How To Get Your Cash Working For You!

Many Australians seem to be leaving money on the table with regard to their cash holdings. Rather than investing their excess cash in higher-yielding term deposits, many Australians are content to leave their money in low-interest cash accounts.

So why do Australians tend to leave their excess cash in cash accounts. One reason is that cash accounts are often seen as a safe and easy way to store money. They are highly liquid, which means that funds can be accessed quickly and easily in case of an emergency. This can be a valuable feature for many Australians who want to ensure that they have easy access to their funds at all times. Additionally, cash accounts are often offered by the same institutions where Australians have their transactional accounts, making them a convenient choice for many. 

While  cash accounts may be convenient and safe, they often offer very low interest rates. This means that by leaving excess cash in a cash account, Australians are effectively losing money. 

An  alternative for those with excess amounts of money in cash accounts could consider is putting money into a term deposit and get a higher rate of return. 

To illustrate the potential benefits of investing in a term deposit as opposed to a cash account, let's look at an example. John has $250,000 in excess cash that he wants to invest in a 12 month term deposit. John shops around and finds a financial institution offering a rate of 4% per annum. Over the twelve  -month period, John’s investment would earn him $10,000 in interest. If he had left the funds in a low-interest cash account earning 0.5% per annum, he would have  earned  only$1,250 p.a. in interest over the same period.  This means if John invests on a trem deposit  at 4% he, will earn an additional $8,750 p.a. in passive income for doing nothing! 

Australians investing in term deposits should shop around for the best  interest rates because not all financial institutions offer the same rates. By taking the time to compare rates and find the best deal, Australians can ensure that their excess cash is earning the highest possible return.  

For those skeptical about leaving substantial amounts of cash in term deposits in Australia, deposits up to $250,000 are guaranteed by the Australian Government . This means that if something were to happen to the financial institution holding the deposit, the government would guarantee the funds up to this amount. 

In summary, it’s important to get your money working harder than you are, because make no mistake, the banks are making huge profits lending your money out, while  many Australians leave their money idle in their low interest bearing accounts.  

To ensure your money can start working harder for you , arrange a chat with one of our expert team members.