Term Deposits used to be the best choice. With their returns dropping dramatically it’s no longer possible to get those 5% returns. So if you’re looking for a safety focused investment, that offers much higher returns, Australian Bonds are the right choice. Bonds give you:
- Flexible length and your investment is not locked in for the full term
- A defensive investment for any portfolio
- Your money is available before the end of the term with no penalties to get your own money back
- Returns a regular, reliable steady income rather than a lump sum return
- Little to zero risk of losing your money
- The possibility of a flexible rate, fixed to interest rates or the inflation rate. This means that if rates go up, so do your returns!
Direct Bond Access now in Australia
Bonds were used exclusively by banks for years. In fact it’s one of the ways banks use to invest your term deposit money into. But for the first time in Australia, Bonds are now directly available to retail customers through the Australian Bond Exchange for as little as $10,000 and this offers a powerful replacement to Term Deposits.
Bonds offer you:
- Interest at regular intervals, not just the end of the term.
- Buy extra during the life of the bond (subject to availability).
- Withdraw some or all of your money at any time with no penalties, your money is not locked up for the entire term.
- The returns can be flexible, which means if the interest rate goes up, you earn more money over the long term!
The limits of Term Deposits
For example, you might have $100,000 and take out a 12 month term deposit at a 0.6% interest rate. After 3 months, the bank raises the term deposit rates up to 1.1%. But that’s for new customers only, you can’t change and get the better rate, or roll your current investment into the new one. Compare that with bonds: You invest your $100,000 in corporate bond at a floating rate of 4.75%. If after 3 months rates rise by the same amount to 5.25%, your bonds now start paying 5.25% and you don’t have to do a thing!
If you’ve been following the market, you’ll see that no one knows what’s happening. And while no one can know for sure what’s going to happen, you can prepare and survive – even THRIVE – in the coming market.
Direct access to Australian Bonds through the Australian Bond Exchange can now offer you better rates and better options compared to term deposits. If you’d like to know more you can Contact Us, or enter your details below and we’ll contact you.