Transform your savings account into a cash-crushing machine with just $30,000

Here's how to make far better returns than cash in the bank.

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A savings account is a useful place to allocate $30,000. But I think Aussies can do much better than an account that pays an interest rate of approximately 5% at best. ASX shares can help investors turn a $30,000 balance in a savings account into a cash machine while providing positives like diversification, capital growth and passive income.

If $30,000 were sitting in a savings account, it would generate interest. But the capital value wouldn't change, and the income it pays would be stuck at that interest rate unless the RBA were to surprise and increase the interest rate again.

Investing in ASX shares means owning a piece of companies that are doing their best to grow profit, increase the underlying value, and pay more cash to shareholders over the longer term.

But I'm not suggesting that investors need to become expert stock pickers. We can utilise the power of exchange-traded funds (ETFs) to achieve the returns we're seeking. ETFs are funds we can buy on the ASX in a single transaction that own a basket of shares.

Here are three ASX ETFs that could be more useful to own than having cash in the bank.

VanEck Morningstar Australian Moat Income ETF (ASX: DVDY)

This ETF invests in a portfolio of 25 high-quality, dividend-paying ASX shares that have strong competitive advantages compared to others in the sector, allowing it to continue making large profits.

The DVDY ETF has provided a partial dividend yield of 4% and more than 5%, including franking credits, in the last 12 months. It has also delivered capital growth of 12% in the last year. This combination of dividends and possible capital growth can deliver pleasing returns, and that appeals to me more than a savings account.

Some of the portfolio's underlying investments include Pinnacle Investment Management Group Ltd (ASX: PNI), Brambles Ltd (ASX: BXB), Ansell Ltd (ASX: ANN) and Computershare Ltd (ASX: CPU).

Vanguard MSCI Index International Shares ETF (ASX: VGS)

This is one of my favourite ETF investments because of its capability to give Aussies broad exposure to the global share market, which has been one of the best-performing asset classes over the past 10 years.

Impressively, the VGS ETF has delivered an average annual return of approximately 13% since its inception in November 2024. It has achieved this thanks to its helpful allocation to IT/tech companies, which currently make up around 25% of the portfolio. The VGS ETF gives good exposure to businesses like AppleNvidiaMicrosoft, and Alphabet.

With a low management fee and excellent diversification across a wide range of share markets from around the world, the VGS ETF is far more compelling to me than cash in the bank.

I think this ETF can continue to perform better than a savings account, partly due to growth trends like AI, global digitalisation, and earnings compounding and partly due to its diversification with more than 1,350 holdings.

VanEck MSCI International Quality ETF (ASX: QUAL)

Some investors may think that owning more than 1,300 global businesses is too many. So, why not just own the high-quality ones?

The QUAL ETF screens out some of the lower global stocks from its portfolio and only owns shares in companies that make strong earnings for shareholders and have healthy levels of debt.

Over the last 10 years, this ASX ETF has returned an average of 15.7% per year. It owns similar businesses to the VGS ETF but allocates more to them because it has fewer holdings — around 300 positions.

This seems like a much more appealing option to me, with much more growth potential over the long term than having $30,000 cash in the bank.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Apple, Microsoft, Nvidia, and Pinnacle Investment Management Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool Australia has positions in and has recommended Pinnacle Investment Management Group. The Motley Fool Australia has recommended Alphabet, Ansell, Apple, Microsoft, Nvidia, and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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