What is a cash investment?
As the name suggests, a cash investment is an investment in money. A cash investment is an easily accessible asset that offers very low risk, such as high interest saving accounts and term deposits.
Savings accounts
One of the simplest and safest investment options available is a savings account, which differs from a typical bank account. A savings account allows you to earn interest from the money that you deposit. This encourages you to deposit money more often whilst limiting your withdrawals. More money in the savings account results in more interest being earned.
Interest rate
The interest rate offered on high interest savings accounts is a standard variable rate, meaning that your rate is not fixed and can move with the market or be vulnerable to changes made by the banks. In the current market, a typical interest rate return can range from 3% – 4% per annum. This interest rate is entirely dependent on which type of account and financial institution you choose, with each having their own requirements that need to be met.
As stated before, some high interest saving accounts offer a bonus rate above the standard variable rate as a reward for a particular behaviour, such as depositing a certain amount each month and/or not making any withdrawals. It is important to pay close attention to these requirements, as not meeting them could result in just the standard rate being paid, which is often very low.
The term
You may keep your money in high interest saving accounts for as long as you choose. You are not required to shift your money if you are satisfied with the terms and conditions because there is no set term or maturity date. Some high interest saving accounts provide an initial rate known as a “honeymoon rate,” which lasts for 3 to 4 months after the account is opened before dropping back to the ordinary variable rate.
Assessing your funds
Your high interest savings account is open and accessible to you at all times. This means you can withdraw your money if and when you need it. But remember, the amount of interest you earn is dependent on the amount of money in there. Plus, many accounts offer bonus interest rates if you don’t withdraw so it’s wise to keep that in mind.
Different account options
It is recommended to utilise online comparison tools such as Finder to research the most suitable savings account for your needs. Click here to compare some of the best high interest savings accounts in the market.
Below is an example of a high interest savings account on Finder. This outlines what key things to look out for when choosing an account.