News and Opinion, sponsored by RaboPlus

By Bernard Hickey

Here’s the short version: Term deposit rates are edging up despite a flat Official Cash Rate  (OCR). That’s because of hot competition between the banks for local deposits, but rates will rise even faster late next year as the Reserve Bank is forced to raise the OCR, possibly quite quickly.

My mother in law likes to sleep at night so I’m suggesting she invests only for a 6-9 month term at around 5% to wait for higher rates late next year. She also needs to see how the extension of the government’s deposit guarantee scheme from mid-October next year works out.

Here’s the long version:

Every Tuesday from now on I’m going to review term deposit and debenture rates and examine the sorts of choices savers will have to make.

Every saver is different with different personal situations and risk appetites, so I won’t pretend to suggest a single option for everyone. Instead I’ll talk about the things my mother in law needs to think about before making a decision. My mother in law is retired and supplementing her pension with income from bank deposits. She is conservative and anything I say is designed to keep my mother in law happy over the long term (ie to make sure she sleeps at night).

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Raboplus was the first bank to break the silence following the Reserve Bank’s decision to leave the Official Cash Rate on hold at 2.5% yesterday. Rabo announced it would increase its one through to five year term deposit rates by between 20 and 30 basis points (bps).

Rabo raised its one year deposit rate by 20 bps to 3.05%; its two year rate by 25 bps to 4.10%; three year by 25 bps to 5.35%; four year by 30 bps to 5.90%; and five year by 30 bps to 6.40%.

See all term deposit rates for terms less than one year here, and for terms one year and over here.

Click here to see Bernard Hickey’s latest Mother-in-Law’s guide to term deposit rates.

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By Bernard Hickey

Here’s the short version. Interest rates are near the bottom of their precipitous fall since the middle of last year. Investors wanting higher interest rates are now seeing higher long term rates for deposits and debentures, but rates will rise further yet. In the meantime, the best thing for the risk averse investor to do is to hunt for the best short term rates on offer by guaranteed, investment grade financial institutions and to watch closely what the government is saying about how to extend, replace or remove the retail deposit guarantee. (Updated to include the RBNZ’s decision to hold the OCR at a record low 2.5%)

The long version.

Sometimes my 60-something mother-in-law (I dare not ask her age) quizzes me about what she should do with her cash savings. Like many other New Zealanders, she and my father-in-law live in their own mortgage-free home and supplement their pensions with the returns from these savings.

My mother-in-law is very risk averse, but would like as high a return as possible. My comments below should be taken as what I would tell my mother-in-law generally about the outlook for interest rates and what’s on offer now rather than any sort of specific financial advice. Every person is different with different appetites for risk and different personal situations.

The outlook for interest rates is uncertain at the best of times, but the global and New Zealand economies are in a particularly volatile and pivotal period where interest rates appear to be bottoming out and are likely to bounce over the next year or two, particularly for long term rates.

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(Updated on April 8 to include latest savings rate increases and ‘What’s hot right now’ section)

By Bernard Hickey

Here’s the short version. Interest rates are near the bottom of their precipitous fall since the middle of last year. Investors wanting higher interest rates are now seeing higher long term rates for deposits and debentures, but rates will rise further yet. In the meantime, the best thing for the risk averse investor to do is to hunt for the best short term rates on offer by guaranteed, investment grade financial institutions and to watch closely what the government is saying about how to extend, replace or remove the retail deposit guarantee.

The long version.

Sometimes my 60-something mother-in-law (I dare not ask her age) quizzes me about what she should do with her cash savings. Like many other New Zealanders, she and my father-in-law live in their own mortgage-free home and supplement their pensions with the returns from these savings.

My mother-in-law is very risk averse, but would like as high a return as possible. My comments below should be taken as what I would tell my mother-in-law generally about the outlook for interest rates and what’s on offer now rather than any sort of specific financial advice. Every person is different with different appetites for risk and different personal situations.

The outlook for interest rates is uncertain at the best of times, but the global and New Zealand economies are entering a particularly volatile and pivotal period where interest rates appear to be bottoming out and are likely to bounce over the next year or two, particularly for long term rates.

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(Updated September 22. I’ve changed my recommendations because of a variety of rate changes.)

The following article is not financial advice for everyone. However, it is what I’d tell my mother-in-law about where to put any spare money. It is written as my view of the best term deposits and debentures from all those on offer up to 1 year, over 1 year and call accounts.

I’d encourage any reader to have a look at these rates tables referred to for a comprehensive view at what’s around. Seriously. Don’t take my word for it. Everyone is different and has their own needs and risk appetites. This is written for my retired mother in law (and father-in-law) who I want to keep happy, both from a risk and return point of view. They, of course, want the highest return for the lowest risk.

I will detail the highs and lows from a risk and return point of view and give my recommendation at the bottom of each section.

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(Updated July 14. I’ve changed my recommendation because Kiwibank has dropped its 5 month special of 8.85% to 8.6%, meaning ASB’s 8.7% for 9 months is the best rate below one year.)

The following article is not financial advice for everyone. However, it is what I’d tell my mother-in-law about where to put any spare money for the short term. It is written as my view of the best call accounts.

I’ve also written guides for the best call account , the best term deposit (or debenture) for over 1 year and the best PIE accounts.

I’d encourage any reader to have a look at the rates table referred to for a comprehensive view at what’s around. Seriously. Don’t take my word for it. Everyone is different and has their own needs and risk appetites. This is written for my retired mother in law (and father-in-law) who I want to keep happy, both from a risk and return point of view. They, of course, want the highest return for the lowest risk.

This website does take advertising from deposit takers and lenders, but this piece is not influenced by that advertising in any way. My inlaw’s long term goodwill is more important to me than any advertiser’s business and, of course, I value my editorial independence very highly. This post will be updated whenever there are any changes to rates.

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