Compare term deposits for long-term interest highs, says expert

Investors should compare term deposits and "juggle" their savings plans in order to reap the best long-term returns, it has been suggested.

Peter Crump of Portfolio Planning Solutions observed that while term deposits offer savers a good level of security, it remains important investors select the right option.

Speaking to the Sydney Morning Herald, he noted that while chasing shorter term "specials" can be rewarding, the strategy can also be exhausting and over the longer term may not necessarily lead to higher returns.

The comments came as the newspaper observed that while last year’s three-year term deposits offered about 5.4 per cent interest, this year’s equivalents are offering about 6.8 per cent.

It noted that savers are therefore at the mercy of term deposit interest rate changes, adding: "The trouble with locking into a three or five-year term because the instrument offers the best return at a particular time is the possibility than in a year from now the return being offered may be better."

Savers were therefore advised to consider a portfolio approach to term deposits whereby funds are invested across a series of maturity patterns.

Last week, Canstar Cannex financial analyst Adam Beu told News Limited that with the Reserve Bank expected to lift interest rates again in the coming months, the outlook for term deposits remains positive.

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