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Tactics for super-sized savings goals
When you’re looking to save a large amount of money (for example, a house deposit or for your retirement fund) there are some different tactics you could use to help support your goals, just remember to do your research to decide what works best for you!
A high-interest-earning savings account is exactly what it sounds like – an account with an above-average interest rate.
However, if you’re saving for something way off in the future our experts agree that once you hit $10,000 in savings, it might be time to explore some other options to make your money work harder for you – such as investing.
Pros: A high-interest account can help you earn interest on top of the money you’re putting aside, helping it to grow a bit more quickly than if it was in a piggy bank or transaction account.
Cons: They usually require regular deposits to qualify for bonus interest rates, and with inflation rising they may not be as useful in the long term. Plus, they come with lots of terms that can greatly affect your returns.
Hot tip
Make sure you check the terms - most accounts will offer an introductory rate for the first few months before it drops down, so make sure you confirm the rate for the full duration you’ll be saving.
These are available for people who have above $5,000 in savings and tend to offer a higher interest rate, however in return you can’t access the money for a set period of time. This is a good option if you’ve already built up a little bit of savings and are keen for a higher interest rate – with the added rigour of not being able to withdraw it.
Pros: Higher interest rates and a guaranteed minimum at the end of your saving period since you can’t withdraw it.
Cons: No access to your funds – plus additional costs or lower interest rates if you need to make an early withdrawal.
If you’re a homeowner paying off a mortgage, then an offset account can be a great way to reduce the interest charged on your home loan.
Your offset account is looked at by banks when calculating the interest rate on your home loan each month: the more you have in the offset account, the less you pay in interest on your mortgage.
While the interest rate applied to the offset account may not be as high as a dedicated savings account, it can often be balanced out by the reduced interest charged on your home loan. It’s a bit of a win-win.
Pros: Reduce the interest charged on your mortgage while growing your savings.
Cons: Can have higher fees than other accounts and aren’t available for all loans.
| Method | Pros | Cons |
|---|---|---|
| High-interest savings accounts |
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| Term deposits |
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| Offset accounts |
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If you’re at the stage in your savings where you’ve got good habits and a savings buffer all locked down, plus at least $1,000 to start with, it’s time to graduate to the investing stage of your life.
The information set out above is general in nature and has been prepared without taking into account your objectives, financial situation or needs. Before acting on the information, you should consider whether the information is appropriate for you having regard to your objectives, financial situation and needs. By providing this information ANZ does not intend to provide any financial advice or other advice or recommendations. You should seek independent financial, legal, tax and other relevant advice having regard to your particular circumstances.