Over the course of GENC3003, I realized an important thing: you can never start planning for your financial future too early. I think that was a key message I took away from Paul Clitheroe's book as well, seeing the emphasis he places on saving, investing, superannuation, and preparing for retirement; all of which require mapping out a plan.
Well, of course, that's why we have the financial plan assignment to do right?
Anyway, I was looking into the idea of maximizing my assets as best I can, even with my current situation as a student. Right now, as much as possible, I put my money into the savings account NetBank Saver (I use Commonwealth Bank), because it has a higher interest rate than my Streamline account - 3.75% per annum compared to like zero (well actually 0.01%). Considering that usually at any one time I don't have assets in excess of $2000, the interest I earn is pretty much negligible.
However, over the course of this summer work program, I have accumulated about $5000 that I can put away. Based on advice in your lecture notes, I decided that a good option would be to keep some in my savings account as a buffer if I require any money, and put the rest into a fixed deposit account to earn a higher interest rate.
So, I went to search for options on the commbank website. What caught my eye at first was the Award Savers account, which offers 5.01% interest on savings if I make a deposit every month and no withdrawals until 30 June 2010. That sounds pretty alright, I could just transfer some money from my monthly allowance, and make sure that I have enough in my NetBank Saver to fall back on if I need to.
On the website Award Saver is touted as a way to earn bonus interest (which would be the only plus point I'm aiming for) and also has a regular savings plan. That would be good for me, to just have an automatic transfer from my Streamline account to another one, so that I know I still am saving a certain portion of my money without thinking too much about it.
The other option I was looking at was Term deposits. Using these plans, I will know exactly how much interest I will receive from them and I will be investing for a fixed period. And the interest rate is pretty high for 7 months - 6%. The only problem is that I require $5000 to start a deposit. I may have enough to deposit it, but then I won't have a savings buffer in case I need oh, say, $1000 to go for that trip to South Island NZ. Well, okay, that's not exactly the way I intend to use my buffer, but basically, I won't have enough accessible money left over to feel secure if I start one right now.
So, my plan is to save up another $1000, so I will have at least that much to use, and then put the money I earned of $5000 into the term deposit. I should be able to achieve this in about 4 months down the road if I am very careful with how I spend my money. And, if I don't spend any of my 'ang pow' or red packet money that I receive from my parents and relatives during Chinese New Year coming up. Will be aiming for the 7 month term deposit because that offers 0.1% more interest than if I keep it there for 12 months. I am not sure why.
Now I guess I'm only comfortable with placing my money in the bank, but once I have a steady income, I will move on to investments and hopefully remember all the sound advice from this course then.
C ya.
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