Rates Down Again!
With the RBA cutting interest rates 25 basis points to a new low of 1.75 per cent and some banks already announcing plans to pass on the cuts in full to mortgage clients, it can’t be long before they also cut their Term Deposit and cash rates, here’s what self funded Australian retirees can expect:
| Sum invested in Cash / TDS | Return at best current rate 3.1% for 1 year | Return after 0.25% drop | Drop in income |
| $250,000 | $7,750 | $7,125 | $625 |
| $500,000 | $15,500 | $14,250 | $1,250 |
| $750,000 | $23,250 | $21,375 | $1,875 |
So that equates to a drop of 8.06% in income for those conservative investors who stick to cash and fixed interest based investments.
Not more than a year ago you could still get 3.5% on a Term Deposit so the drop in income over the last 2 years has been more like 18.5%. Could a normal family suffer that loss income ?
Meanwhile Centrelink will most likely not review Deeming Rates until September 20th and there is no certainty they will react to the drop in interest rates. If they don’t then the next review is not until March 2017. Why Scott Morrison did not address this in March when he knew an election was in the offing surprises me. there will be a lot of grey army voters very angry with the coalition.
The government will claim that the low inflation rates mean no real difference for you and a real “she’ll be right” attitude from Ministers on huge salary packages.
Tell them “THEIR DREAMING” and it’s your REALITY!.
Some tips for those affected:
- Forget about loyalty and shop around for the best deal
- Consider taking on some additional risk but drip feed slowly in to any investment
- Don’t chase yield blindly as you may lose your capital
- Get some advice to ensure you are maximising your entitlements. See a Centrelink Financial Information Service Officer
- See a Financial Planner to discuss ways of improving how you are invested and hopefully your returns.
If you want to know current thinking on the amount needed then read my earlier article How much do I need to live comfortably in retirement?
Feel you are falling behind? Then read 10 Tips For Salvaging Your Retirement Plans and then contact me for personal advice.
Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Schedule Now button up on the left to find the appointment options.
Liam Shorte B.Bus SSA™ AFP
Financial Planner & SMSF Specialist Advisor™
Tel: 02 98941844, Mobile: 0413 936 299
PO Box 6002 BHBC, Baulkham Hills NSW 2153
5/15 Terminus St. Castle Hill NSW 2154
Corporate Authorised Representative of Magnitude Group Pty Ltd ABN 54 086 266 202, AFSL 221557
This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.
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