Plonk

Term deposits and savings thread

97 posts in this topic

Ubanks autosaver premium is now 0.5%.

I am certain it was not this much before as I did not bother with it. Will be now though.

Thats 6.51% if you regularly deposit $200.00 per month. Not a big ask, is it?

http://secure2.ubank.com.au/ub/web/home

Share this post


Link to post
Share on other sites

Ubanks autosaver premium is now 0.5%.

I am certain it was not this much before as I did not bother with it. Will be now though.

Thats 6.51% if you regularly deposit $200.00 per month. Not a big ask, is it?

http://secure2.ubank.com.au/ub/web/home

My mortgage is 6.73%

Getting close.

(there is the tax factor of course, what is the deal with the tax break on cash interest? could that sway offset account funds into these accounts yet?)

Share this post


Link to post
Share on other sites

(there is the tax factor of course, what is the deal with the tax break on cash interest? could that sway offset account funds into these accounts yet?)

highly unlikely. you're taxed at a reduced rate (1/2 your marginal rate?) for the first $1500 or so of interest income as i recall. compared to zero tax for the savings you earn by sticking it in the offset account it sounds like savings rates would have to go up considerably for it to be profitable to take out of the offset.

6.73% with 100% offset sounds like a good deal... i haven't done a lot of research on mortgages though.

Share this post


Link to post
Share on other sites

highly unlikely. you're taxed at a reduced rate (1/2 your marginal rate?) for the first $1500 or so of interest income as i recall. compared to zero tax for the savings you earn by sticking it in the offset account it sounds like savings rates would have to go up considerably for it to be profitable to take out of the offset.

6.73% with 100% offset sounds like a good deal... i haven't done a lot of research on mortgages though.

Tax up to about 300K worked out to be about 34% for me (09FY, kicked the crap out of that this FY, thank you GFC!) due to spending on business stuff and so on. So I guess that means some 17% tax rate on cash. hmmm, certainly requires a bit of spread.

I haven't paid that much attention to the tax break on cash interest because I never thought the gap would close enough and so I thought it was tax free up to a certain amount.

I guess the tax people want us to all have offset accounts. Or buy gold and cheat on tax (I have never sold gold and so have never had the chance to cheat on tax there, I am actually quite interested to see what I do when I eventually do sell it).

Share this post


Link to post
Share on other sites

I guess the tax people want us to all have offset accounts. Or buy gold and cheat on tax (I have never sold gold and so have never had the chance to cheat on tax there, I am actually quite interested to see what I do when I eventually do sell it).

Well it does make sense if you own a PPOR to put the lot into it. Do not diversify just put absolutely everything into the mortgage till it is paid off and then think about diversifying later.

You get an effective return of say 7% / your marginal tax rate, for PAYG this is generally around .40 so well over 10% compared to say a deposit where you will pay tax, you dont get much better than that anywhere.

Yet another reason our tax system drives people into buying their homes.

Hey I just thought if you had a close relative who had a mortgage and you could make a deal with them to go halves in the tax saving...hmmm..

Edit: I dont even think this is illegal? Give friend money to help them with mortgage, and they give it back down the track? It is not insignifiacant money either say 2.5k per annum per 100k. Thats not bad for just loaning a friend some coin. Thats a holiday every year indeed the two families involved in teh scam could use the money each yar to go on a holiday together!

Share this post


Link to post
Share on other sites

Well it does make sense if you own a PPOR to put the lot into it. Do not diversify just put absolutely everything into the mortgage till it is paid off and then think about diversifying later.

You get an effective return of say 7% / your marginal tax rate, for PAYG this is generally around .40 so well over 10% compared to say a deposit where you will pay tax, you dont get much better than that anywhere.

Yet another reason our tax system drives people into buying their homes.

Hey I just thought if you had a close relative who had a mortgage and you could make a deal with them to go halves in the tax saving...hmmm..

Edit: I dont even think this is illegal? Give friend money to help them with mortgage, and they give it back down the track? It is not insignifiacant money either say 2.5k per annum per 100k. Thats not bad for just loaning a friend some coin. Thats a holiday every year indeed the two families involved in teh scam could use the money each yar to go on a holiday together!

i dunno. cash gifts in the US are taxable same as income, perhaps its different in oz. if its not though the friend receiving the tax benefit would be required to declare it as income. it sounds pretty dodgy to me. add to that the possibility that the friend might at some point decide holding a house free and clear is worth more than one's friendship and it seems like a lot of risk for a marginal return. better investments out there i think.

Share this post


Link to post
Share on other sites

i dunno. cash gifts in the US are taxable same as income, perhaps its different in oz. if its not though the friend receiving the tax benefit would be required to declare it as income. it sounds pretty dodgy to me. add to that the possibility that the friend might at some point decide holding a house free and clear is worth more than one's friendship and it seems like a lot of risk for a marginal return. better investments out there i think.

If it is legal than draw up a contract over the house.

In Australia I hear of people getting cash gifts to buy homes all the time. He does not have to declare it on his tax as it is not income it is saved personal expenses which you do not get to claim on tax anyway.

I will assume a .5% spread between deposits and mortgages

Normal bank deposit

on each 100k @ 6% = $6,000.00 40% tax Nett = $3600.00

In your friends mortgage

He saves 6.5% on each 100k = $6500.00 He saves $6500.00 per annum which are undeductabel personal expenses otherwise so thier is no tax liability accrued for him.

I think USA has death tax as well, hence many have living wills to get under the 10k per annum etc. I dont think we have any of that in AUS. I think their might be some limit to how much per annum. Their is probably some exemption for gifts towards someones first home knowing our rotten government! I guess you would explain to the ATO but it was for Australian real estate at which time they would probably give you back another $1000.00...

Anyway back to reality as you point out in reality I would not be doing this. People do tend to get dirty even when you take back what is rightfully yours. I get this even with the petty cash which gets deposited in my account, when you go pull thousands out of your account and then have to hand it out all over the place, even though it was never mine I still feel the loss especially if it is just before pay day... You can also imagine the situation where interests rates rise and they are just struggling generally, you hardly want to be the one breaking the bad news to them of a rate increase!

Share this post


Link to post
Share on other sites

...Hey I just thought if you had a close relative who had a mortgage and you could make a deal with them to go halves in the tax saving...hmmm...

The girlfriends father has a habit of lending the kids and their partners pretty big chunks of coin with no interest. He has also quite happily taken one of those partners to court to get the money back, he is generous but he is also dutch :)

I was thinking of doing pretty much the same thing, borrow a chunk off him, put it in the offset and reduce my payable interest. Then the GFC came wandering along and he lost on paper a decent chunk and he recalled me talking about how I was moving out of the market as I thought the slide would be pretty big.

I felt it would be rubbing salt in the wounds to then turn around and borrow a chunk of cash off him in that scenario.

If things stabilise and he becomes happy and secure again I may take him up on his offer though.

Share this post


Link to post
Share on other sites

Ubanks autosaver premium is now 0.5%.

I am certain it was not this much before as I did not bother with it. Will be now though.

Thats 6.51% if you regularly deposit $200.00 per month. Not a big ask, is it?

UBank is starting to upset me. The reason people liked UBank was that they simplified things. Now they are starting to play the same silly games. I actually looked up the age discrimination act yesterday to see if they are breaking the law with their higher interest rates for people between the ages of 18 and 29.

Edited by sydney3000

Share this post


Link to post
Share on other sites

UBank is starting to upset me. The reason people liked UBank was that they simplified things. Now they are starting to play the same silly games. I actually looked up the age discrimination act yesterday to see if they are breaking the law with their higher interest rates for people between the ages of 18 and 29.

But you get it I think for auto depositing anyway as long as you dont have over 200k in the accounts with them?

I will have to ask the missus tonight to log in and see. We had not bothered with teh auto deposit because it was only 0.1% up untill last time I check. 0.5% now that is now enough to bother with it being about $400.00 on $80k.

Share this post


Link to post
Share on other sites

Argh! Commonwealth bank has a deal going for a 6% interest account.

The fine print says 'valid from 6th august'.

We opened our account of that type on the FIFTH of August. :censored:

Edit: despite the other half (who is a pedant) helpfully informing me that a special offer is a special offer and too bad, we missed out, I just rang them and got us bumped up to 6%. So ner to him :P

Share this post


Link to post
Share on other sites

Edit: despite the other half (who is a pedant) helpfully informing me that a special offer is a special offer and too bad, we missed out, I just rang them and got us bumped up to 6%. So ner to him :P

Of course if they had not played ball you could have just said, "I'm taking up U banks special offer of 6.5%, then!"

Cannot believe the Comm bank is still only payign 4.5% on my FHSA and they have 6% on offer elsewhere. I guess because it has not got much in it yet I have not bothered maneuvuring around, but in 12 months time with another 10k* in it, it starts to make a difference of $300.00 p.a. per account. $600.00 per year is material to me!

In the back of my mind when I set it up I wanted it somewhere that bank runs were less likely to be an issue as it is a difficult account to get at and thought CBA was safe...

*This approaching end of financial year is the year I put 5k in twice because 5k in June for 10/11 and 5k in July for 11/12. From there I am free to buy a house with it... If I wanted too :(

Share this post


Link to post
Share on other sites

The phone guy asked if we were likely to put much money in it (it only had a few $100 in it) ... I said we had a house for sale so yeah, maybe $50,000. Perfectly believable when you have two loans both well under $100k ...

I actually got an offer on the house on the weekend but haven't heard much back from them. Gave them my conveyancer's number and told the convenancer to hold off doing anything (since I have to pay upfront regardless of whether it sells) until he hears from them. Not holding my breath.

Share this post


Link to post
Share on other sites

Combanks FHSA is now 5% in stead of 4.5%.

Goes without saying I will not be putting in anymore the 5k p.a. in them just to milk the governments guarantees.

Share this post


Link to post
Share on other sites

tom, didn't you go for MEBank? 6.25% still, I think (haven't checked). You probably know you can transfer accounts if you want to. I got one of those letters with the new details of how I can put more in. I'll have to get around to that. Thing #600 to do.

Share this post


Link to post
Share on other sites

tom, didn't you go for MEBank? 6.25% still, I think (haven't checked). You probably know you can transfer accounts if you want to. I got one of those letters with the new details of how I can put more in. I'll have to get around to that. Thing #600 to do.

Its my #432 thing to do.

Though I have had some wins with being to busy in life like when I dropped into CBA to open a foreign exchange account #236 thing to do and due to the massive prospectus attached to the account I thought shivers I'd better take this home and read this. As with all of these things it delayed me while I got my head around what I was doing and then the AUD has since gone to the moon! Lucky I didn't cash out when the AUD was heading down...

I don't even know what to do now. I am really keen to offload some of this AUD though, you can just buy way too much with it overseas all of a sudden! I'm not just talking real estate either. A dinner out in Hong Kong is starting to represent good value again. Aussies are going to be the new Yanks when we go holidaying or on business trips. In the past overseas when shopkeepers ask if I was an american a response of; "no Aussie" they usually seemed dissappointed. Maybe though it is because we are tight? Anyway I suspect in future they will get excited as our wages in global terms of what it can buy are for now very flash and if it does what some suggest another 15% then wow!

That reminds me of once when I tried to pay in AUD in Vietnam and the local did not know what it was or what it was worth. I should add they noticed though it was the same style of plastic money they had so eyed it with some suspicion!

Now we are going to be worth more than the $US they will soon get their head around it and say yes you can pay in AUD in stead of $US no worries....

or am I counting my chickens before they hatch?

Share this post


Link to post
Share on other sites

Hard to know, eh, tom- it's wild economic times. I had my "If I buy gold and then the AUD falls, I think I can make money", but I never could quite get my head around it- one of my GHPC fancies :) I was also going to open a foreign account- you can see the prospectus online, I recall. What I remember from it, tom- the one I looked at- was that you couldn't get interest from it, so there was some opportunity cost there. I started thinking about how much interest I was getting in UBank, minused that weekly, and suddenly it seemed less attractive. I think there is some flat fee for some of those accounts, but the bank told me that how it is worked is on the interest rate of the USA- which is pretty much zero. Also, had I got it back when (the AUD was about 94c), I would have lost money because the AUD rose. My 3-way gold/AUD/USD nexus seemed too hard, and the foreign exchange account seemed not quite right for me. My conservatism won out. And then I got into shares- the rest is history. :)

Share this post


Link to post
Share on other sites

Have a piece of everything. A portfolio. Have some Bonds (funds) FFS.

I'm mostly bonds and some cash and precious. FX trading doesn't count I regard that as a small business I am building.

Share this post


Link to post
Share on other sites

i have a ME bank FHSA, its still in the 6.5% range had been putting in $40 a fortnight all last year to make it 1040 for the year, still gotta get tax done so gov will pay me my %17 bonus.

ill let anyone know who cares , when i eventually get my bonus cash

Share this post


Link to post
Share on other sites

I said I'd put this in the savings thread. It's about the highest interest there is out there. It's a corporate bond, and there's an article in the AFR on it today. There'll be more articles, no doubt, in the coming weeks as the market/financial commentariat gets a grip on it.

http://www.healthsco...ope%20Notes.pdf

It's interesting. One could get a 5 year fixed home loan that would be less in interest than one receives from this bond. Interest on the home loan would actually be free- the interest-free home loan!

We're all adults here, so I don't need to say do your own research on it if you're interested. As for me, it's food for thought.

Share this post


Link to post
Share on other sites

i have a ME bank FHSA, its still in the 6.5% range had been putting in $40 a fortnight all last year to make it 1040 for the year, still gotta get tax done so gov will pay me my %17 bonus.

ill let anyone know who cares , when i eventually get my bonus cash

Unfortunately, sg, they've lowered the rate at MEBank for the FHSA to 5.5%. Sneaky of them:

http://mebank.com.au/personal/savings_accounts/first_home_saver.html

Here's their footnote:

"* Interest rate is current as at 20-Nov-2010 and is subject to change."

As of today, we get .75% less, which probably evens out the higher indexation we are getting from the govt.

Share this post


Link to post
Share on other sites

so I don't need to say do your own research on it if you're interested. As for me, it's food for thought.

Too bad the gov won't guarantee it. That always saves me time in researching, just look for the highest return because thats all that matters when the gov goes into bat.

Funny that our own government cannot see what long term effects this will have on the pricing of risk, or otherwise as to our long term financial stability.

Share this post


Link to post
Share on other sites

Naaa, the govt won't guarantee it, tom. CBA is also issuing a corporate bond:

http://www.commbank.com.au/about-us/news/media-releases/2010/181110-commonwealth-bank-announces-details-retail-bond-offering.aspx

AMP issued notes a while ago whic were well taken up. Heritage Buinding society issues 5-year notes also a year ago or so- at 10%- which was a big deal at the time because the IR seemed so high. I *think* but am not sure, that the Healthscope bonds will trade on the ASX. The AMP notes traded on the ASX at a premium to purchase costs, so they had relatively high interest and a sales premium if one wanted to get out- not too bad. I don't mind corporate bonds and notes. I think it was a Telstra bond I had many years ago that gave me 18% interest. There hasn't been a great number of corporate bonds in the Aussie market for years, and we're just starting to get a few now. No govt guarantee, higher interest, and an amount of faith that the business will continue. There's a bunch of analysts, such as the people at termdeposit.com.au who do really in-depth analysis on corporate bonds. All free, too.

Share this post


Link to post
Share on other sites

Well, we have however long it takes to build a house left to scrape together the last of the fees and utility bills and a high interest account is looking good - better than leaving money in the loans.

What's the current word on very short term high interest accounts?

Share this post


Link to post
Share on other sites

Infochoice is my favorite site to show the comparisons, RE. Just make sure you untick the "show sponsored listings first" box, because the highest payers won't come up first if you leave the box ticked.

http://www.infochoice.com.au/banking/savings-account/list.aspx

It looks like Virgin still have the highest rate @ 6.75% for 4 months, compound and calculated daily. Bankwest has a rate @ 7%, but I *think* that one has poor conditions attached to it, like minimum monthly payments needing to be made.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now