Should I lock our money away?

So tomorrow we will be adding another $200 to the emergency fund, to take it to $2000 neat. At the same time, our house deposit account is sitting at $7000 ($7009.23 to be exact!), which together easily represents the most money I’ve ever had in the bank on my life, even accounting for it belonging to two of us.

My financial goals for the year were many, but included saving $35,000 towards a house and $10,000 in an emergency fund. Let’s see how we are going with those aims now that we are two months into the year.

If I work from today’s emergency fund balance of $1800, that represents 18 per cent of my emergency fund goal.

Similarly, $7000 is bang on 20% of our $35,000 house deposit goal.

Clearly we are on track so far in both these savings.

The one issue I have is to figure out if we should move our cash to a term deposit once it reaches $10,000 or so. One issue that a few finance books have alerted me to is that term deposits can sometimes reacha  poorer return than e-savings accounts, simply because they only pay the interest on maturity.

For example if I take $10,000 and put it in a 3-month term deposit at 4.25% payable on maturity, I will get all the interest at the end. But if I leave it in my e-savings account at 3.75%, I’ll get interest added to it at the end of each month, and the new balance will be used to calculate increased interest the next month. Maybe if I can find a markedly better term deposit deal this wouldn’t matter, but until then, I’m not going for it.

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