Other types of investment accounts, other than your typical savings account, that are popular among the average person aiming to save money, include bonds, term deposits and debentures.
Bonds
Investments bonds are similar to managed funds - you invest money and this money is then added to the larger pool of money that is then invested in shares, or cash, or property, and so on.
Technically, an investment bond is a life insurance policy, so you're investing with an insurance company.
As with any account, you can make withdrawals at any time, however, any money you do withdraw is counted as part of your income and you need to pay tax on it. Instead, most people keep the money in the account for at least 10 years, to make the most of the tax benefits available.
Since your money is invested in a company, the profit or interest earned, is taxed at the company tax rate, which is lower than what most people are charged for their income tax. So in the end , you end up paying less in tax and therefore earning more money in your investment.
As with any investment, if share prices or property prices are in decline, your investment will lose value and money too, so it's not a guaranteed way of making money!
This chart gives you a good idea though of just how steady the growth of bonds has tended to be in the past.
Term Deposits
A Term Deposit is a special sort of savings account. You invest a sum of money for an agreed term or time period. During this time you don't add any further deposits and you don't take any money out. The longer you keep the money in the Term Deposit, the higher the interest rate you are offered.
At the end of the term, your initial deposit will have grown in value by the agreed upon interest rate and then you can choose whether to reinvest again, or do something else with your now larger sum of money.
Most banks offer Term Deposits and below you can see at a glance what Westpac has on offer:
Debentures
A debenture is a mixture between a Bond and a Term Deposit.
Firstly, like a Bond, a Debenture is an investment made with a company, not a bank. As such, it is generally a more risky investment, but the interest rate offered is usually higher than what a bank can offer.
Like a Term Deposit, a Debenture is an investment made for a certain term, or period of time. You cannot usually access your money before the term expires and your money is locked away for the entire term for a fixed and agreed upon interest rate. This means that if the economy starts doing well and interest rates rise, your money will still be locked away at a lower interest rate. The reverse is also true, which wouldn't be so bad!