High savings rates make the gap smaller. For short timelines, savings can be very competitive. Compare realistic assumptions.
Open the ETF vs Savings CalculatorWhen the RBA raises rates, Australian savings accounts become genuinely competitive — paying 4-5% pa with zero risk. This makes the ETF vs savings decision much harder than it was in the low-rate era of 2012-2022 when savings paid 1-2%. The question isn't whether savings is good right now — it's whether it will still be good in 5, 10, or 20 years when rates inevitably fall again.
At a 5% savings rate vs a 7% ETF return assumption, the gap is only 2% pa. After tax, brokerage and volatility risk, savings looks very attractive for money you might need within 3-5 years. But the critical question is: how long will rates stay high? The RBA cash rate has averaged around 3-4% over the past 30 years, with long periods well below that. Locking your long-term strategy around today's rates is a common mistake.
| Scenario | Savings (5%) | ETF (7% avg) | Verdict |
|---|---|---|---|
| 1-2 year horizon | ~5% pa, certain | Unpredictable | Savings wins |
| 3-5 year horizon | Rates may fall to 3% | Likely higher | Split approach |
| 10+ year horizon | Rates will vary widely | Historical avg ~7-10% | ETF likely wins |
No. Savings is often safer for short timelines and emergency funds. ETFs may be reasonable for long horizons.
Many people prefer 5+ years, but it depends on volatility and your flexibility.
Use the same contributions and timeline in the ETF vs Savings calculator and compare outcomes.
No. Treat results as estimates and use conservative assumptions.
Run a conservative savings scenario and a conservative ETF scenario, then compare.