Cash News
Even the seemingly simplest products, such as savings accounts – where you would think nothing too tricky would be going on – often come with conditions the saver has to meet to earn higher interest.
Personal finance editor John Collett, signing off after 24 years.Credit: Janie Barrett
These conditions may include requiring that money be added to the account each month, otherwise the saver forfeits the bonus and earns next to nothing on their money. The providers know that many people – leading busy lives – are likely to miss one of the conditions.
Our superannuation system is second to none, but fund members, if they are to get the most out of their savings in retirement need to take control of how their savings are allocated rather than putting their heads in the sand, thinking that retirement is still a long way off, and it can be thought about later.
Most workers, for example, would likely be better off taking more investment risk with their retirement savings, at least for the first couple of decades of their careers in the expectation of earning a higher return over the long term.
Many people fall prey to tricks that have been around for a long time. Run a mile from “blue sky” investments – if the returns spruiked sound too good to be true, they are.
Be aware of fees, costs and taxes and how they can gobble up gross returns. And please, please remember that complexity is the enemy of small investors. Keep it as simple as possible and choose options that are easy to understand, where fees and charges are not easily hidden.
Leave the too-clever-by-half investments to the smarties who can afford to lose money, and never invest for reasons that are fundamentally to do with tax. Technology and financialisation are increasing the demand for reliable information and balanced reporting.
I hope my contribution has helped, if only by making you realise why you need professional advice. If you would like to drop me a line, you can at [email protected].
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.