Finding the right term deposit
Should you invest over a short term or long term? It depends on what fits your needs
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National Seniors Term Deposit
With no fees and flexible terms, the National Seniors Term Deposit allows you to lock in a competitive interest rate that’s protected for your fixed term.
You can earn competitive interest rates up to 4.10% per annum.
National Seniors members can earn a special rate of 4.05% for 5 months or 4.10% for 6 months on maturity for term deposits over $5,000.
If you are approaching or already in retirement, making the most of your savings is more important than ever.
One popular and low-risk option is a term deposit – a savings account where your money is locked away for a fixed period at a guaranteed interest rate.
But how long should you lock in your funds? Choosing between short-term and long-term term deposits can significantly affect your financial flexibility and returns.
A short-term term deposit typically ranges from one to 12 months, while a long-term term deposit can span from one to five years or more. The longer the term, the higher the interest rate tends to be, though this can vary with market conditions.
Short-term term deposits offer greater flexibility. They’re ideal if you want access to your money soon, perhaps to fund a holiday, make a major purchase, or cover medical costs. They also give you the chance to take advantage of rising interest rates more frequently, as you can reinvest at a better rate when your term ends.
However, interest rates for short-term term deposits are often lower, and frequent reinvesting can be a hassle, especially if rates fall or your plans change.
Long-term term deposits are more suited to those who don’t need immediate access to their funds. They offer rate certainty and often better returns. This can be especially appealing to retirees looking for reliable income from interest payments.
The downside? If you need to access your money early, you may face penalties or interest rate reductions. And if interest rates rise during your term, you’ll be locked into a lower rate.
So, what’s right for you?
The best choice depends on your financial goals, income needs, and risk tolerance. If you value flexibility and anticipate needing funds soon, a short-term term deposit may be best. If you have a financial buffer and want to lock in a good rate, a longer term could work in your favour.
Many retirees choose a laddering strategy, which involves splitting their savings across multiple term deposits with staggered maturity dates. This offers a balance between access and better returns.
Whether you choose a short or long term, term deposits can be a reliable part of a low-risk retirement income plan.
Speak with a registered financial adviser to align your choice with your broader financial goals and lifestyle needs.
National Seniors Australia Ltd ABN 89 050 523 003 arranges deposits as an authorised representative (AR 282736) of Auswide Bank Ltd (Auswide Bank) ABN 40 087 652 060, AFSL and Australian Credit Licence 239686. Auswide Bank is a wholly owned subsidiary of MyState Bank Limited ABN 89 067 729 195, part of MyState Limited ABN 26 133 623 962. We do not provide any advice based on any consideration of your objectives, financial situation or needs. A target market determination can be obtained at auswidebank.com.au/tmd. Before making a decision to invest, please consider the Terms and Conditions. If you make a deposit, we will receive a commission from Auswide Bank. For more information about our relationship with Auswide Bank please read the Financial Service Guide contained in the Terms and Conditions*. This account is protected by the Australian Government deposit guarantee. Up to $250,000 of deposits in ‘protected accounts’ held by an entity with Auswide Bank are covered under the Financial Claims Scheme. Information on the Financial Claims Scheme is available at www.fcs.gov.au
