Bank deposits slow, shares the way to go

According to The Australian Financial Review, bank deposits are currently growing at the slowest rate in three years, due to the fact that investors can realise better gains by investing in other instruments, such as shares or property.

Data provided by the Reserve Bank of Australia (RBA) revealed that total deposits had increased just 5.6% over the last year – the weakest growth since July 2010 – whilst growth in term deposits was the weakest in nearly a decade, up just 0.2% in the last 12-month period.

In the long run, this could prove to be an issue for Australia’s banks, including ANZ (ASX: ANZ), NAB (ASX: NAB), Westpac (ASX: WBC) and Commonwealth Bank (ASX: CBA), which rely on customers’ deposits to be able to lend to other customers. Whilst Nomura analyst Victor German does not believe this is a major issue for the banks just yet, he believes it is definitely “an important space to watch” – particularly as more investors take advantage of low rates to buy into property.

Despite the fact that numerous stocks in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) are currently overpriced, there are still many opportunities that are more attractive than term deposits! Discover The Motley Fool’s favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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