Returns on cash savings vs investment property: which earns more?

The cash rate is doing retirees no favours at all at the moment. Earlier this year, ANZ and other banks cut their interest rates on savings accounts to less than 0.5 per cent, while some lenders went even lower.

Many people have put away money all their working life, thinking they’d be able to live off the interest when they retire and maybe dip into their savings from time to time for holidays and the like.

That scenario worked when savings rates were around five per cent: $1 million in the bank would earn about $50,000 a year in interest. People could live off that comfortably and not even touch the capital. These days, that same million will only earn $3000 a year, leaving some retirees struggling to make ends meet.

If those retirees had invested in property for 10 or 15 years before leaving the workforce, they’d still be getting a five per cent return on their investment. Plus, their capital would have been going up in value – not down – by around seven to 10 per cent every year. Over 10 years, that million dollars would now be closer to two million.

The good news is that it’s not too late to make those kinds of gains, with many investors realising they can turn their financial situation around.

If you have money saved, you can buy property now that is going to get you that five per cent return – plus capital growth. Over the past 12 months, we’ve helped a number of retirees with cash buy investment property that has a strong rental yield. They are now enjoying a steady income. And with Dwyer’s three-year rental guarantee, that income is 100 per cent guaranteed for that period.

For more information, contact Jason Dwyer from Dwyer Property Investments on 1800 088 437.

NB: The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. ​Dwyer Property Investments recommends that you seek independent legal, financial and taxation advice before acting on any information in this article.