Not sure where to put this - if you have a chunk of cash - term deposits best?

[entrep]

I have a decent chunk of cash that I want to invest in shares, other assets, probably over the next year or so, and I'm just wondering what to do with it in the interim.

Is it best to stagger term deposits with my local bank and try and get negotiated rates, or are there cash investment funds that might be a better option?

I'm definitely not keen to go with anyone or anything in any way dodgy or that might put my money at risk, especially for just a couple of extra percentage points.

I do not have much experience investing cash as such, so any pointers appreciated.

[Dolcile]

For flexibility I don't think you can beat a cash fund.  Also - depending on your circumstances - the 28% pie tax cap could be advantageous.

[Buzz]

For flexibility I don't think you can beat a cash fund.  Also - depending on your circumstances - the 28% pie tax cap could be advantageous.

Such as what, might you suggest? Tia

[entrep]

For flexibility I don't think you can beat a cash fund.  Also - depending on your circumstances - the 28% pie tax cap could be advantageous.

Any ideas for ones to take a look at? I am enrolled with Investnow. Thanks!

Maybe https://milfordasset.com/funds-performance/cash-fund ?

[Turkey]

The short answer is it ain't easy in a dropping interest rate environment to get a great return on cash. With the OCR forecast to drop again later this month you are guaranteed to get even less return very soon unless you lock in some term deposits NOW...lol

Nz banks don't really need your money so won't pay you much interest for lending yours.

Being an investor I'm sure you understand less risk = less return , higher risk can get you a higher return. Only you can decide what return is acceptable and what risk you're happy to take.



1. Have a look at banks notice saver accounts...I'm using 32 day notice accounts and getting between 3% @ westpac and Rabobank to 3.25% at heartland.

These come in 60 day and 90 day options as well with higher interest rates. Some of these are better rates than just plain term deposits and with a shorter term. Some are PIE.
These interest rates have been reducing as OCR reduces which is a negative compared to locking in term deposit rates

https://www.moneyhub.co.nz/best-notice-saver-accounts.html

If you jump on interest.co.nz and go to savings tab you can compare all the term deposit rates across banks for various terms. Also various bank savings account listed.

https://www.interest.co.nz/saving/term-deposits-1-to-9-months

Remember with deposit guarantee scheme now you pretty safe for $100k with each bank or provider that is registered in scheme.

The problem with money in the bank is with low interest return, inflation @ 2% and tax to pay you pretty much standing still.


2. Because I want a slightly higher return for my overall cash pile...I've also put some into bank preference shares. These pay various interest rates but many around 7- 7.4%.

I started buying these about mid last year when it was clear interest rates were going to drop...so I moved from term deposits to these  in anticipation of term deposit rates dropping and wanting to lock in a similar yield. Your in a different space as your buying fairly late in the interest rates dropping cycle so you have to have a good think about where you think interest rates are going in next year.
My strategy is simple...get in early...get out early...rather than maximise return. I'm just trying to get a higher return better than bank deposits.

You buy these just like shares so you got a transaction cost but get you at least a pretty much guaranteed interest rate and a chance of small capital gain if interest rates drop and vice versa when interest rates rise
Most of these had a face value of $1 when issued but now you have to pay say $1.05 - $1.08 as interest rates drop people pay more for the guaranteed return.
They are more risk here for sure but not the same risk as company shares as there not driven by the companies earnings...just their ability to pay the interest.

Most of these have 4 letter tickers like BNZHA, BNZHB, KWBHB, WNZHA etc...if you don't like banks can get similar QHLHA...BOP council investment arm...give you 6.4%

Some people might think these are too risky but I think NZ banks are pretty safe With high capital requirements and if banks can't pay their bills we probably all in the shit anyway..lol

Again buying these now has more risk than when I bought in  a year ago so you need to factor that in.




Outside of these you just really looking at cash funds I guess but you still paying a management fee,  inflation plus tax = pretty low return

Moneyhub do a bit of an overview on some cash funds here

https://www.moneyhub.co.nz/cash-funds.html


Good luck and let us know if you find any good places to get a good return on cash.

DYOR as I just copied and pasted some links to give you some ideas...I haven't verified or checked any of the info.

[Dolcile]

Any ideas for ones to take a look at? I am enrolled with Investnow. Thanks!

Maybe https://milfordasset.com/funds-performance/cash-fund ?

Yeah the Milford cash fund or the Kernel cash fund.  Both are good. 

[entrep]

Thanks both, will split it between Milford Cash Fund and a Westpac Notice Saver PIE. Cheers

[entrep]

Came across https://www.wedgemoney.co.nz/ today also.