Trump vs Clinton makes investors rush to savings
Share markets around the world, and in Australia, have endured significant sell-offs as the US election is decided today, 9 November. The ASX 200 index of the top 200 shares listed on the Australian Share Market has fallen more than 200 points in one month, from 5,480 on 11 October 2016 to 5,258 on Tuesday 8 November. Analysts say investors are selling down their shareholdings and looking for safe havens, including bank deposits in uncertain times. Savings accounts and term deposits with banks and credit unions have been the beneficiary.
Why are savings accounts seen as safe investments?
All deposits, including savings accounts, transaction accounts and term deposits with an Australian bank or credit union are guaranteed by the Commonwealth Government of Australia, up to $250,000. People with more than $250,000 to invest can break their cash into more than one deposit to fit under the cap.
Deposits in any Australian Authorised Deposit Taking Institution, which includes all the banks and credit unions offering savings accounts listed on Infochoice, are covered by the government guarantee. That means you can feel equally comfortable about depositing your money in a smaller or less well-known institution or a big four bank.
Why are investors flocking to bank deposits?
Many financial analysts have predicted a large fall in global share markets if Donald Trump is elected to follow Barrack Obama as next president of the United States of America. Australia could be particularly affected if a Trump presidency creates difficultiesand new tariffs in trade relations with China. Australian mineral and agricultural exports rely on a strong Chinese economy and a working trade relationship.
Some experts have also pointed to uncertainty flowing from a comfortable win by Hillary Clinton. A strong Clinton win would create a “delusion” that Clinton’s economic plan is acceptable to the American people, said economist Rob Burgess in the The New Daily. Secretary of State Clinton has boasted of low unemployment under the Obama administration, but these numbers hide a much higher under-employment rate said Burgess.
What are the best savings account rates now available?
The best maximum savings account interest rate now available in Australia is from RaboDirect’s High Interest Savings Account with 3.20 per cent for the first four months. This is higher than almost all term deposit rates now in the market.
The best ongoing maximum savings account interest rate is 3.15 per cent from the RAMS Saver account. You must make monthly deposits of $200 and no withdrawals to get the maximum rate.
The ME Online Savings Account has an ongoing maximum rate of 3.05 per cent (variable) when you open a linked transaction account with ME and use PayWave to make a purchase once per week.
You can research and compare savings accounts from all of Australia’s major banks and credit unions here.