In his latest article written for Alan Kohler's Eureka Report, Scott looks at an investor response to the latest interest rate cuts and the government's massive stimulus package. He concludes by suggesting:
Beyond the 1% cut in interest we got this week from the Reserve Bank, the government's latest stimulus package represents the equivalent of $2000 for every man, woman and child in Australia. As and investors you must now:
- Recognise the falling income that cash like investments provide - likely to be well below the income from share investments going forward - while still using cash for liquidity and to dampen volatility within portfolios.
- Take care of seemingly attractive "high income" investment opportunities, which seem tempting against the low rate of cash on offer and which have often failed in the past.
- Be deliberate about the use of the $950 handouts, to look at combining them with a strategy like salary sacrificing to superannuation or the government superannuation co-contribution to increase the impact of the $950.
- Be aware of the increased likelihood of having some time out of work . and planning ahead by building a cash reserve to help get through that period.
- Be careful about the impact that inflation can have on cash-style investments over a long period of time.
- Take note of the areas of the economy directly impacted by the cash handouts, including retail and construction.
For the entire article please click on the following link - Review your strategy ... and portfolio
