Shares vs Term Deposits
Updated: Mar 29, 2020
Author: Bill Savellis
Let's face it, with interest rates so low, no one is going to get rich investing their money in term deposit. But, have term deposits ever been a worthwhile investment?
Some people are brilliant with money, while others make terrible financial decisions. What’s the difference between the two? Why are some people so bad with money?
Often it’s because they procrastinate instead of making sensible decisions. Rather than being decisive, they kick the can down the road thinking they have time to make a decision later.
They lack a sense of urgency, lulled into complacency by a regular income, which covers their day-to-day cost of living. This short-term focus can be disastrous. Few people recognise the consequences of not proactively making a decision, particularly about their finances.
The below graph provides a comparison of investing in term deposits vs the share market.
As the graph illustrates, a $10,000 investment in term deposits back in 1980 would have accumulated ZERO capital growth, wheres you would have accumulated an asset worth $175,000 had you invested in the ASX.
Additionally, the income generated from term deposits had decreased as interest rates have gone down, while the dividends from shares have increased more than 8 times during the same period.
This is a clear indication of the long term benefits of being strategic and proactive with your money rather than focusing on fear of the share market and deferring your financials decisions for another day.
Information published on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in this document is General Advice and does not take into account any person's particular investment objectives, financial situation and particular needs.
Before making an investment decision based on this advice you should consider, with or without the assistance of a qualified adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. Past performance of financial products is no assurance of future performance.