NZ Savings Accounts suck, what to do ....... Is it property boom causing?

Please note this sub-forum does not provide professional finance advice. You should seek advice from a licensed financial advisor.

To post in this sub-forum you must have made 100 posts or have Trust status or have completed our ID Verification.

If investing please consider our affiliate link for new accounts: Sharesies.

Forums › Finance and wealth management › NZ Savings Accounts suck, what to do ....... Is it property boom causing?

1 | 2 | 3 | 4

Networkn
32349 posts

Uber Geek

ID Verified

Trusted

Lifetime subscriber

#1678478 27-Nov-2016 19:41

billgates:

India has one of the highest interest rates on term deposits. Last year it got up to 12% and now it's around 7.50%. Not sure how easy it is for a Non-Indian to open an account in India but I have dual citizenship so it was relatively easy. Ofcourse inflation is higher there compared to NZ so for overseas dual citizener's it's a bonus.

http://www.bankofindia.co.in/english/RupeeTermDeposit.aspx

Hahah, want to invest some cash for me ? LOL

MikeB4

18435 posts

Uber Geek

ID Verified

Trusted

#1678479 27-Nov-2016 19:51

dafman:

MikeB4:

For everyone that gets high interest on deposits there are families that struggle due to high interest rates on borrowing. The current situation is fine.

It ain't fine. The current situation punishes savers and rewards spenders and borrowers. Remember in the past it used to be the other way around?

Because of spenders and borrowers, global banks are carrying unsustainable high levels of debts which, to date, they have been able to shift deck chairs to postpone the inevitable (ie. large-scale losses on debts that cannot be repaid).

We now have massive asset bubbles because artificially low interest rates have driven investors to take on high levels of risk with housing and shares to chase an acceptable level of return.

Time will tell, but I'm reckoning the future ain't bright.

It would be so easy for a young family to pay 18% on their $400,000 mortgage.

Then again it will be harder because they are unemployed as business finance reduces investment and job creation and pushing up liquidations as our competitiveness has tanked. Then government borrowing rises to finance growing joblessness.

mdav056

607 posts

Ultimate Geek

Subscriber

#1678482 27-Nov-2016 20:06

To answer the original question, perhaps you should have a look at LendingCrowd or similar. With LC, you'd be looking at 3-5 years with interest and repayments monthly (which you could reinvest). I've got some money with LC, and only taking A investments, I'm getting >9.5% net interest (after fees, before tax).

gml

JimmyH

2886 posts

Uber Geek

#1678529 27-Nov-2016 21:44

It's not the interest rate per se that matters, from a saver's perspective, but the after-tax real interest rate.

If you are earning 10% when the inflation rate is 8% then you are actually making a negative return on your savings (10% @ 33% tax - 8%) equals negative 1.3% real. Despite 10% interest, you are actually losing money.

You are actually better off making 3.5% when the inflation rate is sitting around 0.5% (pretty much where it currently is) than 10% above. (3.5% @ 33% tax -0.5%) equals positive 1.8%

And current interest rates are not really due to the Auckland property boom (although the Auckland property boom is probably due, at least in part, to low interest rates). It's more a case of low inflation, a strong dollar, and central banks elsewhere flooding markets with liquidity that's causing it.

If you want higher returns, you can get them. You just need to be prepared to take more risk.

TeaLeaf

6325 posts

Uber Geek

#1678567 27-Nov-2016 22:53

thanks ill pass that on.

mines mostly in medium risk managed funds. obviously savings and cheque and property. i find diversifying spreads the load. i considered gold after Trump got elected.

Rikkitic

Awrrr
18657 posts

Uber Geek

Lifetime subscriber

#1678590 28-Nov-2016 00:45

The price of gold plummeted after Trump's election. It has gone from around $1330 to about $1180.

Plesse igmore amd axxept applogies in adbance fir anu typos

Fred99

13684 posts

Uber Geek

#1678634 28-Nov-2016 09:40

Rikkitic:

The price of gold plummeted after Trump's election. It has gone from around $1330 to about $1180.

It actually spiked - corresponding with a sharp fall in equity markets - soon after it became apparent that Trump had won.

Then it started falling - and stock markets recovered strongly - when it sank in that Trump is going to abandon climate change treaties, will implement policies to drill drill drill for oil, coal, whatever, scale back the EPA, deregulate Wall St etc.

That's a great thing for big business - as for the human race - oh well - who cares?

Equinox IT

Cloud spending continues to surge globally, but most organisations haven’t made the changes necessary to maximise the value and cost-efficiency benefits of their cloud investments. Download the whitepaper From Overspend to Advantage now.

nzkiwiman

2585 posts

Uber Geek

Subscriber

#1678662 28-Nov-2016 10:18

I am earning 0.35% on my "can't touch" savings account, which I am sure was better 2-3 years ago when I opened it, though I have no documentation

Been toying with the idea of a term deposit with $10k, but ...

jonathan18

7413 posts

Uber Geek

ID Verified

Trusted

#1678689 28-Nov-2016 10:47

@TeaLeaf: given you seem to have been unaware of the actual potential interest rates on savings in NZ, I'm not sure if you've come across interest.co.nz? Saves having to check out all institutions' websites...

The site has comparisons of all current rates of many financial vehicles, including:

Online savings accounts

Standard savings accounts

Term deposits < 12 months

Term deposits => 12 months

TeaLeaf

6325 posts

Uber Geek

#1678734 28-Nov-2016 11:41

jonathan18:

The site has comparisons of all current rates of many financial vehicles, including:

Nice one Jonathan, you are right, Im out of the loop as most of money is offshore. I was asked for advice by a friends younger family member and I didnt have an answer other than managed funds and long term and low risk if you want to make money over the long period due to the potential of a GFC2.0 etc.

sbiddle

30853 posts

Uber Geek

Retired Mod

Trusted

Biddle Corp

Lifetime subscriber

#1678848 28-Nov-2016 13:22

nzkiwiman:

I am earning 0.35% on my "can't touch" savings account, which I am sure was better 2-3 years ago when I opened it, though I have no documentation

Been toying with the idea of a term deposit with $10k, but ...

You've obviously got your money in the wrong type of account. You should easily be earning 2.5% and have your money on call with any of the big banks.

TeaLeaf

6325 posts

Uber Geek

#1678855 28-Nov-2016 13:46

I think one of the banks, might be aussies Wetspac that offers 2.95% on a normal internet savings account. Ill have to recheck that.

I think its hard to give any kind of advice, and important to realise its not advise its just someones opinion. But, I think its important and great that young people ask what to with what seems like poultry to some, a large amount to them, because salaries havnt gone up by a lot in recent years (perhaps negatively vs inflation), just the paper estimate of real estate.

Oblivian

7296 posts

Uber Geek

ID Verified

#1678858 28-Nov-2016 13:51

Once upon a time I had my life savings in an online account on 8%. Needless to say it was earning, a LOT per month. I lived off the $650/mnth interest alone paying off the credit card. The rest was savings.

Now, some in a Serious Saver (2.6%), and some in an every day use .35 and now and then a term deposit if I know I don't need a chunk for a while.

But with the housing crunch as it is, and saying owning your own is now a dream. And investment is pushing up prices. You don't really need to how we got there it seems - Personal Banking manager noted I had heaps and called me up advising I would be better to invest in investment property or put some into managed funds. Wait, what.. I should buy a house for income. Isn't that what everyone points the finger at presently...

But on looking at the managed funds, unless you go big risk and unless I read it wrong it seems OK on paper. Until you want to take it back and they take their management cut. $1.5-2% fee on something that averages 5%, taking off taxes leaves you with.. 3%. Much like a term deposit or serious saver wins you already, no?

jonathan18

7413 posts

Uber Geek

ID Verified

Trusted

#1678868 28-Nov-2016 14:16

TeaLeaf:

I think one of the banks, might be aussies Wetspac that offers 2.95% on a normal internet savings account. Ill have to recheck that.

You don't have to go far as I've done the work for you - it's all in those links I posted earlier!

In terms of on-call accounts, typically the highest rates are paid by RaboDirect; looks like this is currently the case, with them offering 3% with their Premium Saver if the balance increases by $50 in that month.

If you don't need the money for a while, many banks are doing 3.4% for one year, which isn't bad.

TeaLeaf:

I think its hard to give any kind of advice, and important to realise its not advise its just someones opinion. But, I think its important and great that young people ask what to with what seems like poultry to some, a large amount to them, because salaries havnt gone up by a lot in recent years (perhaps negatively vs inflation), just the paper estimate of real estate.

Poultry for some, versus fish for others?? Love it!

TeaLeaf

6325 posts

Uber Geek

#1678874 28-Nov-2016 14:26

Yeah I check the rates out again.

Was surprised Kiwibanks savings rate and term deposits. As in my experience they suck as a cheque account, where as ASB are brilliant but their savings suck.

I think their credit rating is important too, and was surprised to see Kiwibank at the top of the list, is this due to being owned by NZ?

You might get a great rate say 3.5% but if the company has a DDD rating (lol) and when GFC2.0 hits, you might find the bank goes down with your money. Its happened before.

I think one thing here in NZ is we do have a very nonchalant look at money hence the property boom going against the grain, we dont have a world view (some do clearly, but most live their lives day by day, hour by hour).

Having ties in Aus and Europe I unfortunately have to keep an eye on things. But I think its a good thing.

The wage slaves with $600k mortgages who do live very narrow minded ( I was going to use a psychological term lol) might get a shock one day, and I certainly hope it happens, not to hurt these people, thats terrible, but clearly its impacting a lot of have nots and those wanting to buy on the down.

1 | 2 | 3 | 4