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Investment Bank Accounts

Find out more about how to invest your money for the greatest return with Savvy.

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, updated on July 31st, 2023       

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Finding the best bank account can save you hundreds on fees and connect you with the very latest in smart banking technology.  Compare bank accounts from a wide variety of providers with Savvy to find the very best offers available on the market right now.

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Investment bank accounts explained

If you have funds to invest, there’s a multitude of different investment bank accounts which can help you to achieve the best return on your money.  Take a look at the variety of investment bank accounts available with Savvy and how you should compare account features to find the most suitable one for your individual investment needs.

What are investment bank accounts?

Investment bank accounts are offered by banks (or other specialist financial institutions) which are intended to be a long-term solution to grow net wealth.  They usually form one part of a balanced investment portfolio and sit alongside investment property, shares, bonds and superannuation accounts.  Separate accounts are also available for business investment in Australia.

The type of investment bank account you choose will depend on several factors, with the main one being what sort of return you’re looking for.  Are you just after the highest interest rate on your savings, or do you want a steady regular income which could result from investing in blue-ribbon shares which pay regular dividends? Alternatively, you may be looking at long-term capital growth, in which case property investment options are where you should concentrate.

What are my options for investment bank accounts?

The options you have available to you as far as investment bank accounts go are also dependent on the principal sum you have to invest, the time period you have in mind for your investment and how much access (if any) you wish to have to your funds. Your risk profile (how much risk you’re prepared to take to maximise your investment potential) will also play a part in your choice of account.

High-interest savings and term deposits

High-interest savings accounts and term deposits are the most passive form of cash investment.  Savings accounts (particularly ‘locked’ savings accounts) can offer a bonus rate of interest if various conditions are met, such as a set amount deposited into the account each month or restrictions on withdrawals (either the number of withdrawals allowed per month or a limit on the dollar amount withdrawn).  You can compare your high interest savings account options with Savvy to help you find the best one for your needs, alongside a range of suitable bank account offers.

Term deposits similarly offer a higher interest rate the longer the term of the deposit.  Both of these account types are essentially ‘set and forget’ savings options which offer a risk-free place to park your savings and watch them grow over time. However, they offer comparatively low interest rates compared to other forms of more active investment, which may carry a higher risk profile.

Managed investment bank accounts

These are accounts offered by banks and other specialist investment institutions which offer to actively manage your funds using a combination of fixed deposits, bonds, exchange-traded funds (ETFs), Australian or international shares and property investment.  They often have a minimum deposit size (often starting from $5,000 up to $10,000 or even $50,000) and are aimed at the more serious passive investor. 

Experienced fund managers actively manage the investment account, making all the buying and selling decisions on your behalf according to the parameters you may have specified. You pay either a set fee for services or a percentage of the funds under management per annum.  For example, one of the larger banks offers a managed investment account for an annual 3% p.a. fee, while another offers a managed account for an annual $865 package fee.

Some managed funds offer ‘units’ of the fund for sale.  For example, an investment of $15,000 at a unit price of $1 buys you 15,000 units.  The value of each unit goes up and down and reflects the market value of the assets held in the entire fund.  You may earn income (often called a ‘distribution’) from dividends or from the interest the fund earns.  You can either reinvest this interest to buy more fund units or receive it as a cash income.

What control do I have over managed funds?

If you’re a serious investor with a nest-egg to stash, you may be able to specify how you wish your funds to be invested on your behalf in a managed account.  Common areas where you are given a choice include:

  • Risk factor – choose your risk factor according to how much risk you’re prepared to take to chase certain investment results. You may choose between high, medium, low or balanced risk. An example of balanced risk would be where you’re able to specify a percentage of funds are in high-risk investments and another portion in a lower-risk and lower-interest fund.
  • Investment category – you can choose whether your funds are invested in term deposits, bonds, shares, exchange-traded funds, property or a combination of all these sectors. Your choice may depend on the areas in which the remainder of your investment portfolio is concentrated.  For instance, if you’re already heavily invested in property, you may wish to have a managed fund that concentrates on shares to ensure a balanced investment exposure which isn’t too heavily weighted towards one particular sector.
  • Ethical considerations – you may also be able to specify how your funds are invested based on ethical decisions.  For instance, if you have a concern about climate change, you may specify no investment in coal or petroleum-producing companies.  If you’re concerned about the effects of smoking or gambling, you can also choose ‘ethical’ investment options which don’t involve any investment or support in cigarette manufacturing or distribution or avoid any investment in companies which run casinos or supply or manufacture pokies.  Some investment funds also allow you to invest in so-called ‘green’ (zero-pollution) industries, carbon sequestering or renewable growth projects (such as renewable plantation forests which prevent native rainforests from being cut down to feed paper mills).

Types of bank account

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More of your questions about investment bank accounts

What are the three types of return for income tax purposes in Australia?

Managed funds can grow your wealth and provide returns in several ways.  For income tax purposes, these returns are broadly classified as either interest received on funds, dividends received or realised or unrealised capital gain.  Your decision about which type of investment bank account to choose will depend on what sort of return you’re looking for from your investment.

What are notice saver accounts and are they a good investment?

Notice saver accounts are investment savings accounts which are like a hybrid between a term deposit and a high interest savings account.  The money you deposit is invested and so you receive a relatively high interest rate, but you can access your funds if you give a certain number of days’ notice (usually 31 days’ notice but can be up to 90 days’ notice required).  They’re a relatively new financial product which are currently offered by a limited number of banks but provide more flexibility than term deposits or locked savings accounts.

With a managed investment account, do I have complete control over how the fund manager invests my money?

Yes – you can choose an investment bank account which does provide you with complete control over how your money is invested, avoiding investment in areas you may have an ethical objection to.  However, not all investment bank accounts offer you the option to choose ethical investing, so it’s worth comparing accounts and looking at a variety of investment offers before deciding which one gives you the control you’re after.

Are all investment companies just as safe for my savings?

All authorised deposit-taking institutions (ADI) in Australia have to be licensed by the Australian Prudential Regulation Authority (APRA) to carry on banking business, including accepting deposits.  Heavy penalties apply to any company which isn’t APRA-licenced which accepts deposits from the public.  Having an ADI licence means the bank or financial institution is covered by the government’s Financial Claims Scheme, which guarantees each savings deposit up to $250,000 (per account holder, per ADI).  Before investing your funds, check the financial institution is an authorised ADI and is therefore covered by the government’s savings guarantee.

What is a PDS for an investment bank account and is it important?

As investment bank accounts can involve a relatively high level of risk, the terms and conditions of such accounts can be complex and run to several pages.  The Product Disclosure Statement (PDS) details exactly what all the terms and conditions of the account are.  You must be supplied with a PDS by law.  Read the PDS carefully before deciding which investment bank account is right for you, and if necessary, seek advice from your accountant or financial advisor.

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