In terms of investment opportunities, it is no wonder that Term Deposits are so popular, they are by far the easiest product to understand. You put your money in the bank and you get paid an income.
Yes, there are options, such as do I want to receive interest daily, monthly, yearly, but at the end of the day, on a “sleep-ability” scale, Term Deposits come out on top every time.
The current ‘investment’ climate has seen a flood of money into Term Deposits as investors head for security in uncertain times and who could blame them, the RBA cash rate is still relatively low, the disparity between the rates offered on Deposit and the BBSW rates currently provides an opportunity to investors.
The relative increase in the global cost of credit coupled with stricter funding requirements for the banks has meant that they need to hold larger sums on deposit.
We expect that the current interest rates on offer will revert to their long term margin. This presents an opportunity for clients to invest to lock in higher rates for the longer term.
Term Deposit Broking
The problem when it comes to shopping around for a good rate is that many of the banks either entice investors with a teaser rate that then drops after 6 months or are no longer competitive when you come to roll into another term deposit.
Courtesy of the cumbersome Anti-Money laundering/ID requirements and numerous application forms, banks are aware that they don’t need to be once your current term deposit matures. The likelihood is that you will stick with them.
Even when investors do switch, many find themselves sitting in an at-call account paying little, if any interest, while waiting for the paperwork to be processed at the new bank.
As a result, it is little wonder why the majority of Deposit holders just roll into another Term Deposit offered by their bank.
Australian Money Market – Term Deposit Platform
One of the more recent developments has been the introduction of term deposit platforms allowing investors to broker the best rates and perform overnight switches from one bank to another without having to complete another set of paperwork or ID.
Over the last year, we have used Australian Money Market for our clients, and have been very impressed by their high level of service.
Being able to shop around from over 20 bank, building societies and credit unions and switch overnight with a phone call, not only provides investors the opportunity to obtain a higher interest rate, but also avoids cash sitting at a lower at call rate whilst waiting on a new provider to set up paperwork.
We expect to see the popularity of these products continue to grow as investors switch onto getting a better deal, after all, a difference of 1-2%pa doesn’t sound like much but when you’re expected return is around 6-7%pa, that’s a huge difference.
Rebate Offer: No Entry Fee
Minimum Investment: $20,000
Wealth Focus may receive up to 0.1%pa as a trailing commission for this product. This is paid by the product provider and is NOT an additional fee to the investor.
Contact Wealth Focus on 1300 559 869 for more information.