Why low interest rates aren’t great (and what you can do about it)
It’s now old news that the RBA (Reserve Bank of Australia) has dropped the official cash interest rate down to 2.5% - the lowest level in many decades. But if you have cash saved, that can be bad news for you.
Low interest rates also mean low returns
Now, the maximum return on a 12-month deposit is about 4.1%, but money in your standard savings bank account is now only earning about 3%. A few years ago, you could keep your money in the bank and it would earn you a risk-free 5-6% rate per year. Keeping money in the bank is no longer a great idea. Yes, it’s perceived as “safe” and “risk-free”… but at only 3% returns, you must ask yourself – is it worth it?
What you can do about it now
If you’re one of the people who have been taking advantage of the bank’s safe and risk-free savings returns and have saved up a nice little golden egg, you’re in a great position. Whether your golden egg is large or small, if you want to make better returns on it, this is what you can do about it now.
Consider investing in another property. If you have one, why not go for your second, or third, or alternatively consider investing in the Rental Management Australia Trust, an investment trust connected to Rental Management Australia. For more information contact Brian Ruzich on (08) 9523 5800 or email us on email@example.com
Statistically, capital growths on properties have gone up an average of 10% year on year. Whilst that growth may not be quite so strong right now, it’s still a lot more than the bank’s 3% rate of return. If you would like more information about property investment please contact us for a friendly, no obligation chat on 1300 440 166.
This article is general and does not constitute as investment advice. You should always consult with a Financial Planner before investing, contact us for more information, .
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