Big Cyprus savers to lose up to 60pc

A banking bust in Cyprus sent savers on to the streets in protest last week and sparked fears of another European crisis. Source: AP

A CENTRAL Bank official and a senior Finance Ministry technocrat says that Bank of Cyprus savers with over $100,000 could take losses of up to 60 per cent.

The officials, who spoke on condition of anonymity because they're not authorized to publicly discuss details of the issue, said Saturday that deposits over €100,000 at the country's largest lender will lose 37.5 per cent of their value after being converted into bank shares.

They said they could lose up to 22.5 percent more, depending on an assessment by officials who will determine the exact figure aimed at restoring the troubled bank back to health.

Cyprus agreed Monday to make depositors contribute to a financial rescue in order to secure 10 billion euros ($12.9 billion) in loans from the eurozone and the IMF.

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Savers squeezed again by rates

Interest rates on term deposits continue to fall. Source: National Features

INTEREST rates on fixed deposits have been squeezed recently and longer-term savings are among the hardest hit.

Australian homeowners have welcomed plummeting rates but the same cannot be said for savers.

An analysis by comparison site Mozo has found the average rate on a 180-day term deposit this month is 3.89 per cent, compared with 5.45 per cent two years ago.

In March 2011, 12-month term deposits attracted an interest rate of 6.07 per cent compared with 4.03 per cent now, while two-year fixed deposits had an average rate of 5.97 per cent compared to 4.07 per cent now.

Mozo spokeswoman Kirsty Lamont says the battle for deposits has slowly eased.

"One and two-year rates in particular have fallen sharply and by more than the fall in the cash rate since March 2011," she says.

"The banks are not competing as hard for deposits as they were in 2011 and 2012."

However, ING Direct's executive director of customer, John Arnott, says the "savings habit has stuck".

"The average term deposit has slightly shortened to about eight months ... that's shortened from a month or two," he says.

"Customers out there are looking for certainty and also flexibility when their term deposits mature."

UBank general manager Alex Twigg says he has seen a 10 per cent growth in the amount of term deposit accounts since October, but he has seen the opposite customers opting for longer terms.

"The average length that people are taking TDs out has grown, currently the average length is over seven months," he says.

"They are moving away from the three to six month terms to six to 12 months."

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Cash income slump hits savers

Prescott Securities chief economist Darryl Gobbett Source: National Features

PEOPLE seeking the safety of cash within their investment and superannuation funds are effectively losing money.

Low interest rates have resulted in many cash investment options paying just 2 per cent interest annually, below our 2.2 per cent inflation rate.

Even the popular industry super funds haven't escaped the low return trap, with the biggest funds now offering about 2.6-2.8 per cent.

But experts say there are ways to lift cash returns if you are prepared to do some work.

"A lot (of cash funds) are down to about 1.5 to 2 per cent because they're investing in bank bills at about 3 per cent and then they take out a 1.5 per cent management fee," says Prescott Securities chief economist Darryl Gobbett.

He says people should avoid basic cash options and instead seek term deposits, which are still paying about 4 per cent and are offered by more and more super funds, investment funds and wrap accounts.

Gobbett says retirees relying on cash income can hold a mix of term deposits rolling over every three, six and 12 months.

"Be careful what you are in. That's why we like term deposits - you know what you have got and you know what you are going to get back."

Impact Financial Coaching director Allan Ward says it is always worth checking your interest rate and looking around for something that delivers a better return "without sacrificing security".

"Beware of investments that say they are a fixed rate of return but offer way above market rates. If it looks like a term deposit but is paying twice as much as a term deposit, it's not a term deposit," he says.

Research group Canstar says cash management trusts that were paying almost 6.5 per cent interest in 2008 are now offering just over 2.5 per cent.

Canstar research manager Chris Groth says it is impossible to predict where cash interest rates will go, but warns people about switching to higher-risk assets such as shares that are paying about 6 per cent. "Keep in mind all those reasons for going to cash in the first place," he says.

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INCOME CHECK

Visit your fund's website or make a phone call to get the latest cash performance.

Expand the monthly return to get your annual rate. A figure of 0.22 per cent equals 2.64 per cent a year.

Check if your super or fund offers term deposits, which are still paying about 4 per cent.

Examine other options but work out your tolerance to risk.

View the original article here

Cash income slump hits savers

Prescott Securities chief economist Darryl Gobbett Source: National Features

PEOPLE seeking the safety of cash within their investment and superannuation funds are effectively losing money.

Low interest rates have resulted in many cash investment options paying just 2 per cent interest annually, below our 2.2 per cent inflation rate.

Even the popular industry super funds haven't escaped the low return trap, with the biggest funds now offering about 2.6-2.8 per cent.

But experts say there are ways to lift cash returns if you are prepared to do some work.

"A lot (of cash funds) are down to about 1.5 to 2 per cent because they're investing in bank bills at about 3 per cent and then they take out a 1.5 per cent management fee," says Prescott Securities chief economist Darryl Gobbett.

He says people should avoid basic cash options and instead seek term deposits, which are still paying about 4 per cent and are offered by more and more super funds, investment funds and wrap accounts.

Gobbett says retirees relying on cash income can hold a mix of term deposits rolling over every three, six and 12 months.

"Be careful what you are in. That's why we like term deposits - you know what you have got and you know what you are going to get back."

Impact Financial Coaching director Allan Ward says it is always worth checking your interest rate and looking around for something that delivers a better return "without sacrificing security".

"Beware of investments that say they are a fixed rate of return but offer way above market rates. If it looks like a term deposit but is paying twice as much as a term deposit, it's not a term deposit," he says.

Research group Canstar says cash management trusts that were paying almost 6.5 per cent interest in 2008 are now offering just over 2.5 per cent.

Canstar research manager Chris Groth says it is impossible to predict where cash interest rates will go, but warns people about switching to higher-risk assets such as shares that are paying about 6 per cent. "Keep in mind all those reasons for going to cash in the first place," he says.

--

INCOME CHECK

Visit your fund's website or make a phone call to get the latest cash performance.

Expand the monthly return to get your annual rate. A figure of 0.22 per cent equals 2.64 per cent a year.

Check if your super or fund offers term deposits, which are still paying about 4 per cent.

Examine other options but work out your tolerance to risk.

View the original article here

Cash income slump hits savers

Prescott Securities chief economist Darryl Gobbett Source: National Features

PEOPLE seeking the safety of cash within their investment and superannuation funds are effectively losing money.

Low interest rates have resulted in many cash investment options paying just 2 per cent interest annually, below our 2.2 per cent inflation rate.

Even the popular industry super funds haven't escaped the low return trap, with the biggest funds now offering about 2.6-2.8 per cent.

But experts say there are ways to lift cash returns if you are prepared to do some work.

"A lot (of cash funds) are down to about 1.5 to 2 per cent because they're investing in bank bills at about 3 per cent and then they take out a 1.5 per cent management fee," says Prescott Securities chief economist Darryl Gobbett.

He says people should avoid basic cash options and instead seek term deposits, which are still paying about 4 per cent and are offered by more and more super funds, investment funds and wrap accounts.

Gobbett says retirees relying on cash income can hold a mix of term deposits rolling over every three, six and 12 months.

"Be careful what you are in. That's why we like term deposits - you know what you have got and you know what you are going to get back."

Impact Financial Coaching director Allan Ward says it is always worth checking your interest rate and looking around for something that delivers a better return "without sacrificing security".

"Beware of investments that say they are a fixed rate of return but offer way above market rates. If it looks like a term deposit but is paying twice as much as a term deposit, it's not a term deposit," he says.

Research group Canstar says cash management trusts that were paying almost 6.5 per cent interest in 2008 are now offering just over 2.5 per cent.

Canstar research manager Chris Groth says it is impossible to predict where cash interest rates will go, but warns people about switching to higher-risk assets such as shares that are paying about 6 per cent. "Keep in mind all those reasons for going to cash in the first place," he says.

--

INCOME CHECK

Visit your fund's website or make a phone call to get the latest cash performance.

Expand the monthly return to get your annual rate. A figure of 0.22 per cent equals 2.64 per cent a year.

Check if your super or fund offers term deposits, which are still paying about 4 per cent.

Examine other options but work out your tolerance to risk.

View the original article here