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
Citibank Online Saver has a 3.4% variable intro rate for 4 months, for up to $500K (not yet dropped)
wow, Rabo locks it in and will never change it from 3.30 in 5years? The only risk is if the interest rate goes up for savings accounts which i doubt it will? Also the other risk is being bored out of your mind for 5 years.
I think at 5yr mark, you are better investing in ETFs/index funds. 40k kept at 3.3% over 5 years just makes you another 7k, from what I've read, investors want to double their capital in 5-7 years.
Does anyone know, for any of those paying over 3% in that little list above…do you know when they will drop to below 3% to match the likes of ING now at 2.75%?
Obviously, it is hard to know until they announce, but if the past is any indication, they will reduce the rate in a matter of weeks.
I am referring to non-term deposit accounts. For term deposits, since this time, it is bucking the trend with big banks increasing the rate, this would not apply.
Not dead sure but RAMS has a habit of dropping rates at mid month presumably to trap their customers until the end of the month??
But further I think it was RAMS that didn't drop rates at all for ages when rba and everyone else did. Because of this I am moving again to Rams.
But you may have to deposit $200 then wait until next month to get the higher interest rate.
I believe that if you deposit more than $200 and make no withdrawal you will earn the bonus interest for that month, from RAMS
"To earn the bonus 1.65% p.a. variable interest on top of the variable base rate, just:
Deposit at least $200 during the month
Make no withdrawals during that month
Keep your balance between $0 - $500,000 for the month"
You could put part of the money into Ratesetter, small bits at a time to distribute the funds over as many borrowers as possible.
1 month - 3.1%
1 year - 4.9%
3 year - 9.5%
You may receive your funds back in your RateSetter holding account earlier than anticipated, or you may not receive your funds until after the indicative term.
High risk though, unless you can distribute between multiple loans.
Indeed. It is high risk, but also much better than keeping a sub 3% TD. Currently RateSetter claims their estimated default rate is under 3%, with a contingency fund that covers all foreseen losses.
foreseen losses
Seems like the wild west of lending money, but it looks a lot more attractive with further rate dropping anticipated.
Riding the stockmarket roller coaster seems better option to me if a person had the time to do it well.
It's more like the stockmarket gondola ride compared to this garbage.
3% rate of default?
Casino 🙈
Investing in one =)
How long do you want to invest for? I would normally recommend index funds as they historically do well, but if you only want short term then there is the risk that you will have to cash out during a low.
when inflation is targeting at 3% per year, any of these less than 3% interest before tax means losing. So sad, so hard to earn money risk free~
The Motley Fool….
Companies like:
Priceline- up an astounding 5,512% since David told Stock Advisor members to buy
Netflix - up 5,207%
Amazon.com - up 4,704%
Activision Blizzard - up 2,469%
Members who put $1,000 in each of those companies the day David recommended them have over $185,000 today. And members who put $5,000 in are sitting on over $914,000 today.
Convenient that they only mentioned their very best performers…
But how many of his picks were the opposite? Easy to select the great ones while failing to mention the ones that went nowhere or lost big.
"Quite frankly, this investing service is not for everyone.
I've read hundreds of membership refund requests over the years (all honored with no questions asked, of course) and one theme constantly repeats itself. Please allow me to share with you one such request from July 2012.
Out of respect, I won't publish his email or even his first name, but for purposes of conversation, let's call him "Frank."
Frank subscribed to Stock Advisor just a week before his cancellation and chose to buy Netflix from the best buy list.
It was priced around $12 at the time and it dropped 21% right after Frank bought it.
Including some other colorful language, Frank canceled his membership by calling The Motley Fool as useless as every other stock picking con on the internet.
He went on to ask for a full refund and said he would share his experience with all his investing friends.
Frank received 100% of his money back from The Motley Fool.
And as you probably know, Netflix currently sits at the split-adjusted price of nearly $85 a share, just a little over 4 years after his cancellation request. Even though Frank canceled his $49/year Stock Advisor membership, I hope he never sold his Netflix shares. If not, he's sitting on more than a 777% return today!
While I've read hundreds of emails just like this one, I've also seen hundreds of thousands of investors join and happily renew their memberships year after year.
While vastly outnumbered, are people like Frank who cancel Stock Advisor wrong?
Nope, they're 100% right… They know what's right for them.
There have in fact been a handful of stocks recommended by Stock Advisor that have dropped right after they were picked. For traders like Frank, Motley Fool Stock Advisor is not a great fit.
Given that some stocks drop almost immediately, why would several football stadiums of people continually renew their Stock Advisor memberships with a smile of their face? It's simple really.
Fools invest for the long-term. And when they do so, they see some pretty outstanding results.
Since its inception, Stock Advisor picks have returned 17.7% per year. That's nearly 3 times better than the market average, and is why Wall Street Journal columnist Mark Hulbert recently spotlighted Motley Fool newsletters' outperformance compared to the 200 others he tracks:
Consider this: The three top spots in the Hulbert Financial Digest's five-year rankings of more than 200 investment-advisory services all buy and hold quality companies. Remarkably, all three are subscription newsletters published by the same advisory firm, the Motley Fool in Alexandria, Va., which was founded by brothers Tom and David Gardner in 1993.
To summarize, there are two types of people who take out a $49/year membership to Motley Fool Stock Advisor:
The first group contains a handful of traders who want to get rich very quick (like doubling their money in a month), and will cancel if they don't.
The second group is packed with investors who want to get rich for the long-term. I'm talking about permanent wealth built over 5-year and greater timeframes. This is the Motley Fool way of investing. It's the reason why Stock Advisor is the largest advisory of its kind."
You have been duped by Motley Fool sophism if you think the second group are actually going to 'get rich' in the long term. You are better off reading something that isn't trying to be a shill for a company. It's apparent in your posts that you lack sound financial knowledge and you should probably learn the basics of behavioural finance. Something that everyone knows isn't worth knowing.
Those stock picks you mentioned early are known as growth stocks, and are not really a good stock purchase now. It is a mathematical fact that High past returns reduce future returns. This is also known as the Gordon Equation and is the fundamental rate of return that is also confirmed when analysed against the Fermat & Pascal laws of probability. Growth stocks are generally 'bad companies' to invest in as opposed to value stocks. You'd get better returns and mitigate yourself against a lot of risk if you read a decent financial book and followed a simple Bond / Index of stocks rebalancing method and learnt the principles of discounting to the present when it comes to evaluating stocks. To put it simply:
There is no evidence of stock picking skill
No one can time the market
and the most reliable way it to index which is effectively owning the whole market.
But I won't stop you dumping your money into stocks using the Motley Fool method and being a mouthpiece for their predatory advertising. You'd probably have just as much success with chucking darts at an ASX stock list and making your purchases based on where your dart lands. You'd have a crappier hindsight story compared to the Motley Fool though
Professionals cannot consistently beat the market by picking stocks, and they have much more timely access to information than these stock picker websites would.
It would seem obvious that an individual will have higher costs and lower results than professionals.
All the evidence for index funds are summarised in this great documentary
" Passive Investing: The Evidence the Fund Management Industry Would Prefer You Not to See "
https://www.youtube.com/watch?v=zqa-jSuXmYw
Look at the Vanguard Index funds. The Australian Fixed Interest Index fund is a good option being a defensive asset low cost at .25% in fees and around 6.5% pa average return historically
If you do Index funds, do you get franking credits or will you be taxed on that 6.5% return?
The fund will issue a statement with franking credits for you to claim, corresponding to the investments they have made for you. So in between really
Thanks. As long as the franking credits cancels out the taxes. People mention high interest savings accounts are paying 3% but in reality, after tax it is 2%. So not even keeping up with inflation.
You have to pay tax on you savings account, but you only pay tax on dividends on your shares.
You only pay tax on the capital gain of your shares when you sell them, so you can choose to sell them when you are retired and have no income.
Intuitively, the ASX will also be affected by inflation, whereas the cash in your wallet or your savings account will not.
Also, Intuitively if the average company on the ASX could earn more in a savings account than by doing business, it means that the whole economy has crashed.
So really you will (on average) always be better off investing your money (either in stocks or somewhere else) rather than keeping it in a savings account.
Of course there are many exceptions.
Perhaps have a look at La Trobe financial. They have been around for 60 years and have a proven track record for that time. I've got 9k in there. Give them a call and see what you think, they've been really easy to deal with, even with my noob type questions.
A bit about me. I have 2 properties and was heavily putting money into the offset, no PPR. Once I reached a level of "emergency funds" I started dipping my toes heavily into P2P lending with Ratesetter because (I believe) the risk adjusted returns cannot be matched. I have shares, but the volatility annoys me. RS annoyed me as well because maturity was 3 or 5 years, although you do get capital back every month, basically the liquidity was not there. The outright returns are probably not as high with La Trobe but the it is more liquid. Basically what I have done is invest in other peoples loans at 7.XX% or 8.XX%, interest is calculated daily and paid monthly and maturity varies depending on the circumstances, have a look at their "shopping list" on their website. Its actually pretty cool you can invest in a small development down the road; so to speak. The loan LVR is low and the in the case of default the loan is backed by the underlying asset. I have been a member for only a couple of weeks so I haven't yet seen a round of interest payments, which happen on the 1st of every month, nor have I seen any investment "mature" so please do your own research. Once I gain a bit more confidence I will be pouring much more in there as maturity can be as low as one month. Happy to do a follow up review on here if there is interest.
Unsecured lending of course.
Be a damn pity if people are commonly driven to more risky investments. Then a global dip then rise occurs widely, puts funds back into the right hands again, if you know what I mean.
I'm probably being too cautious. Bluechip with divs maybe my choice for next few years.
Ratesetter is unsecured. My investments with la trobe are secured by the underlying asset, like any mortgage, hence why I am putting more of my portfolio into La Trobe. I'm not advocating everyone jump into La Trobe with 100% of their investible assets; what I'm advocating is do your own due diligence: call them, have a look at their track record and decide for yourself. I like the sector because it is capital stable and returns are paid monthly.
Shares do have some great benefits including capital gains tax discount (for holding more than 12 months), franking credits and instant liquidity, therefore I have some money in this asset class. My share portfolio is actually doing well (thanks mostly to DTL). Shares do have drawbacks as dividends are normally paid twice and the volatility annoys me, this is my personality and therefore I am allocating more funds to La trobe.
Good option indeed but you still pay income tax on your returns. Property is a notch better in a way that you save taxes on repayment of loan.
I know this sounds weird. But seriously, invest maybe 1,2k in Chocolate.
Cocoa is running out of this world, meaning in 2-3 years it will jump like $5, maybe more.
Yeah, cocoa doesn't grow on trees. Oh, wait…
They just make the chocolates smaller.
I wouldn't pay $5 for 2-3 year old chocolate.
Why these lames negging the man?
Obvs means Cocoa-ine.
OP you need to go and get a brick.
Summer is so hot though, will melt all over the neighbourhood
At 35k you are just short of the 40k buy in on my 'unit investment trust' that guarantees to give you a diversified portfolio and maximised diminishing returns over the life of your investment. This unique financial product will give YOU the security you need to know that your future is safe and secure, and more importantly, you're FAMILYs future! PM me for my bank account details so you can start investing immediately!!!!
You have PMs disabled.
sounds good, what can possibility go wrong. this could save me a trip to Nigeria :P
what shares can you buy with 5k? what is the possible ROI from it?
RE: Recommendations of ETF's - specifically the Vanguard products.
https://www.vanguardinvestments.com.au/retail/jsp/investment…
I'm not in an entirely different position to the OP - very early thoughts but at this point in the economic cycle I'd tend to think something a tad defensive in nature would be better than a growth option (assuming medium tern hold).
As such my initial thoughts are towards Vanguard Australian Fixed Interest Index Fund, Vanguard Australian Government Bond Index Fund.
Any thoughts of any of the other Vanguard products to round out a minority holding e.g 60-80% defensive holdings, 20-40% a tad more growth oriented?
Can be Vanguard or other ETFs. Thanks in advance.
Best advice here is to hold onto your money for now, and read up on the suggestions offered. Live rent free at home as long as possible, and maybe buy land when you find somewhere affordable and safe.
Personally I blow all my savings on holidays and ozbargain junk.
buy stock in CBA
The Commonwealth Bank share price has plunged nearly 10% in last 12 mths. I reckon either MPL, RHC or SYD will do better than CBA. I mean SYD performed very well even when Aussie dollar was nearly 1 USD back in a few years back. As long as, people keep coming in Sydney will give you return better than your bank saving accounts.
Rule of thumb do the opposite to what everyone else is doing, with investing think long term the fact that is has dropped in SP but increased in net profits means it is the prime time to buy. But i agree SYD is good, i'd even say TLS is a good buy with the profit report of $5billion just announced.
True, the number 1 rule of trading shares is that you buy when people sell and you sell when people buy. However, It should be noted that investors usually buy stocks based on expectations, not on current performance. The share price of CBA has plummeted over a period time, not because they have failed to generate a decent profit(they actually posted a record high profit), but because they have failed to present a strategy how they are going to generate growth in future. Same for TLS. However, I agree. TLS and CBA are both good stocks and you probably want to hold them for a next few years. However, I would hesitate to recommend anyone to buy them right now. In fact, I wouldn't even recommend someone to buy SYD now. I haven't checked it, but I am sure PER for SYD is over 40, which implies that SYD is actually overpriced.
Red/ black
The Greater Bank has a 3.2% high-interest saving account called a life saver if you're under 25, no required amount you have to transfer or any other requirements, handy for us young people
I suggest you put perhaps 50% into this fund, presently earning 7% p.a.: http://alexanderfunds.com.au/alexander-credit-opportunities-…
25% into the Latrobe Financial Cash & Mortgages at call account at 3.25% variable, and,
25% into the Latrobe Financial Pooled Mortgages account at 1 year term deposit at 5.2% variable
if you have an offset account just park it there will be higher interest saving than any term deposit/savings account
$200M private small funds offering fixed 21% … Going strong for 7 years… But they have a min investment requirment
Rabodirect has dropped rates by 0.25% as of today.
So the High Interest Savings Account is now 3% (with bonus) and 2.05% (Base rate).
Who will be next, ME or RAMS? Still 3.15% p.a. and 3.35% p.a. on their sites.
Yesterday, I checked out what you said about rams not dropping rates for quite a while after RBA rate drop the last time. It was indeed true, so if the trend continues, then ME will be next :-)
I'm getting 5.2% back on La Trobe Financials PMO account, 12 month investment term.
Long term I think property is still the way to go, with the proper research. I'm in a similar position and that's what I'm looking at.
buy 30k bitcoin
Just reading through the forums about how and what to invest money in. Did you invest any of your savings if so when and at how much?
Mr John Citizen, I do not have investment advice for you, but I do feel that I need to inform you that I have seen multiple pictures of your credit cards circling the internet and even on TV advertisements. It would be wise of you to keep your credit card information secret as not doing this, could quickly turn your 30k savings into repayments for your stolen credit card debt.
Beware that some banks eg bank of Melbourne, Adelaide bank require you to open a bank account with them when opening a Term Deposit. And these account have fees unless you do minimum monthly deposits. And so I rule these banks out!!
Im in a similar position to OP. 60k savings with no liabilities. Was initially looking at FHOG and getting my first property but with all the talk about a potential recession I am now looking at savings accounts (Rabodirect) and potentially shares.
I have read a bit about Vanguard but could anyone explain the process of investing with them. Risk/returns etc. and what sort of period I should be looking at.
Thanks in advance.
I don't know about vanguard, but many here seem to think they are a good option.
I want to ask a simple question. Do you say "with all the talk about a potential recession" is this referring to Ozbargain forum, or in the news, papers etc?
Sorry but I never watch tv nowadays so would have no idea if ww3 had started.
Both OZB forum and also the news. Look up Professor Steve Keen who is an economist who basically bets his life that there will be a recession as soon as 2017.
I mentioned on Ozb about 6 months ago, Two people in the UK reserve bank stated they expected two more financial crashes in the next 10 years or so, and I gathered they meant it.
It's wild times trying to guess how to invest. But I'd rather make 0% in the next 5 years, than to gamble in today's seemingly unstable world.
@eotwawki: Yeah last week I was seriously considering taking out a 30-year mortgage but this week the table has turned a bit and I think I'm going to just keep saving money while I am living at home. The question is I should bother looking at shares or is it going to be too risky for a noob like my self, or if I'm going to wait until retirement till I see any good return.
@adzyau:
Funny. The way I look at it is if buying top shares with big dividends, if I buy fairly low like ASX=5000 with say 6% divs, and she drops for a couple years, I can live with it. If buying unsecured financial instruments and I loose half or all my investment, I am not happy with that. I am too cautious to get rich.
The same with housing, if I bought and the price dropped it makes little difference to my living in it. I bought with 7% considering a possible rise up to 18% rates as happened around 1987 from memory. What happened was I bought at $42000 in 1995, house price rose to $300,000 10y later and % dropped overall, so good things happen in finance. At one point me and neighbour were saying weekly we made another $10,000.
You gotta take a chance I guess. NOT ADVICE.
Unfortunately he predicted a recession for the last several years, however 'the market can remain irrational longer than you can remain solvent'.
@eotwawki: I disagree, your attitude is the way to get rich by investing.
People who like to take risks should start a business, not 'gamble' by picking risky shares/investments which have a poor record in the long run
Think about the tax you pay for 65k income before tax, you can easy to find out, any deposit or saving account of 3%, you trully after tax income may be 2% only, so, instead of invest in bank saving or term deposit, you better to purchase bank share when they are low, or take invesment loan for better tax benefit, even plan to invest in rural area.
Should i get someone to invest my money in shares for me seeing as i am a newb?
Then you will be a newbie forever and end up paying a fortune for getting advice from "experts". You should educate yourself first by reading some books or taking some online to make sure what you are getting into before jumping into the share market.
That is called a 'managed fund'.
I posted this further up, its worth watching and aimed at the general public.
https://www.youtube.com/watch?v=zqa-jSuXmYw
Essentially, its not worth paying someone to invest for you because in the long run they can not beat the average of the market - so instead you should just buy the whole market and get the average return.
You can do this buy buying an Index fund, the fund buys all the shares in the market, in the proportions that they make up of the market. You give them your money to invest and they charge you a small fee.
If you want to educate yourself, there are many free courses posted here on ozbargain from Udemy. Investopedia is also a good website for research.
Ok looks like most people are recommending investing with Vanguard basically. I am looking at their ETF products and which funds to invest in. Any recommendations for which ETFs to invest in - I am probably happy to invest 5-10k to begin with and see how it goes.
If you have to choose only one I would go with the normal Australian Shares Index, however if you want to be diversified, put some in the hedged international shares fund.
The ASX has done very poorly this year as you can see by the 2% performance, but in the long run it normally averages 6%.
Keep in mind if the Australian property market crashes, out share market will be hurt too, as the banks make up a significant part of it.
They also have ETFs that invest in things other than stocks, however you should research them first.
If you want to be well diversified and not worry about anything you can sign up and buy one of their retail 'balanced' funds but you pay a bit more in management fees.
how do you invest in mutual Fund ? I have NAB trade account but don't I think I can invest from there
Hi Mr John Citizen
By no means a financial adviser, but my two cents.
I know you have no mortgage, but do you have any other debt? Credit card, car or personal loan/HECS loan. Pay these off first as their interest rates are often much higher than investment returns from your 30k.
Given you said you may want to purchase your property in the next year or so. I do not recommend any ETFs or equity based investments. Reason is quite simple, an investment horizon of one year simply is too risky to guarantee your capital in a share market. The ups and downs of the market will be longer than your one year horizon, so if the markets were to drop tomorrow, you just locked yourself into a long-term investment.
12 month deposit may be unwise, especially if you plan on using the 30k as a down payment. If the "dream" house does surface, you don't want to redeem a term deposit early and lose interest. Choose shorter period term deposits to keep some liquidity.
Another possibility, do you have close family members who have a mortgage? Maybe you can lend your money to them? i.e. if they were paying 4% on the mortgage, you can lend them your money, get 3% interest and let them keep the 1%. Win-win all around. Although, make sure that person is very trustworthy/close and make sure you have everything written down and witnessed + signed.
Ok, a bit more detail/ new dilemma.
The CommBank term deposit rate has come up to 3%, but I'm looking into paying off my HELP (HECS university) debt.
It currently stands at a touch under $20,000. I could easily pay it off with my current savings, and maybe put off property for a while.
It's indexed to the CPI, which since 2010, has averaged 2.29% (admittedly, it's been lower in the last two years at 2.1% in 2015 and 1.5% in 2016, the lowest of the past five years… at least).
So, if I invested in a term deposit at 3%, and lost 1% or so of that on tax, would I be better off paying my HECS debt?
Trying to do some calculations around if I paid it off, how long it'd take to get back to this amount of savings. But I guess taking away compulsory HECS payments would increase my taxable income (?) so that's a stumbling block.
Bah, so confused.
Hi mate,
Ever thought about investing in Start-Ups?
I know of a couple, that are requiring funding…PM me if you're interested to invest for some equity in a start up company.
Different investments are suitable for different people based on their individual circumstances. Start-Ups are rather risky investments.
OP, if considering this, please consider carefully to see if Start-Ups are suitable for you and your circumstances. It requires quite a huge risk tolerance. Since you spoke about HECs debt and thinking of buying house, so not sure if the risk tolerance is suitable for you.
Generally-speaking, they are more suitable for people who, if the money is lost, is not a big deal, and if a Start-Up takes off, you multiply your money many folds. Unless you are the co-founder.
@Lukian: That's right, Crown gift cards. Yeah, it rings a bell now … Thanks.