Interest Rates

[MrBurns]

God bless you. I've been quite interested to read most of what you have had to say. I don't know anyone here from a bar of soap. Only here to learn from others. I've been here for about four years. I've learnt so much - so much more to learn. But not from you obviously. I'm not here for titillation. Only to learn.

What ? You could start by not posting when drunk, people have a right to their privacy, haven't learned anything from you either so we're even eh ?

 

[craft]

I'd argue better to invest in either ILBs of some sort. From what I can see there's still the opportunity to lock in at over 3.5% + CPI for extended periods - up to 2030.

Who's issuing them?

Commonwealth Gov’t 2030 CPI Indexed bonds are only yielding .88% currently.

 

[Julia]

ANZ has dropped their home loan by 27 basis points. Is this going to provoke some more competitive activity on the lending front?
So far they haven't reduced the online at call deposit rate.

 

[tinhat]

What ? You could start by not posting when drunk, people have a right to their privacy, haven't learned anything from you either so we're even eh ?

How is the market price of a financial instrument private? Some person who I've never met makes a claim but refuses to back it up. The information she has provided is worthless and the opinions it backs even more so. Just my opinion. Drunk or sober.

 

[MrBurns]

. Just my opinion. Drunk or sober.

One must be careful not to be drawn into making statements about personal situations if possible, probing questions are a precursor to more probing questions so many think it's wise to draw a line early, I would be wise to do that myself.

 

[McLovin]

Who's issuing them?

Commonwealth Gov’t 2030 CPI Indexed bonds are only yielding .88% currently.

Sydney Airport. (that I know of).

 

[Julia]

How is the market price of a financial instrument private? Some person who I've never met makes a claim but refuses to back it up.

Just silly. How would any provision of dates and terms validate anything already said or otherwise? I could pick any dates and terms out of the air if I were so disposed. It would prove nothing. Neither have I any obligation to prove anything to you.

Next, you'd be demanding copies of my terms of deposit from the relevant institution(s).

You can please yourself whether you consider useful what I or anyone else on this forum says. It's immaterial to me.

"Some person who (sic) I've never met" is demanding details of my personal investments, such details being irrelevant in the context of the general discussion. Why on earth would I feel obliged to compromise my privacy in response?

Last comment from me to you on this, Tin Hat. Rant away as you will.

 

[tinhat]

Just silly. How would any provision of dates and terms validate anything already said or otherwise? I could pick any dates and terms out of the air if I were so disposed. It would prove nothing. Neither have I any obligation to prove anything to you.

It does matter to the conversation when the 8% term deposit was taken out and for what term. Are you implying that the term of a term deposit is immaterial to the investment? Who is being silly now? If the term was immaterial then there would be no difference in the interest rate of an at call deposit and a five month deposit. The yield curve would not exist. What a fool that Ben Bernanke has been with all this "operation twist" carry-on.

As I pointed out in my response to your initial comment about the 8% term deposit, while you may not judge there to be any additional risk to your capital between money on at call deposit and money on long term deposit, the longer a period of time the more uncertainty and the higher the opportunity cost of the investment. This is manifested in the general principle of the yield curve and seems to me to be a consequence of the third law of thermodynamics which is the most fundamental way in which time is manifest in the universe (the "arrow of time").

The longer the term the longer the uncertainty over whether the government bank guarantee (a policy response to the GFC) would be maintained. The more uncertainty about one's own private life and what needs, emergencies, etc may arise in that time.

There is also a general expectation that over the long run money supply will inflate over time, that resources become more scarce in a world with growing demand and growing population and that price inflation is an economic norm. The longer a term deposit the more exposed one is to the uncertainty of what the rate of inflation will be over that period and the risk that inflation will increase over the period.

The illiquidity of a term deposit will raise the opportunity cost of that investment.

A while ago I was looking at hybrids/preference shares as an option as many people were at that time. They seemed to be quite attractive to a lot of investors. I remember looking at a Woolworths hybrid and some of the banks offers and at that time had term deposits been available at 8% I would have considered those too. At the end I made a judgement call to go long in bank shares instead. I find it of interest and of merit to go back over my investment decisions and to review them with the benefit of hindsight. Had you provided us with an idea of when you took out the 8% term deposit and for what term I would have run that as a scenario in my mind and compared that to the risks and pay-offs I have achieved (and in some cases failed to achieve) over a similar time period. I don't have any cash in term deposits. I don't use them although I know they are a major feature of most people's investment strategy. I've changed my investment strategy a couple of times over the past few years. Once in the second half of 2010 that was a period of mistakes for me. Again in 2011 and just these past few weeks I am on the cusp of making a change to my investment strategy again. So, it might have been useful and of interest to know a little more about the timing and the term of your 8% term deposit for me to run it as a scenario. The first thing I would have done is compare the performance of the 8% deposit to the performance of the XAO over the same time.

As this information is something you somewhat condescendingly declined to divulge, as an alternative, I downloaded the historical data on term deposit rates which the RBA provides without any air of conceit at the following URL:

http://www.rba.gov.au/statistics/tables/xls/f04hist.xls

Interestingly, the highest bank deposit interest rate it quotes for this milenia is 8.25% for one year term deposits in July 2008. Interesting because of the shape of the yield curve at that time and that it was right before the start of the GFC. Unfortunately though there are no statistics for five year deposit rates.

Knowing the details of your investments is of little interest to me as we are people with completely different circumstances and needs. Knowing details of your private affairs is of lesser interest as we are complete strangers and I somehow doubt we would find much about each other that would be of mutual interest.

Next, you'd be demanding copies of my terms of deposit from the relevant institution(s).

This is a fallacious argument and disingenuous as it ignores my earlier statements in this thread.

"Some person who (sic) I've never met" is demanding details of my personal investments, such details being irrelevant in the context of the general discussion. Why on earth would I feel obliged to compromise my privacy in response?

Indeed you are the object of the discussion so it seems.

I'm sorry if I have offended you in some way and I don't understand how telling us when and for what term the deposit you mentioned would breach your privacy but that is obviously a judgement you have made based on your personality.

Last comment from me to you on this, Tin Hat. Rant away as you will.

I only come here to learn about shares and investing not for the sake of an argument or for the purpose of becoming illuminated by the enigmatic charm of other people's lives. If I had time to idle away engaged in pointless babble I would spend more time wallowing around in the cesspit of political discourse over in general chat.

 

[Serpentis]

It's not the most elegant of ways, but you can use http://archive.org/ to poke around at historical snapshots of websites, including the websites of the banks and looking at what rates they were offering back then.

Here's Westpac offering an 8% 5 year Term Deposit on Dec 28, 2009:

http://web.archive.org/web/20091228...s/tools-calculators-rates/term-deposit-rates/

I'd sure love one of those right about now.

 

[MrBurns]

As this information is something you somewhat condescendingly declined to divulge, as an alternative, I downloaded the historical data on term deposit rates which the RBA provides without any air of conceit at the following

This is a fallacious argument and disingenuous as it ignores my earlier statements in this thread.

I'm sorry if I have offended you in some way and I don't understand how telling us when and for what term the deposit you mentioned would breach your privacy but that is obviously a judgement you have made based on your personality.
.

You're an insulting intrusive personality aren't you
Why don't you just accept that some people do not wish to be quizzed in any way on any details of their private business.
Are you a teacher or public servant ?
Move on please.

 

[Julia]

Perhaps consider that something does not have to be publicly offered to be available. The particular deposits at 8% were not advertised by the institution with which I have them. Sometimes asking "will you pay X% for Y Years" pays off. Banks needed money at that time. It absolutely wouldn't work now.

The more uncertainty about one's own private life and what needs, emergencies, etc may arise in that time.

I doubt any reasonable person would put all their available cash into a long term deposit, and would rather ensure that sufficient was separately available to cover all living costs for that period plus substantial extra for unexpected expenses.

On a forum we can all ask others whatever we see fit. It is, however, entirely up to those others to decide what they are prepared to offer in response. In order to answer one of your earlier questions, tin hat, I described pretty clearly my situation which backs up the decision to move into a lower risk environment.
I have reservations about such self disclosure because in the past I - and others - have then been in receipt of snide comments about affluence etc. Another member, when discussing brokerage, became the target for such remarks about amount invested. Such is not the business of anyone but that investor.

Potentially the next question could have been "And what will you do with those funds when that term is concluded?" and so on.

So there comes a point when questions feel intrusive and I decline to give further information.
That should not be a reason for rudeness in response imo, or argument that such information is not in fact private if deemed so by the person responding.

Perhaps we can just move on without the need for rudeness or pejorative descriptors of personality.

 

[Julia]

ANZ have followed their variable loan rate drop of 27 basis points with today moving to a 30 basis points cut in their online at call deposit rate, now down to 4.35%.

Off back to Rabodirect for me with these funds where I can get 4.95%.

 

[Vixs]

ANZ have followed their variable loan rate drop of 27 basis points with today moving to a 30 basis points cut in their online at call deposit rate, now down to 4.35%.

Off back to Rabodirect for me with these funds where I can get 4.95%.

TD rates are straight up dismal right now - cash isn't growth though so that's no surprise. Bond funds/ETFs have shown well above cash yields - sure there's capital risk but the yields are pretty decent for rates this low.

 

[Julia]

TD rates are straight up dismal right now - cash isn't growth though so that's no surprise. Bond funds/ETFs have shown well above cash yields - sure there's capital risk but the yields are pretty decent for rates this low.

Just in case there's any confusion here, I wasn't talking about TD rates, just online at call cash.
Have some existing TDs at decent rates.

Agree about the dismal TD rates currently offered.

 

[doctorj]

Agree about the dismal TD rates currently offered.

Compared to most places this side of Argentina, Russia and Ukraine, Australian deposit rates look very good...

1yr, LCY
Australia 4.70%
China 3.30%
Spain 2.00%
UK 1.50%
Italy 1.50%
Canada 1.35%
Germany 1.20%
USA 1.15%

 

[Julia]

Compared to most places this side of Argentina, Russia and Ukraine, Australian deposit rates look very good...

1yr, LCY
Australia 4.70%
China 3.30%
Spain 2.00%
UK 1.50%
Italy 1.50%
Canada 1.35%
Germany 1.20%
USA 1.15%

Our rates are nonetheless dismal compared to what they were a few years ago at about double.

 

[Ves]

Our rates are nonetheless dismal compared to what they were a few years ago at about double.

No reason why they can't halve again in the coming years. Still no technical recession in Australia for 21 years. It's bound to happen eventually. The system needs a shake out.

I'm not so much doom and gloom... but more, waiting for the end of the cycle so the phoenix can rise again from it's ashes.

 

[Muschu]

....
So far they haven't reduced the online at call deposit rate.

I just checked, today, on our online saver account rate with ANZ... A massive 2.75%. They also, some time back, set up a "Negotiator Account" for us.. now down to 3.45%.

Julia, I think it may have been you who posted a link to a website where interest rates, including term deposits, could be compared.

Do you, or someone else, have such a link please?

With thanks

Rick

 

[ROE]

I have multiple Commbank Goal Saver paying 4.40%

each account is limit to 100K providing you put in at least $200 a month and made no more than 1 withdraw

you get 4.4% ...I thought it is pretty good as I mainly stage my cash temporary ....

when the time come I do one large with draw and place on the stock I like...

you can have 2 accounts of Goal Saver per person and 2 Per Join Account

so taking your wife, you and join account you can have up to 600K of cash earning 4.40 at call

 

[Julia]

I just checked, today, on our online saver account rate with ANZ... A massive 2.75%.

That seems odd, Rick. I'm still getting 4.35% on my ANZ online saver, though I won't be surprised to see this dropped soon, especially if the Reserve Banks cuts rates again on Tuesday.

Julia, I think it may have been you who posted a link to a website where interest rates, including term deposits, could be compared.
Here you are, Rick:
http://www.infochoice.com.au