Ask Paul: Can I invest in a term deposit overseas where rates are higher?


Since term deposit rates in Australia are at their lowest, is it possible to invest in a term deposit overseas where interest rates are higher?

Or would the currency exchange variation offset this advantage when trying to return the money to Australia? - Anoop

Interesting question, Anoop.

paul clitheroe

You have hit the nail on the head. Sure, you can get better rates in some countries, but these will not be first world economies, where interest rates are all pretty close to zero, so currency will be the key driver of return.

I watch with huge amusement "expert" predictions on currency.

Here I can tell you that while some get it right for a year or two, currency guessing is a mug's game. You may as well go for dog six in whatever race you choose at the Dapto races.

If you have money you need in the short term, I'd stick with deposits with our local financial institutions.

If you can invest it for the longer term, say five years or more, then you probably need to look at growth assets such as shares.


Paul Clitheroe AM is a respected financial adviser and Money's founder and editorial adviser. He is chair of the Australian Government Financial Literacy Board, and author of several personal finance books. Click here to email Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section.
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