Is a high interest savings account right for you?
With the average life expectancy increasing and the cost of living rising, some Australians may be worried their retirement savings won’t last.
The first things to consider when planning for your nest egg are how much money you have, how much you’ll need, and where that money might come from.
You might already have an idea of how much money you’ll need to live year to year. To give you a general guide, depending on your lifestyle, the average Australian couple needs between $34,560 and $59,619 a year to enjoy retirement according to the ASFA Retirement Standard benchmarks. For singles, those figures are between $23,996 and $43,372.*
Apart from superannuation and investments, any savings you accrue now will improve your chances of enjoying life after retirement – and with solid returns and bonus interest rates, a high interest savings account can help you grow your money faster.
Here’s what you should look for in a high interest savings account, as well as some of the potential pros and cons.
What to look for in a savings account
You’ll want your savings to increase as quickly as possible, so it’s best to find a high interest savings account that offers:
· Great rates. Not all high interest accounts are created equal, so always compare offers. Even a small difference in interest rates can have a big impact on your savings over time.
· Minimum fees and charges. Always review all the fees and charges associated with an account to avoid nasty surprises.
· Access. Make sure you have easy access to your money, preferably 24/7.
· Insurance cover. The government guarantees deposits up to $250,000 in Authorised Deposit-taking Institutions (ADI), which are regulated by the Australian Prudential Regulation Authority (APRA). You can split up amounts over $250,000 into two or more accounts for peace of mind.
Term deposits and notice saver accounts are both good options for increasing your retirement fund. These accounts can offer attractive interest rates when you lock your money away for a specified term or agree to provide notice before making a withdrawal.
If you’re looking for a high interest savings account to build your nest egg, we can help you compare offers from our range of providers, which includes big name banks and smaller credit providers.
This includes, but isn’t limited to:
· Australian Military Bank
· Catalyst Money
· Credit Union SA
· Hunter United
· Illawarra Credit Union
· People’s Choice Credit Union
· Your Credit Union
Weighing up the benefits of a high interest savings account
Possibly the greatest value in putting your money into a high interest savings account is that it’s easily accessible. So, if you need cash in a hurry or want to take a spontaneous trip, you can get what you want when you need it.
Some of the other benefits of keeping your money in a high interest savings account may include:
· Low or no monthly fees.
· Bonus rates to help boost your savings. These can be subject to certain conditions – for example, minimum monthly deposits and limited withdrawals – which can act as added incentive to save.
· Interest is calculated daily and added to the account monthly. Interest rates are subject to market fluctuations. While that means you may have to endure interest rate decreases, it also allows you to take advantage of rate rises – either way, your money keeps growing.
· You can monitor your account 24/7.
When choosing an account, consider that many high interest savings accounts don’t allow BPAY and direct debit transactions. However, these are often available through a linked transaction account.
Overall, high interest savings accounts offer a safe and secure way to build your wealth. It’s never too early or too late to start planning for the future, so take control of your finances now to enjoy the lifestyle you want after you retire.
Start comparing high interest savings accounts now.
*These figures are correct as of 30 September 2016. However, due to inflation, retirement costs will rise over time.