Best of the best: Don’t wait until the new year to find a better deal

Why wait until the new year to make resolutions for your finances? Money asked researchers to nominate their best picks for several types of financial products and investments. Use the holiday season to shop around for a better deal. Saving for retirement

Industry super funds dominate the table of the best-performing funds of past 10 years that are open to anyone.

Rest Super’s Core Strategy investment option tops the table with an average annual compound return of 6.1 per cent, followed closely by another industry fund, CareSuper’s Balanced investment option, with a return of 6 per cent over the decade.

All funds listed in the table comfortably exceed SuperRatings’ industry benchmark of 4.7 per cent, the median return of the largest 50 funds.

There are a few key areas to consider when assessing whether a super fund is a quality provider, says Camille Schmidt, market insights analyst at SuperRatings.

The investment performance may be strong, but is it consistent or will the up and downs of the returns keep you awake at night, Dr Schmidt says.

It is also important to look at the fees and whether they are reasonable. By comparing the overall fee to equivalent products, you can determine whether a fund is relatively cheap or expensive, she says.

And consider whether the fund meets your needs in terms of product flexibility and other services, she says.

For example, can you change investment options easily, does it have a mobile phone application, if that is important to you, and can you access relevant investment seminars and financial advice, Dr Schmidt says.

Australian share funds

Perpetual’s Wholesale Ethical SRI has an average annual compound return over the past 10 year of almost 8 per cent to make it the best-performing Australian shares fund.

Another Perpetual fund, the Wholesale Share Plus L/S, is in second spot with a return of 7.3 per cent. Investors Mutual’s All Industrials Share fund is in third with a return of 6.6 per cent.

Chris Douglas, director of research ratings at Morningstar Australasia, says it is important to assess a fund’s performance over the long term so they can see how a manager has performed over various market conditions.

“And the 10-year performance numbers in the table comprise a wide range of market conditions, including the dramatic sell-off during the 2008 GFC when the local Australian equity market was sold off by almost 40 per cent and 2012-13 when the market was up by more than 20 per cent,” Douglas says.

“All the funds displayed in the table have steered investors through some tricky conditions,” he says.

However, investors need to be careful about extrapolating past performance into the future, Douglas says.

Managers make changes to how the money is managed and key investment staff responsible for the good performance can leave, he says.

And choosing a fund will depend a range of factors to do with your personal circumstances, such as whether you are investing mainly for capital growth or for income. Home loans

Mitchell Watson, the research manager at Canstar, says despite the Reserve Bank keeping the cash rate on hold since August 2016, there’s been plenty of changes in lenders’ interest rates.

That is why it is important for home owners and investors to be consider whether their loan interest rate is still competitive, he says.

“It’s important to not only consider the interest rate but also the fees and the features of the loan meet your needs,” Watson says.

The table also shows the “comparison rate”, which helps consumers identify the true cost of a loan.

It factors in the interest rate, most fees and charges and displays a single percentage rate that can be used to compare various loans from different lenders.

Low-rate cards

In the lead up to the festive season, a no-frills credit card can support your spending while keeping your interest costs to a minimum, says Bessie Hassan, money expert at comparison site Finder.

“Low rate doesn’t mean these products come without fees,” she says.

“You can still incur fees, like an annual fee, which could set you back a hundred dollars or so per year, and late payment fees, so you’ll need to factor this into your budgeting,” she says.

For those looking for a really low purchase rate, there are a limited number of cards offering zero percent interest rates on purchases for a year or more.

However, it is important to pay-off the balance that was transferred within the zero interest rate period and to make sure that subsequent debt racked-up on the card is paid off, in full, each month, Hassan says.

These cards can often revert to a particularly high purchase interest rates at the end of the zero-interest period, she says.

Amex cards with frequent flyer points

Frequent flyer credit cards offer you points on your everyday spend that can be redeemed for a number of items like flights and accommodation.

There are a number of frequent flyer programs and Money has chosen to ranks cards that provide points for Qantas, the largest frequent flyer program.

When it comes to frequent flyer cards, the most important features are the “earn rate” (the number of points earned per dollar spent on the card) and the “burn rate” (how many points you need to spend to redeem a reward). The number of sign-up bonus points and the annual fee are also important.

Finder’s Bessie Hassan says as all of these cards have purchase interest rates of 20 per cent or more, these are only worth considering if you’re sure you can pay off your balance in full at the end of each month.

MasterCard/Visa cards with frequent flyer points

The interchange regulations, enforced in July this year, have seen frequent flyer programs devalued across the board.

Providers have dropped earn rates and there are tighter caps, where, once you exceed a certain spending threshold no more points or fewer points are earned.

“But don’t be blinded by the rewards alone,” Hassan says.

“These products typically come with higher annual fees and high interest rates so it’s essential to weigh up your options to see if the benefits outweigh the costs,” Hassan says.

Correction: The annual free (apart from the discounted first year fee) is $299 rather than $200 on the Qantas Premier Platinum card. Online accounts

There are two types of higher-earning savings accounts on the market – those with an introductory high rate (relatively speaking, given cash rate is at historic lows) and those with a ongoing high rate.

Introductory rates tend to only last for a few months, and after that the earning rate drops sharply – down to as low as 0.8 per cent.

The table shows the best accounts with ongoing interest rates.

Those with an introductory rate will have a bonus interest rate that is paid provided the saver meets certain conditions.

For example, often this simply involves getting your wages paid into a linked current account, making a minimum deposit into the account regularly, or using a debit card a few times a month, Finder’s Hassan says.

This story Administrator ready to work first appeared on Nanjing Night Net.

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