With investment amounts of $100,000 or more, a term deposit could be a good option while you decide what to do with the money. A term deposit offers a fixed rate of return, and is very low-risk. Balances up to $250,000 in a term deposit are protected by the Australian Government Guarantee Scheme.
If you have recently inherited a large amount of cash, have proceeds from a home sale with no new home to buy yet, or are an investor who is in between opportunities, a $100,000 term deposit provides a safe solution for holding onto your cash. This is also a good account to consider if you want to ensure that your retirement funds will be available for when you are ready to start spending them.
Some banks in Australia have added the option of notice term savers accounts, where instead of choosing a length of time for the deposit, you choose how much notice you need to provide before withdrawing the money. Depending on the institution, you may find that the interest rates are slightly lower, but this is worth considering if you want a little more flexibility.
Bonus savings accounts often offer higher interest rates than term deposits, but you'll need to be willing to meet a few ongoing monthly account conditions (such as a monthly deposit condition).
If you're happy to meet some ongoing requirements like making regular deposits, making a set number of purchases or limiting your withdrawals then you can get a higher rate with a bonus saver. But if you simply want an account you can 'set-and-forget' your deposit, a term deposit will be the way to go.
Take a look at Finder's savings account comparison to see how much interest you can earn with a bonus savings account instead of a term deposit. Remember to note the different monthly account conditions for each account in order to earn the maximum bonus rate. You can use the calculator above the table to change your initial deposit value and the term length.
Q. How are penalties calculated for an early withdrawal on a term deposit of $100,000?
A. The financial institution will generally charge an administration fee, which will vary as well as adjust the interest payments. For example, if you initially chose a term of five years but need to withdraw after three, the interest rate will be changed to the lower three year rate.
Q. Can this type of account be used for my SMSF?
A. Yes, so long as it meets the terms of your SMSF, you can use a term deposit to help accelerate its growth. Learn more about SMSFs.
Q. Will my retirement savings be safe in a $100,000 term deposit?
A. A term deposit is a good investment for retirement savings, although keep in mind that at any amount over $250,000, you will not be protected by the Australian Government Guarantee Scheme. For more information you can read our guide on how much you need to retire comfortably in Australia.
SPONSORED: We take a look at whether term deposits or savings accounts serve you better.
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Term deposits have many benefits, but there are also a few things to be aware of.
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While the stock market continues to fall and recession fears ramp up, we're seeing term deposit rates increase for the first time in years.
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