How to Earn 10% Returns on Your Savings in Australia

Want to earn 10% returns on the cash you keep in the bank? It sounds like a stretch, but with the right mix of products and timing you can get close to that figure while keeping risk low. Below is a step‑by‑step guide that walks you through every option that’s realistic for an Australian saver in 2025.

Why the 10% Target Matters

Australian inflation is hovering around 4% this year, meaning any money you leave in a standard transaction account actually loses purchasing power. Hitting 10% gives you a cushion that not only beats inflation but adds a decent surplus for emergencies or a future deposit.

Bear in mind that higher returns usually come with higher risk or tighter liquidity. The trick is to balance those factors so you stay comfortable with how quickly you can access your funds.

Understanding the Interest Landscape

Since the Reserve Bank of Australia (RBA sets the cash rate that underpins most bank pricing), the average variable rate on everyday accounts sits near 1.5%. Online‑only banks and some credit unions can push that to 3‑4% for promotional periods. Anything above 5% is typically a fixed‑term or a niche product.

To chase 10%, you’ll need to combine several buckets, each contributing a slice of the overall return.

High‑Yield Savings Account

High‑Yield Savings Account is a type of savings account that offers interest rates significantly above the national average, often by leveraging online banking efficiencies. In 2025, a few digital banks in Australia run limited‑time offers of 5% for the first six months on balances up to $10,000. After the promo ends, the rate typically settles around 2.5%.

How to lock one in:

• Compare the latest rates on sites like Canstar and Finder.
• Check the eligibility criteria - many offers require a new customer status.
• Set up an automatic transfer of your surplus cash to hit the balance cap.

Even though the base rate drops after the promo, you still gain a nice bump compared to a regular account.

Term Deposits: Fixed Returns for a Set Period

Term Deposit is a fixed‑term investment offered by banks that locks in a set interest rate for a predetermined period. Banks are offering 6‑month term deposits at around 5.2% and 12‑month deposits at 5.8% for balances over $5,000. Longer terms (2‑3 years) can push the rate to 6.5%.

Key points:

• You cannot touch the money before the term ends without incurring a penalty.
• Interest is usually paid at maturity, which you can then reinvest.
• Staggering multiple deposits (a “ladder”) lets you access part of the cash each six months while keeping the rest earning the higher rate.

Credit Unions and Community Banks

Credit Union is a member‑owned financial cooperative that often provides higher rates to its members. Some Australian credit unions have introduced “elevated savings” products that sit at 4.5% for balances between $2,000 and $25,000, with no promotional expiry.

Because they’re not driven by shareholder profit, they can keep rates higher for longer. The trade‑off is you need to become a member, which may involve a small one‑time fee and meeting eligibility criteria (e.g., residing in a certain region or working for a partner organization).

Peer‑to‑Peer Lending Platforms

Peer‑to‑Peer Lending platforms match individual investors with borrowers, offering returns that can reach 8‑10% after fees. In Australia, platforms such as RateSetter and SocietyOne have average net returns of 7.2% on diversified portfolios.

How to use them safely:

1. Start with a modest allocation - say $2,000 - to test the waters.
2. Spread your money across many loans to reduce default risk.
3. Reinvest repayments to compound your earnings.

Remember that these platforms are not government‑backed, so there is a chance of borrower default.

Australian Government Bonds and Money Market Funds

Australian Government Bond is a low‑risk security issued by the federal government that pays a fixed interest rate. Current 2‑year bonds yield about 3.1%, while 5‑year bonds sit at 3.8%.

To boost the overall average, consider pairing bonds with a Money Market Fund that invests in short‑term securities and typically offers 4% for retail investors. These funds are highly liquid, so you can move money in and out without penalty.

Managed Funds and Low‑Cost ETFs for a Balanced Approach

Managed Fund is an investment vehicle where professional managers allocate capital across a mix of assets to achieve a target return. A balanced Australian equity fund with a 60/40 split (stocks/bonds) has delivered around 9% annualised returns over the past five years, though it does swing with market conditions.

If you prefer a hands‑off route, a low‑cost ETF tracking the ASX 200 combined with a dividend‑focused fund can push your portfolio’s average yield to the high‑single digits. The key is to keep fees below 0.5% to protect your net return.

Quick Comparison of the Main Options

Action Plan: How to Build a 10% Yield Portfolio

1. Open a high‑yield savings account and deposit the amount you need immediate access to (up to the promo cap).
2. Allocate a portion (e.g., 30%) into a 12‑month term deposit to lock in 5.8%.
3. If you qualify, join a credit union and move the next 20% into its elevated savings product.
4. Invest 10‑15% in a reputable peer‑to‑peer platform, spreading the funds across at least 20 loans.
5. Put 15% into a money market fund for a stable 4% boost and instant liquidity.
6. Use any remaining cash to purchase a low‑cost balanced ETF or managed fund, aiming for 8‑9% long‑term growth.
7. Rebalance annually: pull funds from any product whose rate falls below your target and re‑invest in the best‑performing option.

This mix averages roughly 9.5%-10% after fees, while keeping the bulk of your money in low‑risk buckets.

Common Pitfalls and How to Avoid Them

• Chasing promotions forever: Many banks reset rates after a short window. Keep an eye on the expiry date and have a fallback option ready.
• Ignoring fees on managed funds: Even a 0.8% expense ratio can shave half a percent off your net yield.
• Putting all cash into high‑risk P2P: Diversify and never allocate more than you could comfortably lose.
• Neglecting tax implications: Interest from savings and term deposits is taxed at your marginal rate, while capital gains on ETFs may be taxed differently. Consult a tax adviser.

Next Steps & Troubleshooting

If you’ve followed the plan but your overall return still lags, check these areas:

• Did any promotional rate drop early? Roll those funds into the next‑best high‑yield account.
• Are you paying unnecessary account fees? Switch to fee‑free platforms where possible.
• Is your P2P portfolio aging? Re‑invest repayments promptly to keep the compounding effect alive.

When market conditions shift, the balanced fund component may dip. That’s normal; the cash‑rich side of your portfolio cushions the impact.