In a recent article published in Alan Kohler's Eureka Report, financial education consultant Scott Francis looks at the possibility of investing in inflation-linked bonds.
Scott concludes that the bottom line is that we don't know what the budget will bring, other than the reality that the Australian government will have a significant amount of borrowing. If an inflation-linked bond is proposed, it will be interesting to see the form in which it is offered.
The reality is that in an environment where the cash rate is 3%, and with the interest payments on a bond taxable, it might not be quite as exciting opportunity as the concept of an inflation-linked bond suggests.
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Inflation-linked bonds need just one ingredient.
