Agreed. The blanket statement "savers dependent on fixed interest have been poorly advised for decades" has so many things wrong with it... Just because fixed interest may not deliver much in the way of returns, it at least has the guarantee (if it's a term deposit with a well-capitalized institution) that you can draw down on the principal amount, and that amount is not at risk.
I couldn't think of anything more problematic than a retiree following this advice and dumping all their savings into bank shares (or any other 'high-yield' shares) and risk their livelihood for slightly larger returns.
Most important rule: Preservation of capital.
Also, if fixed interest is giving returns of 10% but inflation is 8%, they would be happy.
If fixed interest is giving returns of 4% but inflation is 2%, they would NOT be happy.
Its frustratingly simple, but alot of the population think this way..at least thats what Ive come across...
Just wondering what to do with my cash ATM. I see a very long period of low interest rates around the globe and my cash will be chewed away by inflation. It is forcing people to take risks who otherwise wouldn't. I don't want to buy bank or telstra shares because I feel i think they will level off soon, and wont be worth the risk for a 5 or 6% yeild. What to do ?
Agree absolutely. It's often said that this applies only to those approaching or already in retirement.Most important rule: Preservation of capital.
Agree absolutely. It's often said that this applies only to those approaching or already in retirement.
I've never understood why. No matter what your stage in life, surely you're going to primarily focus on preserving existing capital.
Not necessarily. I don't regard my term deposits earning 8% as being any more risky than the funds at call at a bit under 5%.
8% is not a bad return (especially compared to what is currently available) but it is a low return compared to the performance of bank shares over the past couple of years.
This is of little comfort if you're of the belief that regulatory requirements, especially around housing, are not adequate.
Not that it's the most likely scenario, but should our housing market cop a US style beat-down on prices, bank shares will go down with it. Term deposits will stay.
(I'm not bearish on everything BTW, I'm 60% in equities ATM)
My comment was in response to your suggestion that returns on bank deposits are low because "low risk = low returns". I was attempting to point out that imo the risk on my bank deposits was no different now at call earning about half the interest of the term deposit. I could also have noted the minimal yield offered by some widely held companies, eg BHP et al. 8% for no risk seems OK to me.Only 8%. Depending on when you made those term deposits that may have been quite a low return compared to the alternatives.
Sorry. No, I don't recall. Don't recall what various posters have said a week ago in most instances.As you may recall I was posting on these fora a couple of years ago about the compelling dividend yields on offer from shares in the major banks.
Yes, they were good. The returns on the banks, however, didn't represent the market as a whole.A couple of examples. WBC shares purchased Nov 2010 yielding 12% including franking credits this financial year plus 51% unrealised capital gain. ANZ shares purchased Aug 2011 yielding 11% including franking credits this FY plus 57% unrealised capital gain.
Obviously your recall of my posts over the last couple of years is as minimal as mine of yours,8% is not a bad return (especially compared to what is currently available) but it is a low return compared to the performance of bank shares over the past couple of years. I'm not making any comment about your personal situation as obviously I don't know what it is.
+1.Well that's the real purpose of a central bank then - to make cash so disliked it's either gotta be spent or put into things that are riskier ie stocks? It doesn't necessarily mean stocks, even banks, are better but it's all that's left? Not many are talking about the fact that rates are extra low because of a good reason - the economy stinks. And that's going to hit banks hard eventually as well? The question is then timing when to exit....into boring cash:frown:
Exactly. And the number of people adversely affected by the GFC indicates few have much idea about how to jump off a trend when it reverses.This is of little comfort if you're of the belief that regulatory requirements, especially around housing, are not adequate.
Not that it's the most likely scenario, but should our housing market cop a US style beat-down on prices, bank shares will go down with it. Term deposits will stay.
My comment was in response to your suggestion that returns on bank deposits are low because "low risk = low returns". I was attempting to point out that imo the risk on my bank deposits was no different now at call earning about half the interest of the term deposit. I could also have noted the minimal yield offered by some widely held companies, eg BHP et al. 8% for no risk seems OK to me.
Out of interest, when did you take out the term deposit that is paying 8% and for what term?
Out of interest, when did you take out the term deposit that is paying 8% and for what term?
Wrong, actually.I'll take a stab, would've been 2008 for 5 yrs??
Wrong, actually.
Look, fellas. How about you put up a full statement of all your financial decisions over X years?
I have already disclosed more than most people about my personal affairs, and frankly don't feel obliged to answer questions on a public forum that are entirely my business.
Wrong, actually.
Look, fellas. How about you put up a full statement of all your financial decisions over X years?
I have already disclosed more than most people about my personal affairs, and frankly don't feel obliged to answer questions on a public forum that are entirely my business.
Wrong, actually.
Look, fellas. How about you put up a full statement of all your financial decisions over X years?
I have already disclosed more than most people about my personal affairs, and frankly don't feel obliged to answer questions on a public forum that are entirely my business.
Thanks Flying Fox. No offence taken.Apologies Julia, didn't mean to offend.
:headshakeGod bless you. I've been quite interested to read most of what you have had to say. I don't know anyone here from a bar of soap. Only here to learn from others. I've been here for about four years. I've learnt so much - so much more to learn. But not from you obviously. I'm not here for titillation. Only to learn.
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