Savers must balance risk, return and access

Risk, return and access are the keys to a cash investment strategy. All saving is a trade-off between risk and return. And if you see an offer that looks too good to be true, then it probably is and should be considered higher risk.

Most cash savers use a transaction account and a savings account such as an online variable savings account. The transaction account might pay zero interest while charging you around $5 per month to keep it open. You have no guarantee of what interest you are paid since the return can vary with the RBA's rate.

Term deposits are lump sum investments in a bank account that earns you a fixed interest rate over an agreed time. Normally, the term deposit pays you a higher interest rate the longer you are prepared to keep your money in it. Returns on term deposits are also typically higher than a bank savings account.

Source: The Daily Telegraph