Where should I put my savings?
It’s probably one of the most common questions we get at Wealth Enhancers.
Most of us have some form of savings behind us, and know we should be doing something with it. But often it’s confusing to know where the best place is to put this money.
Ensuring that our members have this money in a suitable savings account is very important to us.
We typically look for an account that provides a good interest rate, is easy to access, and is reputable.
For these reasons, at the moment we use UBank as our preferred savings account provider for our members.
So who is UBank? UBank is an online bank – importantly backed by NAB.
Being online only, they have no branches. Consequently, they have much lower overheads and operating costs when compared to traditional banks.
So what? Well, these lower costs mean they can offer their customers some of the best rates around, typically with no – or extremely low – fees.
Our preferred savings account with UBank is their USaver account.
At the time of writing, the current standard variable interest rate in the USaver is 3.31% per annum. Not only is this rate competitive, UBank also offers a bonus interest rate of 0.70% per annum if you start an Automatic Savings Plan (ASP).
If you decide to Get Rich Slow – this can provide a return on your savings account of 4.01% per annum. Competitive indeed!
If you are thinking 0.7% does not sound like a huge amount, consider that when it comes to personal finance, small amounts add up over time!
To prove our point, let’s look a quick example.
1. Regular interest
Assume you start with $5,000 in a UBank Usaver account and add $200 per month for five years. At the standard 3.31% p.a interest rate, you would have $18,929 at the end of five years. You would have earned $1,929 in interest over and above your contributions over the five-year period.
2. Bonus interest
This time, let’s assume the higher bonus interest rate of 4.01% p.a. You now have $19,371. You would have earned $2,371 in interest over and above your contributions over the five-year period – $442 more than when you earn regular interest!
Now, while that isn’t enough for you to retire on, it shows how over time, the longer you hold the account and the bigger your balance becomes, the larger the difference is between the regular interest and bonus interest options.
Most importantly, it shows how much more money you can make with just a small difference in interest rates!
How do you qualify for UBank’s 0.7% bonus interest? It’s simple – an Automatic Savings Plan just involves setting up an automatic credit into your USaver account each month of $200 or more. The only catch is that this MUST be done by logging into UBank – and setting it up through the ASP tab in your online portal. If you set up the transfer from your normal bank account, you will not qualify for the bonus interest.
It is an easy process and only requires you to nominate: (i) the monthly amount you want to transfer into your USaver account; (ii) the date you want the ASP to start; (iii) the frequency of the payment; and (iv) what account the credit will come from.
I encourage you to do some research and see how UBank stacks up against your current bank and savings account provider.
Starting small and starting now really is the key to Getting Rich Slow, and UBank is your new online Piggy Bank.
Article by Ryan Porter
Need some help with your savings? Our Financial Coaches LOVE helping members with their goals and working out how to attach money to them. If you want to chat goals with one of the WE team, book in a time for a Free Strategy Session.
Disclaimer: Information contained within this article is of a general nature. Do not be rely upon it when making financial decisions. Please consult a professional financial advisor or planner (like us!) before acting.