Up To Speed column – Smart Investor, March 2009
The ANZ Online Investment Account
What is it?
It’s an internet banking share investment account.
What does that mean?
It runs like any other online savings account, but your money doesn’t go into a conventional deposit. Instead it goes into a fund that invests in Australia’s top 200 shares. It’s like using your bank account to put all your cash into an index fund.
ANZ reckons people don’t invest because they don’t have the time, effort and knowledge, and are put off by cost, risk and fear of mistakes. This account makes it about as easy as it could possibly be.
What’s it cost me?
The annual management fee is 1 per cent – which is more than an index fund but less than most active ones – and there is a 0.25% fee taken on any amount deposited or withdrawn, much like an entry or exit fee from a managed fund. The minimum initial deposit is $1000, and then subsequent deposits have to be for at least $100.
Can I use it like any other bank account?
Like any other online account, yes – you can make deposits and withdrawals straightforwardly. This means the amount you actually have invested in the market is going to move around a lot, but it does also mean you’re always fully invested.
Why would I do it?
In theory this should be a good time to be invested in the Australian market: it is at historically good value, and if it’s not at the bottom yet it’s almost certainly closer to it than the top it fell from just over a year ago. Problem is, if it falls further and you’re relying on your account as a deposit account, you’re going to have less money in the bank than you thought you had. It’s fair to say most people are likely to opt for a regular deposit account and this account, not just the new one.