How to Split $400K between ME, ING and RAMS Saving Accounts?

poiuy1234 on 23/01/2017 - 10:42
Last edited 23/01/2017 - 10:58 by 1 other user

I have $400,000 that I would like to deposit into high interest savings accounts. I intend on purchasing a house in the near future (within the next 12 months) so will need to access the money then. My after tax income is $4,000 a month and I save 50% of that. Keeping in mind the interest these accounts will be earning and the salary savings I will need to deposit as well, how would I be best to split my $400,000 deposit?

ME Bank
3.05%
Contactless transaction once per week
Bonus paid up to 250k

ING Direct
3.00%
Deposit. 1000 - per month Bonus paid up to 100k

RAMS Saver
3.00%
Deposit 200 per month
No withdrawals

Financial

Comments

  • doweyy on 23/01/2017 - 10:51

    If you don't need to touch the money I can't see why you wouldn't just put it all in ME? The contactless payment can just be like a $1 snickers bar if there's no minimum spend T&C.

    You will get an additional $211 in theory with ME over the year if you are actually putting in 2k per month in savings.

    • poiuy1234 on 23/01/2017 - 11:16

      Re: If you don't need to touch the money I can't see why you wouldn't just put it all in ME?

      Because the interest rate of 3.05% only applies up to 250K :(

      • doweyy on 23/01/2017 - 11:19

        Ohhh, sorry I misread the bonus part, I'm not 100% sure about a good strategy then.

  • inherentchoice on 23/01/2017 - 10:57
    +1

    $240k in ME, $90k in ING Direct and the remaining ~$70k in RAMS. That way you are under the maximums, but maximise the amount in the account with highest interest, while relegating the remaining amount in the RAMS account which restricts withdrawals.

    • poiuy1234 on 23/01/2017 - 11:17

      But the interest rate of 3% is only paid up to 100K.

      • inherentchoice on 23/01/2017 - 11:19

        Yeah I edited my comment now.

        What about putting some money in a higher yielding investment (albeit more risky)? P2P lending, managed funds and shares come to mind. And they can generally be cashed in very easily when it's time to buy your property.

        1 year terms at ratesetter can fetch 4.7%… https://www.ratesetter.com.au/peer-to-peer-lending

  • k-rokfm on 23/01/2017 - 11:16
    -2

    Go in and talk to a teller at either/all of them or more banks as well. From what others have said previously, with the amount of money that you have they will give you a better rate than whats on offer?

  • empty456 on 23/01/2017 - 12:05
    +1

    Assuming you don't want the hassle of talking to banks as suggested above, here is what I would do myself:

    Calculate your expenses for the month and work out what you usually spend (pretty easy since you say you save 50% of $4,000, i.e., savings is $2k per month). Then:

    1) ING Direct - deposit $88k. Make this your salary credit account and set up automated transfers monthly, i.e., ~$2k to ME Bank for your expenses, and the rest of the pay to RAMS. This way you treat your ING Direct account as savings with a monthly goal each month (add $1k every month for a year u til you reach $100k plus whatever interest which is less than $3k for the year). Do not touch this account until it is time to buy the house (apart from the initial setup of monthly automated tranfers)

    2) ME Bank - deposit $240k to an online savings account, and ~$2k to the linked transaction account. $2k gets transferred from ING every month and that goes to the transaction account. This card is what you use (paypass) to pay for your groceries, petrol etc to meet the weekly contactless transaction requirement. No need to add any money into the online savings account as the interest will take you to roughly $248k after a year.

    3) RAMS - deposit $70k. This gets the rest of your monthly savings amount (half of $4k = $2k less what gets left in ING which is $1k => $1k monthly). Do not touch this account until it is time to buy the house.

    SUMMARY
    Initial deposit ampunt: $88k (ING) + $240k (ME online saver) + $2k ( transaction account) + $70k (RAMS) = $400k

    Monhly automated transfers: $1k (lsavings, leave in ING) + $1k (savings, transfer to RAMS) + ~$2k (monthly expenses, transfer to ME Bank transaction account)

    Salary credit to ING
    All ongoing expenses take from ME transaction account and pay for groceries/petrol contactless

    • hanofee on 23/01/2017 - 12:37

      With that amount, I'd really recommend to talk to ME or even ur usual bank. In most cases, u'll get slightly better rate (or they might allow u to save all $400K with that interest even if the T&C only said 250K - though I actually don't like to put everything in a basket, but for short term and low risk like this, why not?)

      • empty456 on 23/01/2017 - 12:53
        +1

        Were you talking to me or OP?

        Like I said the option I gave is in case OP doesn't want to approach banks. Not everyone is so inclined as it takes a bit of time and a lot of listening to their sales pitch.

        Also, Australian deposits are guaranteed up to $250k per deposit/institution so maybe not a low risk idea to put all in MEBank, even houh the chances may be remote.

    • poiuy1234 on 25/01/2017 - 16:15

      Thank you so much for your advice. I will split the money as you suggested. Do you mind me asking why you suggested to have my salary deposited into the ING account versus ME?

      • empty456 on 25/01/2017 - 19:16

        Hi, it is so you meet the minimum monthly deposit without thinking about it. You can do it with the ME transaction account too but that would mean your salary will be deposited into the same account where you take your expenses from. I find that a bit dangerous because I would get tempted to spend…

        By te way, the initial transaction account balance of $2k with ME Bank, I was thinking it is a monh's worth of your expenses in advance as it takes a while to get bank accounts set up the way you want them (I know because I recently did similar). You don't have to do it of course.

        • poiuy1234 on 27/01/2017 - 14:32

          Makes perfect sense! Thank you!!!

  • hashtagbargain on 23/01/2017 - 14:50

    Initially, I was wondering why OP didnt consider UBank.

    Then I checked the rates on my UBank account and saw it was just 2.86% much less than OP's choices.

    I spoke to UBank to see if they could match the rate, and the guy on the phone said he couldn't care less what others gave.

    Now I'm tempted to move my savings away from Ubank for better returns. Question is - Is a difference of 0.19% on an amount of about 100k a massive one?

    • rambutann on 23/01/2017 - 16:31
      +2

      $15.83 a month, $190 a year difference.

    • Rumbaar on 25/01/2017 - 12:18

      If it's not much hassle, then move away. See if they can care less then.

  • Rumbaar on 25/01/2017 - 12:20
    +1

    I signed up for ME Bank today, and their online password and access systems have been down since Monday and they have no idea when it'll be fixed.

    Have others had this kind of issue, and if you cannot access your cash account when you need it, then that's a concern for some and me.

    • empty456 on 25/01/2017 - 19:21

      I have an account with ME, usually I can still pay with the card even if I can't access online. I have automated transfers and always know my balances so I am not too fussed. To be honest it has happened recently with NAB too. I think having multiple banks is advantageous in this scenario; so is having backup cash.

      • Rumbaar on 26/01/2017 - 10:32

        NAB has branches you can go in, ME has only ATM?

  • rewstar on 27/01/2017 - 23:42

    Why aren't you considering Citibank online savings account 3% intro rate for 4 months. Don't need to deposit a certain amount each month or use a card each week to get the 3%.

    • poiuy1234 on 31/01/2017 - 10:34

      Depositing a certain amount each month isn't an issue for me since I have a regular income. And I prefer 3.05% to 3% :)

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