September 23, 2025 Elise Rowe
According to recent data from the Reserve Bank of Australia (RBA), deposit account interest rates currently reach up to around 5%. At the same time, other financial products available in the market have recently delivered returns in the range of approximately 6–8%. It is important to note that investment outcomes depend on many factors, and future performance is never guaranteed.
For those with substantial savings — starting from AUD 100,000 and above — this difference in potential returns may be significant. However, the right choice will depend on your personal goals, risk tolerance, and tax circumstances. Unlike deposits, investment products involve varying levels of risk and may differ in terms of liquidity and potential tax treatment.
To better understand the options available, you can use a free comparison tool to explore different alternatives. Please note: the information provided here is of a general nature and does not constitute personal financial advice. Before making any decisions, you should consider consulting a licensed adviser registered with ASIC (the Australian Securities and Investments Commission).
🔹 Low-risk managed funds: Provide access to diversified assets, can usually be withdrawn when needed, and often come with competitive fee
structures.
🔹 Superannuation investment choices: A retirement savings option that may deliver tax efficiencies under current legislation.
🔹 Corporate bonds: Can generate regular income, with yields in some cases around 4–5%, though performance depends on market and credit
conditions.
Case study
At 48, Sarah had accumulated AUD 350,000 across several term deposits. After meeting with a licensed financial adviser, she shifted part of her balance into a conservative managed fund and reallocated another portion within her superannuation to a diversified investment mix. This approach broadened her exposure beyond deposits, lowered her annual costs, and allowed her to fine-tune her portfolio as her retirement plans develop.
How these options can differ from deposits
✅ Opportunity for improved long-term performance
✅ Wider choice of strategies, plus more liquidity and flexibility
✅
Potential tax advantages, depending on personal circumstances and regulations
✅ In some cases, lower ongoing management costs
✅ Broader diversification and less reliance on bank interest rates
Disclaimer: All investments carry risk, including the chance of capital loss. Returns are not guaranteed, and past results are not a reliable guide to future performance. Tax outcomes vary by individual situation and may change over time. The information provided here is general in nature and does not consider your personal objectives, financial situation or needs. You should obtain professional advice from an ASIC-licensed financial adviser before making investment decisions.
To provide a clearer picture, we spoke with a licensed financial adviser registered with the Australian Securities and Investments Commission (ASIC), who previously worked in leading superannuation and investment firms. As he explained:
“Many people don’t realise the differences between savings products. By comparing carefully, you may identify opportunities that can have a meaningful impact on your long-term financial outcomes.”
He added:
“Term deposits are relatively safe, but there are other products that, in some cases, may offer higher potential returns for only slightly more risk. In addition, some alternatives provide features such as tax benefits or greater flexibility that deposits usually don’t.”
| Savings Channel | Potential Annual Return | Liquidity / Flexibility | Tax Benefits | Risk Level |
| Investment-grade Corporate Bonds | 4%-5%+ | High | No | Medium |
| Conservative Managed Funds | 4%-6% | High | Possible | Low–Medium |
| Superannuation – Bond Option | 3%-5% | Low (restricted access) | Yes – Significant | Low |
| Balanced Managed Funds | 5%-8%+ | Medium | Possible | Medium |
| Superannuation – Conservative | 4%-7% | Low (restricted access) | Yes – Significant | Medium |
| Bank Term Deposit | Up to 5% | Very High | No | Very Low |
These figures are based on historical performance. They do not guarantee future outcomes. All investments carry risk,
including the potential loss of capital.
Depending on the option chosen, potential returns can vary considerably – from around 5% in deposits to above 8% in some diversified managed funds.
On a savings balance of AUD 1,000,000, even small percentage differences can amount to tens of thousands of dollars over time.
Market reforms and ongoing shifts in interest rates may present opportunities for Australians with substantial savings.
If you are considering alternatives to deposits, a licensed financial adviser can help assess your circumstances, explain available products, and highlight options that may suit your needs.