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Compare SMSF term deposit rates

An SMSF term deposit could be a low-risk approach compared with other options. Learn what an SMSF term deposit is, and compare interest rates, fees and more to find an SMSF term deposits to suit your needs.

An SMSF term deposit is one potentially low-risk option for investors looking to grow their self-managed super funds.

But before you make a decision, it’s important to understand what SMSF term deposits are and the interest rates these can earn.

What is a self-managed super fund?

A self-managed super fund is a superannuation option in which the members are also the trustees. As the trustee of your own super fund, you hold both the legal and management responsibilities. Self-managed super funds are designed to provide the same retirement benefits as other superannuation funds.

Although self-managed funds work similarly to other super funds, they are slightly different because the member controls the fund. This allows them to make investments, manage contributions and maintain records. Members can choose to manage the fund themselves or engage an SMSF specialist to do the work for them.

Can I invest in a term deposit with my self-managed super fund?

Yes, you can. Because you are the trustee of your self-managed super fund, you can choose to invest a portion of your super balance into a term deposit. Some financial institutions offer special term deposits specifically for self-managed super funds, which they usually call “SMSF term deposits”.

Like other term deposits, the purpose of SMSF term deposits is to help you increase your savings. In the case of SMSF term deposits, these savings are for your retirement.

What are the benefits of an SMSF term deposit?

There are several potential benefits of SMSF term deposits.

  • Low risk:

    A term deposit provides you with a relatively low-risk, steady way to grow your retirement fund. After you agree upon your fixed interest rate, you know exactly what your fund will be earning throughout the entire term.

  • Low maintenance:

    Managing your super fund can be time-consuming. So some might consider a “set-and-forget” option that requires less effort as a part of their broader investment strategy.

  • No fluctuations:

    Because term deposits earn a fixed interest rate, there’s no fluctuation to monitor or manage. Essentially, you can lock your money away to earn interest, and you don’t have to worry about any changes for the entire term.

Are there SMSF rates associated with SMSF term deposits?

The financial landscape is always changing, and the interest rates being offered on term deposits are always shifting. The same applies for SMSF term deposit rates.

However, there are a couple of reasons why your SMSF term deposit might earn more interest than other term deposits:

  • Longer term:

    Many fund members choose to invest in a term deposit years before their retirement. Because the interest rate offer tends to go up as the term gets longer, you might find that you can access a higher interest rate if you were locking away your money for, say, 10 years, as opposed to one year. 

  • Option to reinvest:

    You typically have more time to roll your deposit over into a new investment when your term expires. For example, you might open a term deposit for five years originally. If your retirement is still years away when your five-year timeframe expires, you can reinvest the funds into a new deposit. This could potentially earn you more interest in the long run.

  • Bigger deposit:

    Many SMSF term deposits have a minimum balance requirement, which means that you must commit a certain amount of money into the deposit to be eligible. Because you’re depositing a larger sum, you may be offered a better interest rate.

How do I get the most out of my SMSF term deposit?

As with many investment products, one important way to reap the benefits of your SMSF term deposit is to find a competitive interest rate. The interest rate of your deposit won’t change for the duration of your term, so you want to be sure you’re getting the best deal, especially if you’re locking away your money for an extended period. To get the best fixed rate, compare all SMSF term deposit providers and choose the best rate for the term you want to invest.

The second way to make the most of your SMSF term deposit is to find an account with zero fees. Many term deposits on the market offer fee-free accounts, so you may not need to pay unnecessary fees on another account.

What are some things about SMSF term deposits I should be aware of?

One thing anyone who is considering SMSF term deposits should know about is automatic rollover policies. At the end of your term, some term deposits roll over automatically if you don’t notify your provider of your intent after the term expires. This means that your money is reinvested in a new contract when your term ends, potentially at a lower rate or under different conditions. Make sure you know your term expiry date and to do your research before your term ends so you’re still getting the best rate that you can.

Another thing to be aware of is the minimum balance requirement. Some financial providers may require you to deposit a minimum amount in your SMSF term deposits. You should consider whether this minimum deposit amount aligns with your own financial goals.

It’s also important to know the fees your provider might charge you for your SMSF term deposit. While many providers don’t charge fees, it’s a good idea to understand whether part of your deposit is going towards fees and if the investment is worth any potential fees you are paying.