The RBA voted to keep record low interest rates at 2% today, and according to the latest futures prices, there is a 29% chance the RBA will cut rates to 1.75% in May.
So what has caused expectations to turn towards a rate cut? The answer is Currency Wars. Our Australian dollar has risen over 10% since January. Central banks want currency values low as they believe that’s the only way to boost a national economy. So for now at least it appears Australia will have lower interest rates for long.
This will make property owners happy, however retires who are looking for income returns are being forced to look outside the box. Currently interest rates are around 1.9 – 2% at cash management accounts, and up to 3% for 1 year Term Deposits. On $300,000 invested in a term deposit investors are generating $9,000 pa. Gone are the days of achieving 6-7% interest rates by just having your funds sitting in a bank account.
At Sapient Financial Solutions we work with our clients to look outside the box to achieve higher income returns. We have a number of strategies that include holding a first mortgage over property for a relatively low risk 7.9% return to holding a basket of shares generating 10.75% returns.
Sapient has offices in both Melbourne & Sydney and we are available to assist either yourself or those you care about with higher income return opportunities.