Deposits and bonds
Earn interest on your money.
Cash accounts, term deposits and bonds all pay you interest, and each suits a different need, from money you can reach any day to income on a set schedule for years ahead. Your adviser helps you choose the right mix and takes care of everything for you. This page is general information, not an offer or a recommendation.
Side by side.
| Question | Cash account | Term deposit | Bond |
|---|---|---|---|
| Who it is with | An Australian bank, building society or credit union | An Australian bank, building society or credit union | A government or a company |
| What it pays | A variable rate, often with a bonus rate for meeting simple monthly conditions | A fixed rate for the whole term, set on the day it opens | Interest, called a coupon, paid on set dates |
| When you get it back | Any day | On the maturity date, with your interest | The face value on the maturity date |
| If you need it sooner | Any day, with no notice and no loss of interest | Usually available with notice, often 31 days, at a lower rate | Can be sold at the market price on the day, which may be more or less than you paid |
| The Government guarantee | Covered up to $250,000 per account holder, per authorised deposit taking institution | Covered, within the same limit at each bank | Not covered. Optional capital protection is available on specified bonds |
| Whose name it is in | Yours | Yours | Yours |
Rates and coupons are set by the bank or the issuer and are shown before tax. They are not a forecast of returns.
How the Government guarantee works.
The Financial Claims Scheme is the Australian Government's guarantee on deposits with Australian banks, building societies and credit unions, known as authorised deposit taking institutions. If one of them were to fail, the scheme pays each depositor up to $250,000 per account holder, per authorised deposit taking institution.
The limit applies to each institution rather than to each account, and some banks trade under several brand names on one licence. Your adviser keeps track of this for you, and the scheme's own site, fcs.gov.au, lists which brands belong together.
The guarantee covers cash accounts and term deposits. Bonds, managed funds and shares are not covered, and for bonds, optional capital protection is available on specified bonds.
For larger amounts, your adviser can spread your money across several banks, so that each part stays within the guarantee.
Cash waiting in your Towemer account is held in your own name, never pooled with other clients' money, and is covered by the guarantee in the same way.
Cash accounts and term deposits.
A cash account keeps your money working
A high interest cash account earns interest on your balance while keeping your money available any day. Many accounts pay a higher bonus rate in months when you meet simple conditions, such as a regular deposit, and your adviser will help you find an account that suits how you use your money.
A term deposit fixes your rate
You choose the term, commonly one, three, six or twelve months, and the rate is fixed for all of it, so you know exactly what you will earn from the day it opens. Interest can be paid at maturity or, for many terms, monthly at a slightly lower rate.
We look after your maturities
Your adviser contacts you before every term deposit matures, so you can choose what happens next: renew it, move the money, or have it paid to you. Unless you ask your adviser to renew it, the money is paid to you at maturity. Your maturity dates are always in your Towemer account, under Income.
If you need the money sooner
Early access is usually available with notice, often 31 days, at a lower rate. Your adviser arranges it for you.
We handle the paperwork
Your adviser takes care of the application and all the paperwork. Interest, and the money from a maturing term deposit, are paid to your nominated bank account, or to your Towemer cash account if you prefer. To withdraw from a cash account, just ask your adviser.
Today's rates, every morning
The rates in your account are the banks' own published rates, updated from their official Open Banking feeds every morning and confirmed on the day your deposit is opened.
Bonds
Regular income, with a set end date.
A bond is a loan to a government or a company. The borrower pays you interest at an agreed rate on agreed dates and repays the face value on the maturity date. Because you know the dates in advance, bonds are useful for matching your money to costs you know are coming.
When do you need the money?
A coupon date at every tick, then the face value returned on the maturity date.
The coupon is the interest rate on the face value. What you earn also depends on the price you pay and on the issuer repaying, and if you sell before maturity you receive the market price on the day. The bonds above are Australian Commonwealth and state government bonds, shown only to explain how maturity dates work, and are not a recommendation.
Price and yield move in opposite directions.
A bond pays a fixed amount of interest. If you pay less for the bond, that fixed amount is a higher yield on your money. If you pay more, the yield is lower.
Illustrative figures only, not a real bond. One bond with a face value of $100, paying $4 a year, shown at nine different prices. This is the running yield, the simplest measure. Yield to maturity, explained below, is the better one for comparing bonds.
The parts of a bond, explained.
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Issuer
Who is borrowing
The government, state or company you are lending to, which pays your interest and repays the face value.
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Face value
What is repaid at maturity
Usually $100 for each bond. It is set when the bond is issued, and can differ from the price you pay.
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Coupon
The interest rate
Set when the bond is issued and paid on stated dates, usually twice a year. On a fixed rate bond it stays the same for the life of the bond.
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Maturity
The repayment date
The day the face value is repaid, which makes a bond useful for a cost you know is coming.
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Price
What it costs today
Bonds can be bought and sold before they mature, so the price moves, mostly with interest rates. Held to maturity, a bond repays its face value whatever its price did in between.
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Running yield
The coupon divided by the price
A quick measure of the income from a bond at today's price. It does not count the face value you get back at the end, so yield to maturity is better for comparing bonds.
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Yield to maturity
The best figure for comparing bonds
It counts every coupon and the difference between the price you pay and the face value you get back, which makes it the best single figure for comparing two bonds.
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Duration
How much the price moves
How sensitive the price is to interest rates, quoted in years. As a rough rule, a bond with a duration of seven moves about seven per cent in price for each one percentage point change in yields, up when yields fall and down when they rise.
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Credit rating
An independent view of the issuer
A rating agency's view of how likely the issuer is to pay, from AAA down. It is a useful guide and is reviewed over time, but it is not a guarantee.
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Ranking
The order of repayment
If an issuer cannot pay, senior secured bonds are repaid first, then senior unsecured, then subordinated, then shareholders. Two bonds from the same company can carry different levels of risk because of where they rank.
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Call date
When the issuer may repay early
Some bonds let the issuer repay on set dates before maturity. If it does not, the bond carries on to its next call date or to maturity, sometimes at a new rate.
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Currency
What it pays in
A bond issued in US dollars, euros or pounds pays in that currency, so its value in Australian dollars moves with the exchange rate, up or down.
The bonds available in Australia.
There are five main kinds of bond, each with a different borrower behind it. Your adviser will explain which could suit you.
Commonwealth Government Securities
The Australian Government borrowing in its own name, through the Australian Office of Financial Management. Treasury Bonds pay a fixed coupon. Treasury Indexed Bonds adjust the face value with the Consumer Price Index, so the repayment keeps pace with inflation. They carry the lowest credit risk available in Australian dollars, though the price still moves with interest rates.
Semi government bonds
The states and territories borrowing in their own names through their treasury corporations. They usually pay a little more than Commonwealth bonds, and are often called semis.
Corporate bonds
Companies borrowing directly from investors. They usually pay more than government bonds, reflecting the extra risk of lending to a company, and optional capital protection is available on specified bonds.
Bank bonds and capital notes
Banks borrow at several levels. Senior bonds rank alongside the bank's other ordinary lenders, subordinated notes, called Tier 2, rank behind them, and capital notes rank further back again and carry extra conditions, which is why each level pays more. A bank's depositors rank ahead of all of them.
Bonds issued abroad
Governments and companies outside Australia borrowing in their own currencies, which widens the choice of borrowers. Their value in Australian dollars moves with the exchange rate.
Good to know.
Make the most of a bonus rate
Many cash accounts pay their highest rate in months when you make a set deposit or no withdrawals. Your adviser can help you choose an account whose conditions fit how you use your money.
Spread your maturity dates
Placing term deposits for different terms, such as three, six and twelve months, means some of your money comes due regularly, so you have access to funds without breaking a term.
Hold to maturity for certainty
If you hold a bond until it matures and the issuer pays, you receive every coupon along the way and the face value at the end, whatever the price did in between.
Use term deposits and bonds together
Term deposits are guaranteed up to the limit and suit shorter terms. Bonds can lock in income for longer and can be sold before maturity, and optional capital protection is available on specified bonds. Together they give you both security and flexibility.
Compare on yield to maturity
Yield to maturity gives the fullest picture when comparing bonds, because it counts every coupon and the price you pay. A higher yield usually reflects a higher risk, and your adviser will explain the difference.
How we help.
Today's strongest rates
Tell your adviser how much and for how long. Offerings, in your account, shows the strongest cash and term deposit rates published this morning for that amount and term, alongside the firm's bonds.
Held in your name
Your adviser takes care of the application and all the paperwork, and every deposit and bond is held in your name.
Spread across banks
For amounts above $250,000, your adviser can spread your money across banks so that every part stays within the Government guarantee.
No fee on a deposit
There is no fee from us for placing a cash account or a term deposit. Bonds carry the purchase and sale fees set out in our Financial Services Guide.
Matched to your plans
Because term deposits and bonds have set dates, your adviser can line them up with costs you know are coming, such as school fees, a renovation or retirement.
Optional capital protection
On specified bonds, you can add capital protection for a yearly fee, which covers your capital and any unpaid coupons if the issuer has a credit event. The details are in our Financial Services Guide.
Flexible if plans change
A bond can be sold before its maturity date at the market price on the day, and your adviser arranges the sale for you.
In one account, confirmed in writing
Every deposit and bond sits in your one Towemer account, with income and maturity dates in one view. The amount, the rate or the coupon, and the settlement date are confirmed with you in writing before anything is placed, and a reply from you saying “I confirm” is enough.
Talk to an adviser about your savings.
Tell us how much you would like to invest and when you might need it, and your adviser will take you through today's rates. There is no obligation.