SMSFs that have not reviewed the terms of their cash investment may be missing out on thousands of dollars of returns each year, according to a financial product comparison site.
Mozo money and finance expert Rachel Wastell said the difference between returns for an average and high cash rate for SMSF investors at present could equate to more than $4500 per year.
“As part of the Mozo Experts Choice Awards, our teams reviewed the rates of dozens of SMSF savings accounts to find that hitting snooze on your SMSF cash portfolio could be costing you more than you realise,” Wastell said.
She said Mozo compared 35 SMSF savings accounts and found a 2.23 percentage point difference in savings rates between the average rate of 2.22 per cent a year and the highest figure currently on offer of 4.45 per cent a year.
Settling for the lower figure for a single year would result in an interest return of $4485, while the higher figure would result in a return of $9084 at a difference of $4599 on a $200,000 SMSF balance, she noted.
Additionally, over five years the best SMSF savings rate would generate $49,736 in interest compared to the average rate of $23,456, or a difference of $26,280, while opting for an interest rate around 4 per cent per annum or higher would still create around $20,000 more in interest.
“Many SMSF savers don’t realise that leaving their cash in a low interest account could be costing them tens of thousands of dollars, as when it comes to large SMSF balances, the tiniest difference in rates really adds up,” Wastell said.
Mozo stated the firms with the highest rates at present were Qudos Bank, Macquarie, Bank First, Police Credit Union, Rabobank and HSBC, all of which offered an SMSF savings account above 4 per cent a year.
“When it comes to finding the best savings rates, loyalty does not pay and switching from the average rate to a market-leading rate could give you the leg-up to reinvest in your retirement,” Wastell said.
“Don’t lose thousands of dollars in potential interest because of a sleepy savings rate.”
