$500,000 in a term deposit vs a growth portfolio
Term deposits feel safe. Your capital stays put and the interest arrives on schedule. But over 15 years, “safe” can quietly become expensive.
Here’s what happens to $500,000 in each option, with the same 4.5% starting income:
| Term deposit | Growth portfolio | |
|---|---|---|
| Capital after 15 years | $500,000 | $837,674 |
| Annual income in year 15 | $22,500 | $36,421 |
| Total income received | $337,500 | $434,153 |
| Franking credits on top | None | $148,852 |
| Total (capital + income) | $837,500 | $1,271,827 |
The growth portfolio finishes $434,327 ahead. That’s $337,674 of extra capital plus $96,653 of extra income. Add the franking credits and the gap widens further.
Why the growth portfolio wins
- Your capital grows. It rises from $500,000 to over $837,000 instead of standing still.
- Your income grows with it. A term deposit pays the same $22,500 every year. The portfolio’s income rises to more than $36,000 a year, a 62% pay rise you don’t have to ask for.
- Franking credits. Australian share dividends can come with tax credits attached. Term deposit interest is simply taxed.
- It beats inflation. At average inflation of 2.67%, $500,000 in a term deposit has the buying power of roughly $337,000 after 15 years, a loss of about a third. The portfolio’s capital ends up more than double that inflation-adjusted figure.
- Real history, not guesswork. The portfolio return is based on what Australian shares actually delivered from 2010 to 2024, about 8% a year before franking. Including franking, the real investor return was closer to 9–9.5%, so these figures are conservative.
The bottom line: doing nothing has a cost. If you’re sitting on cash or term deposits and want your money to work harder, let’s talk about what a growth portfolio could look like for you.
Call Chris and the team on (08) 8377 7501 or email office@intechwealth.com.au.
General information only. It doesn’t take your personal circumstances into account and isn’t personal advice. Past performance is not a reliable indicator of future performance. Share markets can fall as well as rise, and portfolio values and income are not guaranteed. Term deposit capital is fixed and, unlike shares, isn’t exposed to market falls. Figures are illustrative and before fees and tax.
