Investment Strategy
February 1, 2025
MyInterestFinder Team
Term Deposits: Your Safe Haven in Volatile Markets
Safe Haven
Market Volatility
Security
Capital Preservation
Market Volatility and Your Savings
Stock markets can swing 20-30% in a matter of weeks. Property values fluctuate. Crypto can lose half its value overnight. But term deposits? Your principal is 100% guaranteed.
The Case for Capital Preservation
Government-backed term deposits offer unique advantages during uncertain times:
- Zero capital risk: Your principal cannot decrease
- Guaranteed returns: Know exactly what you'll earn
- Government protection: Up to $250,000 per institution
- No market correlation: Unaffected by share market movements
Historical Perspective
During recent market downturns:
- 2020 COVID crash: ASX fell 37% - term deposits paid steady returns
- 2022 market correction: Global stocks down 20% - deposits unaffected
- Banking concerns 2023: Silicon Valley Bank collapse had zero impact on Australian government-backed deposits
Current Rate Opportunity
Today's term deposit rates are exceptional:
- Rates at 8-year highs (7-8.5% P.A.)
- Significantly above long-term averages
- Beating inflation with real positive returns
- Risk-free returns that rival historical share market averages
Portfolio Allocation Strategy
Consider term deposits as the foundation of a defensive portfolio:
- Conservative: 60-80% in term deposits
- Balanced: 30-50% in term deposits
- Growth: 10-20% as a stability anchor
Peace of Mind Has Value
Beyond the financial returns, government-backed deposits provide something invaluable: certainty. In a world of economic uncertainty, knowing your savings are secure and growing steadily provides genuine peace of mind.
Sometimes the best investment decision is choosing not to take unnecessary risks with your hard-earned money.