Managing a self-managed super fund (SMSF) gives you more control over your retirement savings, and many people turn to SMSF term deposits for a predictable way to grow their funds. But how do you work out how much your SMSF can earn from a term deposit? An SMSF term deposit calculator can be a helpful tool to help you estimate your returns. This article explores how they work, as well as some potential strategies that may help maximise your SMSF’s earnings.
Using SMSF term deposit calculators
SMSF term deposit calculators can help you estimate the potential returns on your investment. Broadly, here's how they work:
- Input your deposit amount
- Select the term length, which will govern the interest rate you can earn
Some term deposit calculators will also allow you to choose how often interest is paid to you, which can affect the interest rate you’re offered. The calculator will then show you how much estimated interest you could earn over the deposit term.
Just remember, term deposit calculators are estimates only and do not represent either quotes or pre-qualifications for an SMSF term deposit. They should only be used as guidance. Every calculator is subject to its own disclaimers and assumptions.
Maximising your SMSF term deposit earnings
You may wish to consider the following in order to get the most out of your SMSF term deposit
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Ladder your investments. Instead of placing all your funds in a single SMSF term deposit, you may choose to spread your funds across different term deposits with different terms. This is known as term deposit laddering and may provide access to higher rates in an environment where interest rates are increasing while maintaining some flexibility or liquidity if you need funds sooner.
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Compare rates across institutions. Different authorised deposit-taking institutions may offer different rates, and some might have term deposits tailored for SMSFs. Taking the time to compare providers could result in better returns.
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Consider the timing of investment. Just like every investment, timing is key for an SMSF term deposit. While SMSF term deposits provide a fixed interest rate, it’s still important to consider the timing of your investment. As an SMSF Trustee, it's your responsibility to observe and manage the risks for your investments.
Important Information
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