Model portfolios: The best deal on deposits

One of our honeymoon deposit rates has now ended, so it's time to go shopping for a great rate on cash. Richard Livingston surveys the scene.

Key Points

  • Honeymoon rate on ING Direct has ended
  • UBank offers an attractive base and bonus rate
  • We can work around UBank’s no withdrawal catch   

An extra percentage point from one investment is as good as one from another (ignoring tax). So while individual stocks usually provide the largest moves in a diversified portfolio, it’s worth paying close attention to the returns from your cash holdings.

Our ‘at call’, allowing us to take advantage of opportunities elsewhere as they arise, we’ll use another account for regular transactions where possible so we don’t shoot our bonus interest in the foot too often.

One of the best things about online savings accounts is that they’re typically fee free and they don’t clog up your letterbox. So there’s no real downside to keeping more than one.

To make sure we’re not always dipping into the USaver account (and losing the bonus interest) we’ll keep a smaller balance in our ING Direct account for regular transactions. The interest from ING Direct is unaffected by how many withdrawals are made.

UBank term deposit

In our model portfolios we classify everything with a term less than two years as ‘cash’. Our Conservative Portfolio includes a 12 month term deposit (also with UBank), which is just about to expire, and each portfolio will soon include the RaboDirect (May 2016 maturity) term deposits in their ‘cash’ allocation.

For this reason, we’re currently overweight Australian fixed interest and underweight cash. Once early June comes around this will automatically correct itself. At that point, with the UBank term deposit maturing, we’ll take another look at our options, including short-term deposits.

Portfolios back on track

With these changes, and the share trades outlined in Model portfolios: Time for Platinum Capital to go and Model portfolios: Australian shares and property back on track, our model portfolio asset allocations are back inside their targets.

As ever, we would welcome your feedback on this article. If you feel it provides too much detail, or not enough, please let us know. Email is the best way to get in touch, with super@intelligentinvestor.com.au being the best address to reach us on.

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