Optimal Returns: Fixed Interest Funds Beat Bank Deposits

For people with cash to invest for a short period of time and looking for the best return, term deposits at your bank doesn't cut it. You can get around 2.3% before tax at a major bank. It's safe but the return is unappealing.

This leads people to google around for higher rates and finding they can get up above 4% for their term deposit outside of the major banks but it's a high risk in the good times and a completely reckless move at a time like this.

There is a solution. You could use conservative fixed interest funds where the fund effectively lends money to institutions for an agreed return. Our preferred conservative bond fund has returned over 4% per year over the last 5 years (after fees) and the investment is diversified, lending to higher grade insitutions such as local authorities and major banks as you can see in the picture.

Bottom line - you can expect the same return from a high quality diversified fixed interest fund as you would if you get lucky with a high risk institution.

Don't take a senseless risk in order to get a few % more.