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I am an Australian PR and say I have 10,000 AUD in my savings account. Currently my bank offers a 4% interest rate credited monthly to my account. I do not need access to this money for another 2 years. Are there any other investment options I could consider for a greater return of investment ?

I do not want to take major risk so the stock markets are out of question. The term deposits at my bank are worser than the savings account as they offer only 3.33% annually.

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  • If you want higher returns you may have to take on more risk.
    – Victor
    Jun 3, 2014 at 5:38
  • @Victor What would be my options in Australia ?
    – happybuddha
    Jun 3, 2014 at 5:49
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    Same as most places around the world. In order of lowest returns (and usually lower risk) to higher returns (and usually higher risk), Bank savings accounts, term deposits, on-line savings accounts, offset accounts (if you have a mortgage), fixed interest eg. Bonds, property and stock markets. If you are looking for only 2 years I would avoid direct property due to lower liquidity. If you want potentially higher returns then you can go for derivatives like options or CFDs, FX or Futures. These usually have higher risks again but as with any investments some risks can be partly managed.
    – Victor
    Jun 3, 2014 at 6:10
  • Which bank are you with? Is the 4% interest rate on your savings account only valid for a promotional period?
    – karancan
    Jun 3, 2014 at 21:14
  • not the sort of question SE is made for, it leads to discussions and suggestions instead of a QA. The gov first home saver account suggestion comes to mind. Even without gov co-contribs you MAY be able to salary sacrifice into it, saving you income tax and live off the 10k instead of 10k of your after tax income. This would return $14k for me if I did it. It is likely to end in June 2015 so you get your money then instead of in 4 years. Look out if you're not using it to buy a house though
    – BeowulfNode42
    Jun 14, 2014 at 1:36

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It depends on the exact level of risk that you want, but if you want to keep your risk close to zero you're pretty much stuck with the banks (and those rates don't look to be going up any time soon).

If you're willing to accept a little more risk, you can invest in some index tracking ETFs instead, with the main providers in Australia being Vanguard, Street State and Betashares. A useful tool for for an overview of the Australian ETF market is offered by StockSpot.

The index funds reduce your level of risk by investing in an index of the market, e.g. the S&P 200 tracked by STW. If the market as a whole rises, then your investment will too, even though within that index individual companies will rise and fall.

This limits your potential rate of return as well, and is still significantly more risky than leaving your cash in an Aussie bank (after all, the whole market can fall), but it might strike the right balance for you.

If you're getting started, HSBC, Nabtrade, Commsec and Westpac were all offering a couple of months of free trades up to a certain value. Once the free trades are done, you'll do better to move to another broker (you can migrate your shares to the others to take advantage of their free trades too) or to a cheaper broker like CMC Markets.

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