It’s 1 July. The flurry of 30 June has passed, and 52-year-old Diane and her 54-year-old husband Peter are now…
Written by Rachel Polglase Published: June 27 2019 Investments
There are plenty of reasons to hold cash in your self-managed super fund (SMSF).
You can have funds available for investment to act when the time is right. This is particularly the case if you expect opportunities in a year or so’s time when property or share markets may have bottomed.
Cash is often held to add diversification to a portfolio, and as a defensive strategy, to limit losses from more risky investments.
At the same time, you need to make your money “work” by ensuring you are earning the best interest rate available.
Term deposits (TDs) are an effective way to hold cash in an SMSF because they provide a choice of terms and the certainty of knowing the return when you invest.
TD interest rates change frequently so investors can be nimble, switching products at maturity or operating a series of deposits at different terms to earn high rates while ensuring they have cash available throughout the year.
The Cashwerkz platform enables investors to switch investments, at maturity, without the need to be further identified or open up new accounts to switch investment choices. Investors can search and compare terms and rates offered by the financial institutions found on the Cashwerkz platform before switching to ensure that they have made a sound decision.
Having the information presented in the comparison table means they can also take advantage of special offers, made at times when a bank will offer a high rate on a particular term to match its own need for funds.
The investor is in control, which suits people who have set up their own super fund and want to decide how to manage their retirement savings.
SMSF owners hold cash for a variety of reasons and with TDs they can operate their cash holdings as actively as other elements of their portfolio to earn the best return.