Are there any safe alternatives to term deposits? The interest rates have become ridiculous.
Shares are a bit of a risk and I don't like risks because I am very unlucky… :(
Thanks for your advice.
Alternatives to Term Deposits
Paul871 on 14/06/2017 - 11:21
Comments
Thank you, I will have a look.
Probably more risky than shares
Shares risk going down but playing the bank means a fixed agreement on interest and repayments, albeit with a small risk that the borrower may default. P2P platforms have been growing because they work. Hey, for over a century banks have been making big bucks playing middle man so why shouldn't we cut them out of the equation with P2P lending?
Hey, for over a century banks have been making big bucks playing middle man so why shouldn't we cut them out of the equation with P2P lending?
Sure, but you shouldn't be under the illusion that you're getting something for nothing. P2P is inherently more risky than a bank deposit. For starters, you have exposure to an individual borrower, rather than an entire intuition (which has an implicit government guarantee).
I had never heard of it. Thanks, it sounds good.
I use that as well, but please do make sure you weigh up your risks before considering.
The basic (theory) behind finance is the higher the expected return, the higher the risk.
It could be a little complex, but basic exchange traded funds (etfs) are generally a lower risk option then individual shares if you get one that follows the asx200 index or one that's a selection of Australian bonds.
Or hunt through ozbargain for the best interest rate accounts if you want to keep it simple.
Hope this helps.
Thanks yes, I will keep an eye on Finances here. I have time as I just renewed my Term Deposit. I had thought of other possible investments last time I renewed it but then hoped the interest rates would go up a bit. Instead they went down, so I would like to at least consider other options.
The problem with shares is that we don't know until the last moment when something happens, like with DickSmith or other similar situations.I will have a look at it too. I guess I don't know much about finances as I had never heard of it either. I learned a lot in this thread! Thanks everyone.
Buy an ETF of fixed interest products. You'll get almost the same safety as a Term Deposit, with hopefully higher return.
However the buy/sell fee will cut into your eventual profit, so this is only worth doing if you have a cheap broker or a large amount to invest.
Thank you. It is another interesting option.
You can park your money at ING Direct at 3%pa while deciding what to do with it. That's only a bit lower than term deposits and you don't need to lock your money away.
I think saving account has a higher interest rate than term deposit, unless you are willing to lock your money for quite a long term (i.e. over a year)… Correct me if I'm wrong!
Actually, you're right, I just had a look at ING's TDs and none are over 3%. A TD does give you the certainty of locking in a rate, at the cost of monthly compounding interest and a higher rate.
As others have said, I would look at RateSetter. It's possible to get 7.2%pa over 3 years (after RS' fees are deducted). Many people (including me) trickle money into RS rather then jam in a big wad, so that the money is guaranteed to be spread among as many borrowers as possible.
Yes, I will definitely look at RateSetter. You know, a few years ago TDs had good interest rates, reaching about 7% at some stage, but now… and when I heard that interest rates will probably fall even more I thought I really have to find something else.
Thank you!
The savings accounts with ING Direct, ME Bank, etc, get you around 3% with instant access to your money. There's some conditions (using their everyday accounts) but they're pretty easy to meet.