Are you a deal hunter?
WE ALL like to think we're deal hunters. The trouble is, we often sweat the small stuff without seeing the bigger picture. And it's burning a multi-billion dollar hole in our wallets each year.
Research by Heritage Bank found that three-quarters of Australians say they know how to chase a good deal. But we have a habit of obsessing over short term savings on minor purchases - like food and clothing. By overlooking opportunities for a better deal on our major financial products, we're collectively letting $7.4 billion slip through our fingers annually.
Part of the problem is inertia. There's plenty of competition in our financial sector. We just don't always make the most of it to get a better deal - sticking with the same provider we've always used can seem so much easier.
By way of example, a recent report by consumer body, the ACCC, found Aussies are paying too much for foreign currency (FX) conversion services. People who use the big four banks to send money overseas could have collectively saved about $150 million in the space of a year by using a cheaper service - of which there are many.
It's a similar story with home loans. Research by Uno Home Loans found one in four of us go straight to our existing bank for a mortgage. The crazy thing is, even with a loan in place, 63% of home owners stick with the same bank, despite the potential to save tens of thousands of dollars over the life of a loan by switching to a cheaper lender.
It can be the same with investing.
The fees we pay on superannuation can have a massive impact over time. A Stockspot report found you could be about $200,000 better off over your lifetime by investing your super in a fund charging annual fees below 1% compared to fund with fees of 2%. Yet plenty of Australians have their super in a fund where the annual fees top 2.6%.
Just as a higher interest rate isn't a sign of a better home loan, paying lavish fees on investments doesn't mean enjoying higher returns.
None of us can control investment markets. But we are free to choose how much our investments are impacted by fees. A little shopping around could leave you pleasantly surprised at how much you could save - and that's what nailing a good deal is all about.
Paul Clitheroe is Chairman of InvestSMART, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.