Aussies are making a costly mistake by piling cash into savings accounts and term deposits, warns fund manager Laurence Parisi. While the average return for online savings accounts was 3.10% per annum and bank term deposits sat at 3.6%, both yielded less than the headline inflation figure of 4%. This means savers are experiencing a "guaranteed loss" in real terms as inflation eats away at their wealth. However, personal finance educator Glen James offers a different perspective. He argues that cash is essential for emergencies and short-term goals, and should not be invested in the sharemarket to chase better returns. James emphasizes the importance of having a plan for your money and investing in growth assets as a hedge against inflation. Australian Banking Association CEO Simon Birmingham advises customers to shop around for better rates and maximize their return on savings. The article highlights the need for Aussies to carefully consider their investment strategies and the potential risks associated with inflation.
