Term deposits

[qldfrog]

I believe this is the list, I have researched it

List of authorised deposit-taking institutions covered under the Financial Claims Scheme | APRA

The authorised deposit-taking institutions (ADIs) listed at the bottom of this page are all covered under the Financial Claims Scheme (the FCS).

www.apra.gov.au

Citibank (australia retail) has just been bought back by NAB so that is one less gov guarantee for me

 

[Value Collector]

Actually you recommend it to me a good year+ ago and I have been sitting on the fence about it since then 4.8% currently I Just checked it sure does sound very sweet.

Have you ever had anybody default on their loan?

Plenti have a new market that just opened on their lending platform earning 9.2%.

 

[Dona Ferentes]

And as always, risk and reward!

Christopher Joye, often a fear-mongerer, wrote last week:
" ....the industry sector with the highest proportion of zombie [companies] in Australia is real estate, including construction, residential developers and commercial property, which is one reason why banks do not normally lend much to these companies. They have instead been forced to seek finance from non-bank lenders that charge higher interest rates in exchange for taking on the risk that these zombies default on their debts.

"The looming global recession has all the makings of a mega default cycle that will see many zombies wiped out in both the corporate and household sectors. The last time we had this sort of cathartic capitalistic clearing of the dead-wood in the economy was the 1991 recession. None of the current crop of non-bank lenders were in business back then."

Is such a scenario about to play out? I'd hope not but a rate like 9.2% is well north of BBSW by about 6%. Not investment grade.

 

[InsvestoBoy]

And as always, risk and reward!

Christopher Joye, often a fear-mongerer, wrote last week:
" ....the industry sector with the highest proportion of zombie [companies] in Australia is real estate, including construction, residential developers and commercial property, which is one reason why banks do not normally lend much to these companies. They have instead been forced to seek finance from non-bank lenders that charge higher interest rates in exchange for taking on the risk that these zombies default on their debts.

"The looming global recession has all the makings of a mega default cycle that will see many zombies wiped out in both the corporate and household sectors. The last time we had this sort of cathartic capitalistic clearing of the dead-wood in the economy was the 1991 recession. None of the current crop of non-bank lenders were in business back then."

Is such a scenario about to play out? I'd hope not but a rate like 9.2% is well north of BBSW by about 6%. Not investment grade.

I like Joye, he has been spot on about a lot of things for quite a while. Certainly could've made some serious money listening to his public calls. Funny to be called a fear monger considering he was a resolute housing bull for soooooo long against all the crash callers and was proven correct every step of the way. If the guy spent something like a decade being right on housing going up says it's going to go down, maybe worth a listen.

 

[Dona Ferentes]

I like Joye,...

Tend to agree. Coolabah Capital is one of the better houses around for pricing debt; mainly works with insto money.

Home - Coolabah Capital Investments

Coolabah Capital Investments Pty Ltd is a leading active long and long-short credit manager based in Australia that is responsible for managing the Smarter Money Investments portfolios, the BetaShares Active Australian Hybrid ETF (ASX: HBRD) and numerous institutional mandates.

coolabahcapital.com

 

[Value Collector]

And as always, risk and reward!

Christopher Joye, often a fear-mongerer, wrote last week:
" ....the industry sector with the highest proportion of zombie [companies] in Australia is real estate, including construction, residential developers and commercial property, which is one reason why banks do not normally lend much to these companies. They have instead been forced to seek finance from non-bank lenders that charge higher interest rates in exchange for taking on the risk that these zombies default on their debts.

"The looming global recession has all the makings of a mega default cycle that will see many zombies wiped out in both the corporate and household sectors. The last time we had this sort of cathartic capitalistic clearing of the dead-wood in the economy was the 1991 recession. None of the current crop of non-bank lenders were in business back then."

Is such a scenario about to play out? I'd hope not but a rate like 9.2% is well north of BBSW by about 6%. Not investment grade.

As with all investments in Plenti, you have the protection of the provision fund, which currently has over $13 Million in it, and which for the last 10 years has ensured not a single $1 of principle or interest has been lost by any Plenti investors.

Is it possible that if defaults skyrocketed above what the provision fund could handle that some of your capital will be eaten into?…. Yes totally possible, but it’s secured by a diversified portfolio of loans and the way I think of it is that even if defaults went 10 times higher than the current 1%- 2%, and exhausted the provision fund, you might only lose 10% or 15% of your capital that year, because the interest on all the loans that didn’t default that year offset some of the loss.

So I think of it like an investment earning 9.2% that 1 year out of 20 might lose 15%, the odds are definitely in your favour.

With term deposits you are guaranteed to lose in an after tax and inflation sense, with a 9.2% you are going to come out on top.

Are you further up the risk ladder? Yes it’s less risk than shares and other investments.

 

[Dona Ferentes]

Investment flows?

 

[rcw1]

Investment flows?

View attachment 158942

Good morning
Say you draw a line just under the100 as an average across the years to compensate for zero interest rates 2020/202. The deposits have still sky rocketed .... very interesting. Thanks for that @Dona Ferentes

Kind regards
rcw1

 

[qldfrog]

Should get a sizeable lump sum soon, some will go into TD, saving accounts
For 12 months TD, judo seems the best TD, and savings i will go rabobank.
Anyone aware of little known gens, better opportunities for TD, saving accounts?
I know about canstar, etc comparison tools

 

[divs4ever]

Should get a sizeable lump sum soon, some will go into TD, saving accounts
For 12 months TD, judo seems the best TD, and savings i will go rabobank.
Anyone aware of little known gens, better opportunities for TD, saving accounts?
I know about canstar, etc comparison tools

leading up to 2019 i decided i needed extreme flexibility so went for a 'saver account ' that paid monthly interest on daily balances

but that probably won't suit you as that account always has less than $20K in it , and the extra went into the share market and other stuff ( forward buying of durable and long-life goods )

good luck finding a good spot with Oz rates facing uncertainty ( the RBA considered a hike , but there will be pressure to cut in the US )

 

[sptrawler]

Should get a sizeable lump sum soon, some will go into TD, saving accounts
For 12 months TD, judo seems the best TD, and savings i will go rabobank.
Anyone aware of little known gens, better opportunities for TD, saving accounts?
I know about canstar, etc comparison tools

Of the mainstream banks, it looks like 5% is about the best.

 

[Dona Ferentes]

yin and yang ... from the press
.
The nation’s largest banks are beginning to ratchet up discounts on home loans once again, threatening a fresh outbreak of the “mortgage wars” and driving them to punish savers to protect profit margins ahead of an expected interest rate cut.

It comes just as bank net-interest margins – a core measure of profitability – have only recently begun to stabilise after years of deterioration. While margins usually expand when interest rates rise, the major banks competed away the benefits in an intense battle for borrowers refinancing fixed-rate mortgages.

The pain had eased in the past six months as lenders prioritised returns over the size of their loan books, but Jarden analyst Jeff Cai said loan discounting had come back to life with “more benign deposit competition”.

The Australian Financial Review revealed on Tuesday that the Commonwealth Bank, National Australia Bank and ANZ all made super-sized cuts to term deposit rates in recent days, in some cases by up to 80 basis points...

 

[qldfrog]

yin and yang ... from the press
.
The nation’s largest banks are beginning to ratchet up discounts on home loans once again, threatening a fresh outbreak of the “mortgage wars” and driving them to punish savers to protect profit margins ahead of an expected interest rate cut.

It comes just as bank net-interest margins – a core measure of profitability – have only recently begun to stabilise after years of deterioration. While margins usually expand when interest rates rise, the major banks competed away the benefits in an intense battle for borrowers refinancing fixed-rate mortgages.

The pain had eased in the past six months as lenders prioritised returns over the size of their loan books, but Jarden analyst Jeff Cai said loan discounting had come back to life with “more benign deposit competition”.

The Australian Financial Review revealed on Tuesday that the Commonwealth Bank, National Australia Bank and ANZ all made super-sized cuts to term deposit rates in recent days, in some cases by up to 80 basis points...

I locked my last one last week above 5%.but we all might suffer with lower interest on our day to day cash i am afraid