Savings Account

I recently finished listening to the Barefoot Investor. It’s given me the impetus to put a personal security fund (what he calls MOJO) in place. Additionally, I’ll be turning 25 in January, so my under 25’s savings account will be converting to a regular savings account and dropping down to a variable rate of 1.05%.

This doesn’t sound like a big deal, sure. But if I’m going to keep liquid cash for a rainy day rather than investing it, I might as well keep it in an account with as best a rate as possible.

Scott Pape recommends ING in The Barefoot Investor. As of June 2020, Scott still uses ING but gives a few other recommendations. Of course, switching banks for minimal gain is inadvisable, so if you’ve got something that works there’s no need to faff around setting up and closing accounts and transferring funds. You can of course decide whether the savings are worth it to you.

Bank	Base Var. Rate	Bonus Var. Rate	Max. Var. Rate	Account Fees	Min Monthly Deposit	Min card trans	ATM Fees	EFTPOS Fees	Withdrawal Penalty	Max Balance
ING	0.10%pa	1.55%pa	1.65%pa	$0	$1000	5	5-day Refund in Aus	$0	Nil	$100k
UBank	0.54%pa	1.06%pa	1.60%pa	$0	$200	0	Free at Big 4		Nil	$250k
Up Bank	0.10%pa	1.50%pa	1.60%pa	$0	$0	5	Free at Big 4 or Bendigo	Free (see p57)	Nil	$50k
Me Bank	0.10%pa	1.45%pa	1.55%pa	$0	$0	4	5-min Refund in Aus		Nil	$250k

In my case, I currently have a Newcastle Permanent Under 25s Smart Saver Account, so as long as I increase the balance by $10 and make no more than 2 withdrawals each month I get a 2%pa rate. But, in January I’ll be turning 25, so that will change to $150 min deposit for a 1.05%pa rate. It’s worth noting that Newcastle Perm’s savings account doesn’t require opening and using a transaction account to get the best deal, whereas the majority of the above, and the product I’m going to recommend below, do.

Account	Base Var. Rate	Bonus Var. Rate	Max. Var. Rate	Account Fees	Min Growth Factor	Min card trans	ATM Fees	EFTPOS Fees	Withdrawal Penalty	Max Balance
Under 25s Smart Saver	0%pa	1.05%pa	1.05%pa	$0	$150	0	Free at Newcastle Perm	$0	No interest over 2 transactions
Smart Saver	0%pa	2.00%pa	2.00%pa	$0	$10	0	Free at Newcastle Perm	$0	No interest over 2 transactions

Keep in mind that Newcastle Perm’s Smart Saver accounts don’t have a Minimum Deposit (i.e. chuck your money in, but feel free to take it out) like those above, but do have a Minimum Growth Factor (i.e. the account needs to be this much richer at the end of the month).

Buuuuuut, in July of this year Westpac launched a new 3%pa savings rate on their Life Savings Account for 18-29yos. If you fit into this age bracket and have less than $30,000 open this account now

The linked transaction account has a monthly fee of $5 if you aren’t eligible for the fee waiver, but that’s fairly uncomplicated. If you:

• are under 21
• are a full-time tertiary student
• have a Centrelink Health Care or Pension card
• are in your first 12 months in the country
• deposit at least $2k/month (Minimum Deposit, not Minimum Growth Factor);

Then the fee is waved. That should cover pretty well everyone under 30.

Westpac’s Life Savings Account manages this with 2 separate bonus rates. That may sound like juggling, but I’ll show you how to automate that.

Base Rate – 0.4%

Minimum Growth Rate – 0.6%

This bonus rate is awarded if the account grows in a given calendar month. Simple.

Set up a monthly recurring payment of $1 from your Transaction Account to your Savings Account.

You can make more contributions if you like (and building your own personal security is important), but you’ll get better returns if you invest that money into low-risk shares. The $12pa that you invest into your account would need a 100% return elsewhere to match what you would return on the $2k minimum that Barefoot recommends you keep in cash for emergencies. And that number goes up when you push your MOJO to 3-6 months of expenses.

Minimum Trans Rate – 2.0%

This bonus rate, called Spend&Save, is awarded if at least 5 eligible purchases are made with the card.

Unless you’re the kind of person that makes less than 5 purchases a month, this should be simple. Just use the account for your everyday expenses. If not, just hit up the self-checkout on the way out of the supermarket and make 5 separate payments for your monthly grocery shop.

	Base Var. Rate	Bonus Var. Rate	Max. Var. Rate	Account Fees	Min Growth Factor	Min card trans	ATM Fees	EFTPOS Fees	Withdrawal Penalty	Max Balance
Westpac 18-29yo	0.4%pa	0.6%pa + 2.0%pa	3.00%pa	$5/month waivable	$1	5	Free at Westpac group	$0	Nil	$30k

Feature Image by Micheile Henderson on Unsplash.