Term deposits still highly favoured

Against a backdrop of plunging interest rates, investors are still putting their money in the banks in term deposits.

Term deposit rates monitored by the website interest.co.nz are now slipping under 5 per cent and the BNZ has dropped its nine-month minimum term rate to 3.5 per cent for deposits of $100,000 or more.

Many shares are paying dividends that equate to double-digit yields on current share prices.

But a survey by ASB of investors reveals term deposits and bank savings continue to be the top choices of investors.

Rental properties are still third and confidence in KiwiSaver has increased.

At the end of last year 18 per cent of investors opted for the surety of term deposits as providing the best return of all investment types. This was down 3 percentage points from the third quarter but was enough to keep term deposits in top place. Bank savings were in second position at 16 per cent of respondents and rental properties retained third at 15 per cent.