Ask Paul: Where should I put savings while term deposit rates are low?


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Q. I am 71 and have $100,000 in a term deposit. With interest rates so low I need to find an alternative to this.

Is there anything you can suggest? - Margaret

The problem here, Margaret, is risk. $100,000 is a lot of money and I do understand that you want to earn more than 1% to 2%.

paul clitheroe

You could look at a few options, but they all come with extra risk.

You could put some into high-dividend-yielding shares. A mix of these would produce income of around 5% and franking credits, but the capital value will move up and down with the market.

An income fund may interest you. Most major fund managers have one of these.

Again, there is more risk, but the returns are generally higher.

Given the significant amount you have to invest, my preference is for you to seek professional advice.

$100,000 is not an amount to be trifled with and it is important that you invest with a very good understanding of the risks, the potential returns and, of course, any impact on any pension entitlements you may have.

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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. Click here to ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. Please view our disclaimer here.

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