Reviewer: Jane

I agree with Matt and Dori's comments. There is no 'advantage' to the Cash 'Advantage' fund over the standard savings account. The effective rates are the same for the 38% tax payer (3.6%) and it is actually a disadvantage for the 33% tax payer. Your reply to Matt is misleading. I can't see any advantage at all in investing in the CAF fund even as a 38% tax payer. Please explain if I am missing something here.

Mike Heath: Jane, thanks for the feedback. Your point is valid when the interest rate differential between the CAF and On Call is greater than then tax benefit of the CAF for those on 38% RWT.

Reviewer: Matt

Your CAF does not seem to have any advantage at the moment for the 39%RWT tax payer. Do you think the name is mesleading to investors?

John Baird (Operations Manager): Thanks for the comment Matt. The Cash Advantage Fund was named so for the tax breaks it offers the 33% and 38% tax payers.

Reviewer: Dori

To Mike Heath: Hi. Please explain why the CAF is now only paying 3.45% interest whereas the call savings a/c is paying 4% when the CAF funds are invested in Rabobank & there are not supposed to be any fees. Even your web page on CAF is incorrect stating :" Paying 39% or 33% tax on deposits you're paying too much" when your calculator show that as a 33% taxpayer I would receive more from the call a/c. This seems to have happened since the Government Guarantee - is the 0.55% interest difference the cost of the GG? Dori.

Mike Heath: Dori, thanks for the question. There is no correlation between the rates we offer for the On Call and CAF products – they act quite independent of each other. The rates we pay are a function of the wholesale rates we receive for money invested in both – currently meaning the CAF is paying less. With regards to the deposit guarantee, both incur the same levy so that is not a consideration.

Reviewer: L Bennett

What would the return be for a period of 12 months in the cash advantage fund compared with a 12 month term deposit, tax rate 19.5% deposit of $10000.

Mike Heath: Hi, assuming that both the Cash Advantage Fund (CAF) and the 1 Year TD are paying 3.85% … the CAF returns a tax effective rate of 3.92% versus 3.85% for the 1 Yr TD. The net interest would be $315.56 for the CAF and $309.93 for the 1 Yr TD.

Reviewer: Edwin

Are funds in the CAF guaranteed by the parent Rabobank like deposits?

Mike Heath: Edwin, we are still awaiting sign-off from the Treasury What we do know, once it’s given the guarantee is back-dated to 12th Oct 2008. Once we here from the Treasury we shall let our customers know straight away.

Reviewer: Karen

I read that the comparison of interest rates between on Call and CAF are as a yearly comparison, what if investing time frame was shorter, maybe 6mths, would that make any difference on returns?

Mike Heath: Karen, on the basis that the interest rates and calculations are all annualised no it doesn’t. In real dollar terms you’d earn less obviously as the compounding period is less.

Reviewer: Peter

I'm a little confused as to why the interest rate for the Cash Advantage Fund is less than that for the on-call account. Given that the former is not protected by a government guarantee, does it not carry more risk, which you would expect to be reflected in a higher interest rate?

Mike Heath: Peter, a very good question. There is not correlation, in terms of rates offered between the On Call deposit account and the Cash Advantage Fund. The rates we offer for both are a function of the underlying returns we receive for each dollar invested in them. Regards Mike

Reviewer: Claudia

I have been following your blog and am waiting for any news on the deposit guarantee scheme for PIE investments. Will you publish any changes in your newsletter?

Mike Heath: Claudia, most definitely. We shall let all customers know by way of a specific e-mail, an update to our Home Page and also in our secure banking site.

Reviewer: Rachael

I am impressed with the CAF but would like the option of a fixed-term PIE. Is this likely to happen (preferably sometime soon)?. Thanks.

Mike Heath: Rachael – we are looking at a PIE TD but can not give a firm date for it yet. Merry Xmas!