A warning on interest rates

With a further fall of the official interest rate, interest rates paid to investors have fallen again.

Term deposit rates are pitiful.  Not only are they low, they are pretty much half of the current inflation rate.  What that means is that in real terms, balances are going backwards.

But what is really scary is what interest rates are being paid on “investment” accounts. 

We have recently seen examples where clients are earning nothing (like zero) on account balances up to $250,000.  Sometimes this has been missed by a client as there had been, until recently, a decent interest rate paid.  Sometimes it has been missed due to a bank publicising the headline interest rate for balances over say $500,000.

But beware if chasing higher interest rates.  If someone is paying over the odds, then tread carefully.  Very carefully.  Often it means the investment is risky.  So is an extra % or two really worth the risk of losing your hard earned dollars?


At MRS, we will spend today planning for your success.