The Aussies getting fleeced on their savings


Families race to exit expensive schools, shares forecast to rise up to 7%, and one simple step could quadruple your savings rate. Here are five things you may have missed this week.

Private school exodus as cost of living soars

Millions of Aussie families are switching to public schooling to help save their budget.

high interest savings accounts

According to Finder's Parenting Report 2023, 17% of parents with primary-aged children are contemplating moving their child from a private school to a public school to reduce their expenses.

A further 10% of families have already made the switch to a public school as living costs skyrocket.

The largest exodus is expected in NSW, where one in five parents admit they are considering moving their children from private to public schools. This is in addition to the 14% who have already moved to less pricey pastures.

It comes as Finder analysis shows back-to-school costs in 2023 are set to burn an $11.4 billion hole in parents' pockets - an average of $2,325 for primary school kids, and $4,212 for secondary students.

CommSec tips shares to lift 4-7% in 2023

Aussie shares had a tough year in 2022, dishing up a loss of 5.5%.

However, online broker CommSec is forecasting the Australian sharemarket could gain 4-7% over the coming 12 months - depending on inflation pressures, interest rate changes and economic recovery in China.

Despite last year's downturn, Australian shares held up better than most other advanced markets due to our out-performing economy.

CommSec Chief Equities Economist Craig James says US share indexes recorded their biggest declines since 2008, with the NASDAQ falling 33.1%, the S&P 500 index down 19.4%.

CommSec says one factor in favour of Aussie shares is attractive valuations. Dividends also remain attractive with the dividend yield sitting near 4.23%.

2022 wasn't a loss-maker for all stocks. Bumper gains were notched up by many resource companies, with Whitehaven Coal up 261% for the year, and New Hope Corporation's share price rising 185%.

Make your savings rate skyrocket

The Federal Treasurer has asked consumer watchdog - the ACCC, to investigate competition in the savings sector, as the gap between the highest and lowest savings rates continues to widen.

The latest APRA statistics show Australians have a record $1.33 trillion in the bank. Yet many savers are still earning less than 1% on their hard-earned cash.

Getting the best rate may not mean switching banks - just bank accounts.

As a guide, RateCity says Westpac's eSaver pays a rate of just 0.85%. However, Westpac customers with a Life savings account are earning 3.75% - over four times the rate on the eSaver.

Similarly, ANZ Online Saver customers are earning an ongoing rate of 0.60%, while ANZ Plus Save customers are earning 3.75%.

RateCity research director, Sally Tindall, says Australians don't need to wait for a government inquiry to find out if they're on a dud rate.

She notes, "Savings customers should aim for an ongoing rate that's above the current cash rate, at an absolute minimum. Anyone earning less than this is getting fleeced.

"Even switching within your own bank could potentially see your savings rate skyrocket overnight."

How to cut around $409 from your monthly mortgage payments

One in three home loan borrowers are considering refinancing their mortgage this year, a figure that rises to almost half (44%) borrowers aged 35-44.

That's according to Mortgage Choice research, which found 16% of borrowers are switching because their lender won't give them the same low rate as new customers.

The survey revealed the most common concern about refinancing - that borrowers will be worse off after moving their mortgage (59%).

This concern may not be warranted. Mortgage Choice CEO Anthony Waldron says, "The research showed us that, on average, borrowers who refinanced with a broker saved $409 on their monthly repayments, compared to $249 for borrowers who went direct to their lender."

Big spending likely to fuel further rate hikes

If Reserve Bank rate hikes were designed to cool household spending, they don't appear to have hit the mark.

The Australian Bureau of Statistics says household spending jumped 11% last November compared to November 2021.

Jacqui Vitas, ABS head of macroeconomic statistics, says November 2022 was the 21st consecutive month of increased through-the-year household spending.

While the ABS says Black Friday sales fueled a 1.4% jump in retail spending in November, inflation is now sitting at 7.3%, up from 6.9% in October, making further rate hikes look like a sure thing for 2023.

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A former Chartered Accountant, Nicola Field has been a regular contributor to Money for 20 years, and writes on personal finance issues for some of Australia's largest financial institutions. She is the author of Investing in Your Child's Future and Baby or Bust, and has collaborated with Paul Clitheroe on a variety of projects including radio scripts, newspaper columns, and several books.