The hidden Risk in playing it Safe

Tue Sep 15 2026
The hidden Risk in playing it Safe

With the Depositor Compensation Scheme now in place, and Term Deposit rates creeping up, it can be tempting to hold more of your money in cash than you potentially should

We are not denying that interest bearing cash accounts, and in particular Term deposits, can play an important role in protecting capital and providing short-term certainty. However, as the last decade has shown, rates can fluctuate significantly making longer term planning difficult.

For many investors, the challenge is not the safety of a term deposit itself, but the uncertainty of what happens next. A strategy that relies solely on continually renewing term deposits may work well when rates are high, but can result in a substantial drop in income when rates fall.

Over the last 10 years to August 2026, the lowest 6-month Term Deposit rate was 0.82% in January 2021 whilst the highest was 6.04% in March 2024. With the average over the ten years, 3.37% before Tax. (source: Retail interest rates on lending and deposits (B3) - Reserve Bank of New Zealand - Te Pūtea Matua)

That's why successful long-term investing is often about balancing security, flexibility, and growth. Having some money available in cash or term deposits for short-term needs can provide peace of mind, while investing a portion of your savings for the longer term may help your wealth grow and keep pace with inflation over time.

Rather than chasing the highest rate available today, consider whether your investment strategy is designed to support the lifestyle, income needs, and goals you may have over the next 10, 20, or even 30 years.

The best investment strategy is not necessarily the one that generates the highest return this year. It's the one that gives you confidence that your money can continue working for you through changing interest-rate environments, market conditions, and life stages.

If you'd like to understand how current term deposit rates compare with other investment options, or whether your portfolio is positioned appropriately for your goals, please contact us. We're here to help you make informed decisions with confidence.

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