lower risk than a bank deposit which the Australian Government only guarantees to $250000 - and there is no real guarantee the Australian Government won't go bust some day while someone will always pick up your mortgage.

  • redfox1200 on 07/09/2022 - 07:38
    +1

    are you offsetting a PPOR or investment property? if its a PPOR your return is still 3.78%, it would be silly to take that out and put it in a savings account where you need to pay tax on interest

    • Stingo on 07/09/2022 - 13:22

      Regardless of whether it is a PPOR or not the return is still the same by my reckoning. The fact that the ATO is effectively subsidising interest payments on an investment property only makes a difference in your considerations as to whether you want to minimise your taxable income by paying the minimum amount required on the loan but of course by doing that you'll be increasing the total amount of repayments.

      • redfox1200 on 07/09/2022 - 13:28

        it's not the same, as the interest you are offsetting is tax deductible on an investment property, so if you are in the top tax bracket your only really offsetting 53%. The mortgage payment is the same regardless.

        on a PPOR your intestest is not tax deductible, so you will save 100% of what is offset.

        • Stingo on 07/09/2022 - 16:30

          You're still effectively earning tax-free interest from your offset account. The difference is with an investment property you effectively get part of the interest portion of your mortgage payment back from the tax man. The would allow you to put more into your offset if you want but the tax man will be less generous in absolute terms.

  • Vulgar on 07/09/2022 - 07:53
    -2

    I would recommend Vanguards' ASX 300 ETF (ASX: VAS). It provides a decent return over the long-term (roughly 7% after factoring in inflation). Stick with the bank accounts if you truly need the liquidity in the short-term.

  • Hector on 07/09/2022 - 08:23

    Thanks all

    I guess I should have asked a different question

    What savings account has the highest interest rate ATM?

    ING 3.1, UBank 3.3. Anything else?

    • Stingo on 07/09/2022 - 13:26
      +1

      Check the Savings Account Leaderboard. Ubank's rate only applies from the start of next month with the others yet to announce.

      • Hector on 07/09/2022 - 16:43
        +1

        This is what I was looking for. Thanks !!

  • Rako on 07/09/2022 - 13:56

    BOQ Smart Saver account 3.10%
    BOQ Future Saver Account for 14 to 35 year olds 3.5%

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