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Alternatives to Term Deposit?

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neutralbaby

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today ING reduced their 90Days FD rate from 7.25% to 6.50%, and 180Days is now 5% and 1 Year is a mere 4.5%..

I was wondering about your opinions on where you'd put your spare cash? I am a conservative type saver and FD had been the best option for me for the past years .. Now half of TDs will be matured by mid Dec I can't help if the rate will go down any further.... should really have locked them into a longer term when the rate was big fat >8% :banghead:

What other low risk alternatives are good at current economy situation? ANZ has online saver acc for 6.5% but rate subject to change anytime..

Or, how long do you think it will take, for the the good o interest rate will return?

Thanks for all commets :)
 
If house prices, shares, cars and other goods are going down each month for years it's a matter of holding on to every $ and getting every $ in to your account.
When you are sure the bottom has arrived look at buying in.
When a house today is on the market for say 300K , that's what the seller wants but there are no buyers, wait until it comes down to 180K and then decided.
Forget about inflation as everything is dropping in price so you are miles ahead.
 
High yield mortgage funds. 10%+ per annum and the gum mint will probably bail you out if something goes wrong.
 
Spend it. Saving is basically delayed consumption and real returns (interest rates - tax - inflation) for term deposits in the current environment are negative.
 
freddy2 said:
Spend it.
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In current environment it would probably be good idea to spend it on fuel, food, water and store it.

Problem is, storage costs money and storage containers are expensive not to mention that food can perish.

With honey being one exception that will keep indefinetly, but who would want several tonnes of honey?
 
neutralbaby said:
today ING reduced their 90Days FD rate from 7.25% to 6.50%, and 180Days is now 5% and 1 Year is a mere 4.5%..

I was wondering about your opinions on where you'd put your spare cash? I am a conservative type saver and FD had been the best option for me for the past years .. Now half of TDs will be matured by mid Dec I can't help if the rate will go down any further.... should really have locked them into a longer term when the rate was big fat >8% :banghead:

What other low risk alternatives are good at current economy situation? ANZ has online saver acc for 6.5% but rate subject to change anytime..

Or, how long do you think it will take, for the the good o interest rate will return?

Thanks for all commets :)
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Get over the 8%+ yields.

If it were me, I would lock in for as long as I can at the best rate I can. In months to come 6% locked for 3 years will look very good . Call Bankwest and speak to their term deposits team if you have over $100k. You'll be surprised at what they can offer. They offered me 8.7% over 3 years. Needless to say, I bit their arms off!
 
hmm.. not much options really.. with the good rates at least i was happy even with tax.. just wondering how low could the rate possible sink..

Hopefully aussie will regain its value soon then at least I can get some profits from the exchange.. Not a resident here thus buying property/house is not the way for me to go..
 
Pommiegranite said:
Get over the 8%+ yields.

If it were me, I would lock in for as long as I can at the best rate I can. In months to come 6% locked for 3 years will look very good . Call Bankwest and speak to their term deposits team if you have over $100k. You'll be surprised at what they can offer. They offered me 8.7% over 3 years. Needless to say, I bit their arms off!
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Oh for the good old days, I recently rolled over a term deposit 2.3%, when will we return to long term average?
 
sptrawler said:
Are they reasonably secure, or pawn shop sort of loans?
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Their default rate is about 1.7%, which is less than most of the banks, and loses are funded by the provision fund, so no investor has ever lost money.

The provision fund is designed to cover loses of 3%, and short term spikes of over 6%.

They are also loan out money on be half of the government, via their clean energy loans, which are currently paying 6.4% for 3 years.

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If you are loaning money out at 8.1%.

Even if loses spiked above the 3% - 6% that the provision fund could handle, the loan book would have to suffer a further 5%+ loss before your total return dropped below the 2.3% term deposit.

So you are paying a lot for the perceived safety.

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But yeah, rate setter are top notch, they are very good at managing their loan book.
 
sptrawler said:
Sounds interesting, I will look into them, cheers VC
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when this came up a month ago i put a grand in as a tester to see. just rolled over first month 3 days ago. process is fairly straight forward but website takes a day or 2 to sorta catch up with events ...... and my grand has now somehow split into the mainish block with the interest (re-done at 4.0% a couple of days ago) and a $20 bit (that was not repaid at rollover but took a few days extra to clear in my account - today - so is now waiting in the 1 month queue currently at 3.9% to be loaned out).

I have found there is limited transparency over what is going on at the time (so actual repayment/rollover is confusing when happening ) but there is total control and clarity of what is going to happen (if that makes sense) ....

i have not tried to do a withdrawal yet ......
 
How can they afford to pay such high rates compared to the rest of the financial industry ?
 
SirRumpole said:
How can they afford to pay such high rates compared to the rest of the financial industry ?
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With a normal bank, they pay you 2% and then go and loan the money at 14% and they make a huge profit margin.

With rate setter, they Pay the investor around 8%, put around 3% into the provision fund to cover defaults, pay themselves 1% and then charge the customer 12%.

The big difference is they are paying the investor the lions share of the loan interest, however the investor also takes a bit more risk in a dooms day event.
 
HelloU said:
when this came up a month ago i put a grand in as a tester to see. just rolled over first month 3 days ago. process is fairly straight forward but website takes a day or 2 to sorta catch up with events ...... and my grand has now somehow split into the mainish block with the interest (re-done at 4.0% a couple of days ago) and a $20 bit (that was not repaid at rollover but took a few days extra to clear in my account - today - so is now waiting in the 1 month queue currently at 3.9% to be loaned out).

I have found there is limited transparency over what is going on at the time (so actual repayment/rollover is confusing when happening ) but there is total control and clarity of what is going to happen (if that makes sense) ....

i have not tried to do a withdrawal yet ......
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That’s totally normal mate.

Repayments take 2-3 days to clear depending on when they are paid.

Once they are cleared they become available in your holding account or are automatically reinvested if you have that set up.

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The reason you now have two loans, and your original loan has shrunk is because repayments are principle and interest payments from various loans and may be reinvested in multiple loans.

Don’t get wrapped around the axles trying to track individual loans, day by day just monitor the big picture.

I have over 300 separate loans in my account and that number grows each month as principle and interest payments get reinvested,

At any time I might have payments from 20 different loans in the clearing or reinvestment phase, it’s impossible to try and track each one.

But you don’t need to track each one, it all is managed, of course you can randomly check individual loans for curiosity sake, but you don’t need to.
 
Ratesetter: Provision Fund buffer* = $12,856,004

Current estimate of bad debt** = $8,151,156

You'd wanna be quick to avoid the spin-co :cool:
 
Value Collector said:
That’s totally normal mate.

Repayments take 2-3 days to clear depending on when they are paid.

Once they are cleared they become available in your holding account or are automatically reinvested if you have that set up.

————
The reason you now have two loans, and your original loan has shrunk is because repayments are principle and interest payments from various loans and may be reinvested in multiple loans.

Don’t get wrapped around the axles trying to track individual loans, day by day just monitor the big picture.

I have over 300 separate loans in my account and that number grows each month as principle and interest payments get reinvested,

At any time I might have payments from 20 different loans in the clearing or reinvestment phase, it’s impossible to try and track each one.

But you don’t need to track each one, it all is managed, of course you can randomly check individual loans for curiosity sake, but you don’t need to.
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yep, was a look see to get the feel of it on the comfort scale.

I imagine it was u that spoke of it a month (5 weeks) ago that prompted me to look at it so cheers (maybe a wisr thread?). Certainly is a user friendly interface ......... and only leaves that single point of fear of capital loss to contend with.

In a asx world where a company director can do a CR at a 20% discount (so devalues my capital by 20%) and give themselves a truckload of free shares in the same process ..... and that is considered "normal" business, i will take some risk at places like ratesetter.
 
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