Term deposits the only low-risk alternative to low rates

Term deposits are the only low-risk alternative to savings accounts as typical interest rates take a battering, the Sydney Morning Herald’s resident money expert has claimed.

Responding to a reader who is concerned about the sliding returns offered by his savings account, Noel Whittaker advises that term deposits will provide higher interest, but lack the flexibility of a savings account.

He added that another drawback of a term deposit is that savers "will not be able to move to higher rates when the interest rate cycle starts to turn upward again".

Meanwhile, responding to another reader, Whittaker advises that for elderly people who want to use their home as credit while still providing property for their children in their will, a reverse home loan may be an attractive option.

According to a recent study from Deloitte, Western Australia’s reverse mortgage is growing particularly fast, with a 23 per cent growth recorded in 2008.

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