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Author bio
Laura Stewart is a Finance Editor at The Motley Fool, where she covers Australian and international equity markets. She joined the company in 2022, following a career transition from legal advisory work in Southeast Asia into the investment industry.
Prior to her current editorial role, Laura spent three years as an Equity Analyst and Writer, producing investment research across the ASX, NYSE, and NASDAQ. Her coverage included small-cap growth companies, thematic investment ideas, and high-quality U.S.-listed businesses.
Laura holds a Master of Applied Finance and brings additional expertise in accounting, taxation, and estate and wealth planning from her postgraduate studies. She also has a background in law and communications, which supports her analytical and reporting work in financial markets.
Outside of work, she enjoys spending time in the Adelaide Hills with her flock of sheep.
Education
Laura holds a Bachelor of Laws, a Bachelor of Communication (Journalism), and a Bachelor of Commerce with majors in Accounting and Corporate Finance. In 2025, she completed a Master of Applied Finance at the University of Adelaide, receiving postgraduate awards in Accounting Concepts & Methods, Ethical Principles in Accounting & Finance, Real Estate Valuation & Investment, and Tax, Estate & Wealth Planning. Social media LinkedIn Favourite investment quote
"Compound interest is the eighth wonder of the world. He who understands it, earns it... he who doesn't... pays it."
— Albert Einstein
Published
Today, Australian mortgage holders received the news that they'd been dreading.
As anticipated, the Reserve Bank of Australia (RBA) raised the official cash rate from 4.60% to 4.85%. That's the fifth consecutive rate rise for the year. It's also an 18-year high, placing further strain on struggling borrowers.
This comes at a time when unemployment has ticked up, inflation remains elevated, and house prices have fallen in every major capital city.
Since the rate hike was already priced into the market, the S&P/ASX 200 Index (ASX: XJO)responded mildly. The index is down just 0.1% for the day to 8,855 points.
Image source: Getty Images
Did term deposits just become more compelling than ASX shares?
Investing has always been a relative game.
As reported by Vanguard, investing in ASX shares over the past 30 years has delivered almost double the annual return of term deposits. Specifically, 9.0% and 4.0%. So, it's not even been close.
When interest rates sat below 3% during the COVID-19 period, the choice was even clearer. Investing in ASX shares was almost always the more financially savvy choice compared to investing in term deposits.
However, this is just an average. The comparison is not static and shifts across the interest rate cycle.
Today's acceleration in the RBA rate rises to a fresh 18-year high has made the choice far less straightforward.
Banks don't always pass on increases in the cash rate. However, according to Canstar, Australian term deposit rates typically sit between 0.10% and 0.70% above the official RBA cash rate. Typically, the longer the term length, the higher the interest rate.
Should the RBA hand down another rate rise, we could see the cash rate exceed 5%, making north-of-6% term deposits very possible.
Interest rates now likely sit at the highest level in living memory for many ASX investors.
That's likely to entice many investors.
So, should you sell ASX shares and park the money in term deposits?
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