Aussie personal wealth is falling, but you can still come out on top

Aussie personal wealth is falling, but you can still come out on top

Our personal wealth is declining, but you can make some simple changes that put you ahead today.

According to new research from Roy Morgan, the gross personal wealth (assets) of Australians was $9,784 billion as of the December quarter, 2018. This was a drop of $512 billion (5 per cent) from the September quarter; the lowest level recorded throughout 2018.

Roy Morgan research also found that net wealth (after debt) decreased from $8,993 billion to $8,608 billion.

Composition of Gross Personal Wealth – Australia

Picture1

Source: Roy Morgan Single Source (Australia).

While the property market may be out of your control, there are a few simple ways you can increase your own personal wealth today.

  1. Super proof your savings by salary sacrificing

Salary sacrificing to super is an arrangement where you and your employer pay a nominated figure or percentage of your pre-tax salary into your superannuation account as an extra contribution.

Due to superannuation accounts using compound interest, the sooner you make additional contributions, the greater your personal wealth will be by retirement age.

These contributions are taxed at a rate of 15 per cent, which is an appealing prospect given that it is lower than most people’s marginal tax rate. Also, salary sacrificing allows you to reduce your taxable income (if you earn more than $37,000 a year).

  1. Park your savings in a high interest rate account or term deposit

If you want to grow your personal wealth through a lower-risk option than the property market, consider squirrelling away some of your savings into a high interest savings account or term deposit.

High-interest rates are intended to help you save, not spend, so they typically reward customers with their max rates if they make regular deposits and/or limit the number of withdrawals made.

High interest savings accounts

Market leaders

Base rate

Max rate

Interest earned each month on
$10K

Interest earned each month on
$25K

Conditions

Bank of Queensland

0.50%

3.00%

$25

$63

Monthly deposit of $1k in the prior month, available for balances up to $250k.

CUA

0.50%

2.90%

$24

$60

Monthly deposit of $250, no withdraw allowed.

UBank

1.81%

2.87%

$24

$60

Monthly deposit of $200, total balance of all accounts connected must be less than $200k.

ME Bank

1.30%

2.85%

$24

$59

Must use linked transaction account weekly.

Bank First

0.05%

2.85%

$24

$59

Monthly deposits, no withdraw allowed.

Source: RateCity.com.au

 Term deposits work similarly to savings accounts, with one major difference; your savings are locked away and cannot be touched for a set time frame while they accrue interest. They are seen as a low-risk investment option.

When choosing a term deposit, the interest rate is one of the most significant factors to consider. The general rule of thumb is that the longer the term, the higher the term deposit rate.

For example:

John has saved $5,000 and doesn’t want to be tempted and dip into his savings, so he looks into locking this away in a term deposit.

He chooses a 2-year term deposit, that pays an interest rate of 2.30 per cent annually.

After two years he has earned $232.64 in interest on his initial $5,000 deposit.

 

High interest term deposit accounts

1-year

3-year

5-year

Market leaders

Rate

Interest (1yr, $20K)

Rate

Interest (3yrs, $20K)

Rate

Interest (5yrs, $20K)

Australian Unity

2.75%

$550

3.00%

$1,800

3.00%

$3,000

Teachers Mutual Bank/ UniBank

2.80%

$560

3.00%

$1,800

Qudos Bank

2.70%

$540

3.00%

$1,800

QBANK

2.60%

$520

2.90%

$1,740

2.90%

$2,900

Source: RateCity.com.au 

  1. Reduce your superannuation fees

As Warren Buffett once warned “remember, your fees are their income”.

A lot of Aussies don’t and making the wrong choice could be costing them tens of thousands of dollars over their working lifetime.

Do a little research on your own super fund to find out the contribution fees, admin fees and/or indirect cost ratio you may be paying as this is money out of your pocket and into the pocket of said fund.

Fee level

Contribution fee

Admin fees (p.a)

Indirect cost ratio (p.a)

Low

0%

$50

0%

Low-medium

0%

$50

0.3%

Medium

0%

$50

0.6%

Medium-high

2%

$0

1.3%

High

4%

$

2%

Source: ASIC superannuation calculator

 

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Learn more about bank accounts

How do I open a bank account for a child?

There are few better ways for a child to learn about money management than through savings. And there’s a plethora of bank accounts designed specifically for young people and children.

A bank account for a child can be opened online, over the phone or in a branch in a few easy steps. The minimum age a child can open a bank account for themselves usually ranges between 12 and 14.

If the child is too young to open the account, you can do it for them as their legal parent or guardian. 

To do this, you would need to be over 18, have an Australian residential address and currently reside in Australia (or have proof of residency).

You would also need to provide:

  • Identification for yourself and the child
  • Your tax file number (TFN) or TFN exemption

Depending on the bank account, you might be able to choose what level of access the child has to their bank account (online and via the phone).

How do you set up a bank account online?

Once you’ve compared bank accounts and found the right one, the process of opening a bank account online is quite simple and can be done in around 10 minutes.

To set up a bank account online, you’ll need to prove your identity and provide an approved form of ID as well as your tax file number (TFN).

If you’re a new customer of the bank, you’ll need to verify your identity and potentially upload documents before you can complete your online application.

Once your ID has been verified and you’ve set up your bank account online, you should receive your bank cards in the mail along with your PIN and any other account details.

Can foreigners open bank account in Australia?

If you’re migrating, studying or working in Australia, you’ll be pleased to know that you can open an Australian bank account. For the most part, opening a bank account in Australia is a simple process which starts by comparing the types of bank accounts foreigners can open in Australia.

Once you’ve found a bank account that suits your needs, you can start the application process.

When you apply for the account, you’ll need to provide proof of ID which may include your passport, overseas ID or credit card. You may also need to provide a copy of your visa and proof of address in Australia.

Depending on the bank and the type of account you choose, you may be able to apply for the account online or over the phone before you arrive in Australia.

Can debt collectors take money out of your bank account?

Many people find themselves struggling to cope with debt at one time or another. In these cases, a debt collector could contact you to demand payment for a debt, to explain the consequences of you failing to pay a debt, or to organise alternative payment arrangements.

If you’re contacted by a debt collector, you may be wondering what their rights are and whether they can take money out of your bank account.

Creditors cannot access money in your bank account unless a court order (also known as a ‘garnishee order’) is made to allow creditors to recover debt by taking money from your bank account or salary.

If this happens, the creditor can take money out of your bank account unless you pay the debt in full or make an alternative payment arrangement such as paying in instalments through the court.

How do I transfer money from Paypal to my bank account?

Transferring cash from Paypal into your bank account is simple…if you have a Paypal account that is.

Once you’re logged into your Paypal account, the account balance will appear on your home page. Below your balance are two options:

  • Add money
  • Withdraw money

Choose option two if you want to transfer money from your Paypal account to your personal bank account.

The next screen will prompt you to either enter new bank account details or choose a bank account that’s connected to Paypal. You can always add more bank accounts to your Paypal profile.

Another way to transfer out of Paypal is by jumping to the wallet tab on the top menu, and clicking ‘transfer money’. Both options will give you the same result.

How can I close an ANZ Bank account from overseas?

There are two ways you can close your ANZ Bank account from overseas:

  • Call +64 4 472 7123 (toll charges apply)
  • Send a bank mail request via ANZ internet banking

Can I close my bank account over the phone?

In most cases, you can close a personal or business bank account over the phone. In fact, this is the best way to ensure you’ve closed an account properly.

By speaking to a banking representative, you can capture and close out any pending transactions, or interest owing/payable on the account being closed.

In the instance where the account is a joint account, or you have multiple bank accounts you want to close, your bank may send you a form that you need to fill out and return.

Either way, you would be advised over the phone of the steps you need to take. Calling your bank ahead of closing an account is often a smart course of action.

Can foreigners open bank accounts in Australia?

Many Australian lenders allow foreigners to open bank accounts in Australia. Often, this can be done before you arrive in the country – with no Australian address required. When you get to Australia, you can pick up your debit card, using your passport as identification.

Can I open bank accounts for my children?

A common question for new parents is, ‘Can I open a bank account for my child?’

The short answer is yes – as a parent you can open a bank account for your child.

Once you’ve compared your options and found a bank account that suits your needs, the process is relatively simple.

As the bank account is for your child, you’ll need to provide some documentation such as proof of ID, including your tax file number.

You will also need a copy of your child’s birth certificate, and in some cases you may also need to sign a guarantee of indemnity.

Depending on the bank and whether you’re an existing customer, you may be able to open a bank account for your child online. However, you may still need to go into a branch to prove your identity.

How to transfer money to another bank account

Transferring money to another bank is often called a bank transfer, and it can be done a few different ways.

Customers generally need three pieces of information to transfer money to another bank account. Customers need the account name, BSB and account number of the account they wish to transfer money to.

One way of transferring money to another bank account is in a branch with the help of a staff member; they will often give you a receipt as well as confirmation of the transfer.

Transfers can be also made via internet banking and phone banking.

Some banks also allow customers to make transfers via partnered ATMs, especially if the account is with the same bank.

Can you deposit money into somebody else's bank account?

One of the easiest banking tasks in the world is depositing money. You can even deposit money into someone else’s bank account if you wish.

The basic information you need to deposit money into a third-party bank account is:

  • Payee’s name
  • Bank, building society or credit union (though this isn’t necessary)
  • BSB (or bank code, which is the branch identifier)
  • Account number

Including the name of the financial institution isn’t necessary – particularly with online banking – because the BSB will identify this for you.

A handy tip is to record yourself (or add a personal message) in the transaction description or reference. This will show up on the recipients account, letting them know who’s paid them the money.

Can I link a bank account to Paypal?

Paypal is a safe and convenient way to pay online without the need to share your financial details. You can send and receive money or accept credit and debit cards as a seller using Paypal.

It’s easy to link your bank account to a Paypal account and start making transactions within minutes.

To start, you first need a Paypal account (it’s free to join). When setting up your Paypal account, you will be prompted to link a credit card or bank account (or both if you wish).

PayPal works without a balance; you can use Paypal to shop or send money when your balance is zero.

When your Paypal balance is zero, Paypal will ask you to choose your preferred payment method at the checkout.

This could be either your linked bank account or credit card. Your bank details can be updated if you change banks or credit cards.

Can you find your bank account number online?

If your bank offers online services, you should be able to find your bank account number online by logging into your account on your bank’s website and checking your details there.

Keep in mind that each type of account you have with a bank comes with a unique account number. This means if you have a bank account as well as a savings account, for example, your bank account number and your savings account number will be different.

If you don’t have access to your bank account online or can’t login, you should be able to find your account number on a mailed bank statement, if you have one.

Alternatively, you can call your bank’s customer service number or visit a branch to retrieve your account number.

Do you need a bank account to sell on eBay?

You don’t need a bank account to sell on eBay. But if you don’t have a bank account, you must provide either a credit card or debit card.