Often, deciding on the best investment strategy for your lump sum can be difficult. Should you invest in the share market, buy property or consider fixing your funds in a bank term deposit?
A bank term deposit can be a popular choice among investors, who enjoy the security of knowing exactly with their nest egg is, how much interest it will accrue and when it will mature.
And depending on the days' trading, a bank term deposit can offer competitive yield when compared with other investment strategies such as share market trading. So what's the trick to knowing which option is the best of the three?
Unfortunately, there's no trick to investing, nor is there one 'best' solution. Rather each investor will benefit from a different investment strategy to the next. And this is where a financial planner can come into the equation.
How they stack up
When it comes to share market trading, one of the main advantages for many investors is that it presents a relatively liquid asset. In other words, you can quickly convert the stocks into cash by selling them.
A bank term deposit on the other hand is 'fixed' and you may incur a fee if you decide to exit the contract and access funds before maturity.
The advantage of getting a bank term deposit, is that they are a relatively risk-free investment options, compared with Australian equities, which are prone to fluctuation.
So clearly it pays to do your research when comparing bank term deposits and share market investment options, because it's your bottom line that will ultimately reap the rewards.
The table below displays some of today's highest interest rates for 90 day term deposits.