Ask Paul: My son says I'm wasting money keeping it in the bank


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Dear Paul,

Thank you for your recent offer to answer cost-of-living questions.

I am a pensioner and have saved up a few thousand dollars for a rainy day.

ask paul clitheroe my son says I'm wasting my money by keeping it in the bank

My son keeps telling me to invest it, but I am happier keeping it in the bank.

I am managing okay with my bills. But I like knowing I have this for unexpected expenses.

He says it's wasted just sitting in the bank. Am I really doing the wrong thing here? Is there a way to compromise? - Leanne

You know, Leanne, there is no compromise here. This is your money and your decision.

You are a pensioner. Your son is not doing the wrong thing - he wants the best for you and wants you to earn higher returns. I applaud that.

But he is incorrect.

He sees risk through the eyes of a youngster, which is great for him. If he makes a poor investment decision, so be it. He can easily re-earn that money.

But I agree with you completely. You see risk through the eyes of a retiree who cannot work to replace lost money.

What I would do is to thank your son for his advice, but let him know that the security of your money is really important to you.

With rising interest rates, you should also be able to get more than 4% on your money in a bank with effectively no risk. This is a terrific return for little risk.

You can tell him you are being both secure and earning great returns.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. View our disclaimer.
Sam P
August 16, 2023 11.23pm

Paul is spot on. Couldn't agree more. Everyone should have an emergency fun, no matter how big or small, that is easily accessible.

George Kenos
August 21, 2023 6.40am

Hi Paul we sold our house and down sized we are on a reduced aged part pension with a small income stream monthly we have deposited the profit from the sale of our house into Bank interest which nearly makes up for the for the lose on our reduced aged pension we just think the money is safer in the bank do you think we are doing the right thing and also would we have to do a tax return regards George.