Along with this raft of legislative change, the Australian Securities and Investments Commission (ASIC) has also introduced new licensing requirements for accountants who work with and advise Self Managed Superannuation Fund (SMSF) Trustees. Only approx. 10% of accountants have complied with these changes to date.
As such if you, as many, consider your accountant would be your 1st port of call for Financial Advice, they will likely advise you, they are unable to provide the information you require & should consult a qualified Financial Adviser / Planner.
This is general advice only and you should seek expert financial advice from a qualified financial adviser before acting on any of the information covered in these topics.
Cash and Fixed Interest Options for Aussie Investors unhappy with 0% returns on their cash.
Aussie Investors currently hold $1.1 trillion in savings account products, and this has been steadily increasing over time. The bulk of these accounts are earning zero interest.
Term deposits (TD) are in investment that improve on this. Currently you are looking at returns between 1.3% and 1.5% on terms between 3 and 5 years however you are forgoing access to your funds during this period.
Managed Cash Funds have the potential to earn higher returns than TD. They invest in a range of high-quality money market investments and have the added advantage of providing access to funds.
Managed Bond funds will typically also provide a reliable and steady income stream better than cash. Generally, these funds will hold Australian and International Government Bonds as well as highly rated companies.
While they can be traded at any time. Bond Funds are considered low to medium risk investments, as interest rate movements can result in small amounts of capital volatility. As such minimum time frames of 3 years plus are recommended for these holdings. Another advantage of Bonds is that they are not highly correlated to share market returns, so holding them alongside shares in your portfolio will reduce overall volatility.
The Reserve Bank has indicated current interest rates are likely to remain as they are for at least 3 years, so investors need to start looking at new options in the cash and fixed interest space to enhance their returns.
“In any moment of decision, the best thing you can do is the right thing. The next best thing is the wrong thing, and the worst thing you can do is nothing.” – Theodore Roosevelt.
