Plonk

Term deposits and savings thread

97 posts in this topic

Virgin does indeed look the go ... that cheeky little 4 month teaser rate is actually perfect for us, since that's about how long it takes to build a house (and I mean the actual building part, all the other stuff takes AGES)

We've got an account at about 6% with the CBA (assuming that introductory deal is still going) but at this point, any extra money helps ... waiting for confirmation of the Virgin one in the mail as we speak :)

Pretty sad I'm using the interest on some money to pay exit/refinance fees from switching out from the CBA though. That's just money for nothing, no wonder they want to abolish exit fees.

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

http://mebank.com.au...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.

oh well ill stop putting any money in then, screw this, less interest than Ubank, and i cant get it out, 6 months and no gov bonus, i have stopped depositing in it as of this week.

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oh well ill stop putting any money in then, screw this, less interest than Ubank, and i cant get it out, 6 months and no gov bonus, i have stopped depositing in it as of this week.

DO you do tax returns? You have to for them to put in their ante. The pricks scarcely mention this in the info booklet but this is apparently the trigger.

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yeah i forgot about that, etax is fruiting out every time i try and update it. guess its progress, untill recently there was no update and no scan the intelweb for info to fill out my forms

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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.

If the govt started guaranteeing junk bonds thats end game. Sell up and go overseas.

Investment grade is BBB or higher.

http://en.wikipedia.org/wiki/Investment_grade#Investment_grade

On the other thread Plonk researched this as a B.

An obligor is MORE VULNERABLE than the obligors rated 'BB', but the obligor currently has the capacity to meet its financial commitments. Adverse business, financial, or economic conditions will likely impair the obligor's capacity or willingness to meet its financial commitments.

What is a junk bond?

In finance, a high-yield bond (non-investment-grade bond, speculative-grade bond, or junk bond) is a bond that is rated below investment grade at the time of purchase. These bonds have a higher risk of default or other adverse credit events, but typically pay higher yields than better quality bonds in order to make them attractive to investors.

http://en.wikipedia.org/wiki/High-yield_debt

If non capital guaranteed bonds are your thing, these are the 3 best funds I can find in Oz.

http://www.investsmart.com.au/managed-funds/Aberdeen-Diversified-Fixed-Income-Fund-14322.asp

http://www.investsmart.com.au/managed-funds/EQT-PIMCO-Global-Bond-Fund-10877.asp

http://www.investsmart.com.au/managed-funds/EQT-PIMCO-Australian-Bond-Fund-10875.asp

(PIMCO is to bonds what BHP is to mining http://en.wikipedia.org/wiki/Pimco )

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Rabobank consistantly offers competitive rates.

I am thinking of diversifying rather than having the majority of my cash with U bank putting some in Rabo as well. I know we have a gov guarantee in place but to be extra safe...

Anyway their might be two positives out of this as I see them:

1.

Australia’s safest bank

*Deposits with Rabobank Australia Limited are guaranteed by our ultimate parent, Rabobank, ranked safest non-government owned bank in the world by Global Finance Magazine since 1999.

http://www.rabobank.com.au/Investing/Deposits/Pages/Deposits.aspx

and

2.

They may possibly take my deposit and deploy it into agriculture of something more worthwhile than existing Australian houses. This seems like a worthy thing to do in its own right. While my deposit is f*ck all on its own seeing the current moves of the government I want to find a bank that does not put all its depositors funds into the Australian mortgage market. That it pays good interest is a bonus too!

Anyway I have been complaining about our housing ponzi for long enough while my own deposits fuel the very same bubble. I guess if enough people do similar farmers will pay less for their loans and homeowners more. Thats gotta be a win.

Anyway from what I can tell they have no funds at all in residential mortgages!

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I could not find info saying Rabo were the safest bank but I found this which has them right up there;

http://topforeignstocks.com/2010/09/05/the-worlds-50-safest-banks-2010/

Anyway if our Aussie banks can be considered as safe as they are when they have loan assets 60% exposed to one asset class that has seen real growth against inflation at unsustainable levels than who knows how safe they really are.

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tom. I remember when I was on GHPC reading on Rabo's website that they had a higher rating than any of the Big 4 Aussie banks. I read your post just then and went to look for same, but like you, I couldn't find it, although they used to have that fact plastered all over the site- obviously a big coup to be rated higher than local banks. So, it seems Aussie Rabo has had something of a downgrade:

http://cryptogon.com/?p=12549

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Are they covered by the Australian government guarantee? The likes of ING are and they are subsidiaries of international banks so you would have though Rabo would be too?

If they are as a protest against so much funding going to residential mortgages and ultimately this is what my deposit with U bank fuels I am thinking of hitting Rabo bank as they do not appear to do mortgages at all. It might only be 1/5 of one mortgage but at least I am doing my little bit to decrease the available funds for Australian mortgages if I do this.

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Just saw a banner add which said U saver Online Savings 6.21%pa with 0.36% p.a. savings bonus. It says from 1 June 2010. What is going on, surely they are too professional to have an old add being recycled?

Have they just put the rate down?

When you follow the link they are showing 6.51% with savings bonus. Maybe they are in the process of changing it down! Hopefully they have just made a cock up with the advertising. The other add comes up just as often with the 6.51% rate.

Anyway if they put the bugger down in the face of saying funding costs are going up surely this will create as much trouble PR wise for the banks as putting up mortgage rates.... I wish....

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Rabo bank are now in front.

http://www.rabobank..../pages/fmd.aspx

6.7% 1 year term deposit.

That is the best rate around as far as I know and you can be assured only a small amount is in mortgage debt.

I just cannot tell if it has to be for a farm being a farm management deposit?

Oh Goody, means a rate rise is finally coming

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Thanks for the tip about Rabo - I'll look into them.

I currently have term deposits in Ubank - which I found to be competitive, but to diversify, Rabo may be a good alternative too

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MB: Negative term deposit returns

Today’s chart comes from our own Rumplestatskin, who has received many requests to compile a chart comprising the real (i.e adjusted for inflation) after tax (RAT) returns on term deposits for Australian investors (click to enlarge full size):

Real-after-tax-returns-300x159.png

It’s quite obvious that savers have been punished since the secular shift from the turn of the century (observable worldwide, largely as a result of Greenspan reinflating risk markets post-NASDAQ bubble) to effectively zero return on their capital.

The behavior of private savers is shown clearly in the RBA’s Household Savings Ratio (HSR) chart, updated from the Chart Pack released last week:

household-sector.html.png

The secular decline in savings culminated in rational dissaving in the early noughties, leading to an increase in secondary asset (e.g houses and shares) values, before reversing to the current “dis-leveraging” and rising HSR, well over 10% of income, even though the cash rate has returned to below average nominal lows:

18bl-cr.gif

This behaviour of increased savings during low or zero interest rate policy (ZIRP) with subsequent negative RAT returns is the antithesis of common economic wisdom where such conditions should increase investment in risk assets and spur economic activity.

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thanks for sharing the charts!

That's a little annoying though that the real returns on term deposits are negative according to your charts!

I'm supposed to be making more money from term deposits, not losing it.

Perhaps I should put my money elsewhere... any ideas?

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ubank usaver and an auto saving plan depossiting 200 a month gets you %6.11 no term deposit. just at call %5.6 if you forgo the direct debit they want to setup on another bank

hell i could try and explain this better?

you get %5,6 at ubank.

and if you set up an ASP a bonus 0.5%

the ASP requires you setup a direct debit from anotyher bank of 200+ a month

Edited by savagegoose

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There is the Progress Saver at Anz @ 5.75% as long as you deposit approx $10/month or something like that you get the extra amount. It was at 6% before the latest cut. It's not an exclusive online account.

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