I've written previously here about how to choose the best savings account for you which is a vital step in organising your personal finances.
But Fools may be looking at many of the top high-interest savings accounts (HISAs) and wondering: how can I maximise my return from these accounts and make my dollar go further?
Keeping it simple: the rollover strategy
Investors who have done their research on the HISA offerings available on the market may have noticed that banks often sweeten the deal by providing an elevated introductory rate for a period of around 4 months.
These include some of the best on the market including those offered by Citibank (2.90% p.a. for 4 months), HSBC (3.10% p.a. for 4 months) and Rabobank (3.05% p.a. for 4 months). After this initial introductory period and the bank has got your savings, they tend to substantially cut this rate to something within the 1.50% – 2.00% p.a. range.
For those who want to maximise their return on investment, I have implemented a simple account rollover strategy to get the most out of my savings which can be easily replicated. By simply choosing a HISA (and meeting the requisite terms and conditions), one can easily boost returns for just a little bit of extra effort.
Rather than just being able to enjoy the introductory rate from one account, I've been able to rollover my hard-earned cash across three of these HISAs per year to boost my returns with a little bit of setup and shutdown for each of these banks.
The best bit is that given it's not a credit product, there is theoretically very little limit to the strategy provided new HISAs are offered by banks across Australia that meet your investing needs.
I've outlined a basic example that demonstrates how much of a difference this rollover strategy could make if you put $100,000 in savings over a 12-month period compared to just parking your money in one account for 12 months.
Example: the rollover strategy in action
Generating Foolproof returns
It's easy to see from above, that the little bit of extra effort to setup and rollover your money from one HISA to another can yield an easy $1,000 more on a $100,000 nest egg. Once the standard variable rate of 1.60% kicks in after 4 months on the Citibank account, the rollover strategy comes into its own and translates to an extra 1% return over the course of a 12-month period.
This rollover strategy is easy to implement and requires minimal outlay to generate that extra cash – no investment risk required. It's the centrepiece of my personal finance strategy and this can easily be replicated to level up your own finances and build towards financial independence.
