How to maximise your savings

Make the most of your money despite low interest rates.

Interest rates have never been so low and while this is good news for those paying off a mortgage, it has made it more difficult for retirees and those with money in savings accounts as they’re earning less on their investment.

RACQ Manager Banker to Member Initiatives Eszter Cathcart said when deciding how to make the most out of your savings, it was important to first look at when you would need to access your money. 

“If you’ll need to access your savings in the short-term future you may need to sacrifice the return but if you won’t need these funds for some time then you could look at alternative options to cash,” Ms Cathcart said. 

“There are many options out there, but it’s crucial to do your research and be across the risks and returns of each, so you can understand what best meets your needs.”

High interest savings accounts 

Ms Cathcart said shopping around for the best rate could make a big difference to the amount you earn. 

“Look out for introductory rates that banks may offer and what the rates will revert back to when the intro rate concludes. Be disciplined when the rate has ended and shop around again for the best deal,” she said.

“Fees always play a big part in eroding savings, so make sure you’re not paying fees unnecessarily.”

Term deposits

A term deposit was another option to consider, according to Ms Cathcart, and with a guaranteed return, it meant you could choose the timeframe that suited you. 

“Term deposit accounts are savings accounts which pay a fixed interest rate over a set period,” she said. 

“They normally offer a greater return than a regular savings accounts, but you can’t access your funds until the agreed term expires, so are not suitable if you think you may need to access your money in the immediate future.” 

Savings bonds

Ms Cathcart said a savings bond was another alternative for longer term investing.

“When you invest in bonds, you're lending money to a company or government and you receive regular interest payments in return,” she said. 

“If you’re trying to save for a child’s education, an education bond may be an another option to consider.”

Other options

Alternatives like a managed fund or a real estate investment trusts (REIT) could be low risk and often offer a higher return than current cash rates.

“If you decide to put your cash into a managed fund, it will be pooled together with other investors and the fund manager buys and sells assets, like shares or bonds, on your behalf,” Ms Cathcart said. 

“REITs invest in property either in Australia or internationally, so investing in one of these will see you gain access to multiple properties rather than investing in just one, this can lower your overall risk.”

The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs.  Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.