Cash investment accounts

If you have just sold a large investment such as a house, a cash investment account (or cash management account) is a good place to "park" your money and gain the highest possible returns until it is re-invested. Cash investment accounts are most appropriate for investing large amounts of money for a short period of time. There is generally easy access to your money and obligations of no more than ninety days.

Interest rates, opening balances and features of cash investment accounts

Cash investment accounts generally offer average to lower rates of interest, immediate access to your money through ATMs (although higher fees may apply), EFTPOS and telephone banking - much like a savings account. They will have a minimum opening balance, usually between $500 and $10,000, but may be best suited to larger amounts such as $100,000.

Cash investment accounts return the lowest yields compared to shares, property investment and fixed interest accounts, so they are only recommended for short-term periods.

Do cash investment accounts carry any risks?

Any investment involves a degree of risk, as the financial institution is investing your money, but major institutions such as CBA, ANZ and NAB who offer these types of accounts are generally low risk.

ANZ, for example, offers a Premium Cash Management Account, which suits cash investment. CBA offers a similar account with a smaller opening minimum balance required.

The risk with cash investment is that the interest rates are generally so low (two to five percent) that inflation may overtake them, with the investor ending up behind. So utilise this form of investment only for the short-term and keep your money working in between more lucrative investments.