Bank Term Deposits
In New Zealand a deposit with a Registered Trading Bank is generally regarded as second only to Government Stock in terms of security. But note they DO NOT carry a Government Guarantee.
You invest for a "term". You promise to leave the money with the bank for a fixed period of time. In return the bank promises to pay you interest at a fixed rate for that term. Depending on the bank, interest may be paid monthly, quarterly, six monthly, annually or on maturity. Find one that suits your needs.
Resident withholding tax (rwt) will be deducted by the bank at a rate nominated by you. Be sure to nominate a rate or they will automatically deduct rwt at 33%.
Terms are available from 30 days to 5 years. Banks will occasionally have special rates for a maturity term where they need the money to "balance their books" and so you might be able to pick up a little bit more interest than otherwise.
It used to be easy to break a term deposit if you needed the money early but that is no longer the case. Be sure to check on the consequences of breaking the term of the deposit before you commit to a term.
To find the latest rates you can go to your banks website or visit Interest.co.nz where they will show you a list of the current rates available for a range of banks. And other fixed interest offerings from other non-bank institutions, Beware you will be taking more risk for the usually higher return from no-banks.
For terms less than 12 months go here >>> https://www.interest.co.nz/saving/term-deposits-1-to-9-months
For terms greater than 12 months go here >>> https://www.interest.co.nz/saving/term-deposits-1-to-5-years
For those on a marginal tax rate of 30% or 33% a Term PIE, may be advantageous to you because a PIE caps your tax rate at 28%. Term PIEs are term deposit funds that offer investors the tax advantages of the Portfolio Investment Entity regime, and they pay tax on investment income based on the prescribed investor rate (PIR) of their investors, rather than at the entity's tax rate. Use interest.co.nz's our Deposit Calculator to work out the after-tax savings that will apply to you.
For current Term PIE rates being offered visit here >>> https://www.interest.co.nz/saving/term-pie
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