Couch potato savings or body builder savings?

Most of us open a savings or cheque account early on in life and allow our income and savings to sit there. But is that really the best place for your savings? Do you know what sort of returns you’re getting from your bank deposit account?


It might surprise you to know you can get your money to earn better returns by simply putting your savings into an alternate account. Here are some things to consider.

Know your purpose

Why are you saving anyway? Is it for a big purchase, for a rainy day, to kick old spending habits or to ensure income in retirement? It’s important to know what you’re working towards and when you’ll want your cash. Knowing this makes choosing an alternative to standard bank deposits much simpler.

Why am I saving?

  • Planning for your hopes and dreams, these are people saving for a home or car purchase, holiday or travel or a once-in-a-lifetime event.
  • Setting good saving habits. This is anyone who wants to take control of their spending and savings habits.
  • Simplify your self-managed super fund. These are SMSF members who are looking to simplify their admin.
  • Start saving at a young age. These are young adults who want to start setting themselves up for the future
  • Planning your future. These are people looking for a ways to boost their retirement planning
  • Beyond retirement. Once you have retired, do you want to set-up a regular source of income?

Crack the piggy bank

If you have $1000 or more, you should consider a term deposit with strong returns, or a conservative active cash fund or a slightly higher risk higher income fund.

If you have $10,000 or more, you could enter the share market through a protected equities offering. Funds like this are ordinarily the domain of the wealthy in Australia, but there are options for those with smaller amounts to invest.

Take it or leave it

If you want to be able to draw on those savings at any time, make sure you choose a savings option that allows you to take out your money when you want it. A three day turn-around is pretty standard. Alternatively, if you’re happen to set-and-forget those funds for a period of one month up to five years, you can lock in a healthy fixed rate and take the funds out when they hit maturity.

Difference in dollars

It’s always a matter of balancing risk and return. The safest and lowest returning option is a bank deposit and cash management accounts, which often pay interest at a rate in line with the RBA cash rate. If you are prepared to lock up your money for a fixed period, you should earn a bit more interest. Next you might consider an active cash or higher income solution that holds a range of interest-bearing investments.

These can deliver returns that are 1-3% above the RBA cash rate. On the share market side of things, a Protected Equities fund aims for strong long-term returns that are around 5% above the inflation rate. These are good ways to complement standard savings dependent upon time frame and a suitable risk/return trade-off.

Let's kick your savings off the couch and get it to start working out!