Considering a Low Risk Asset Class?

by Dominique Schuh

The Australian share market tumbled into the red on heavy volume after a weak sales report from supermarket chain Coles, and forecast-beating inflation data dealt a stunning blow to investor optimism. A 5.2 per cent jump in the spot iron ore price offered little support as the S&P/ASX 200 index fell 1.8 per cent at its worst before recovering to close down 83 points, or 1.53 per cent, at 5359.8. Surprisingly strong inflation figures for the September quarter have reduced expectations of a cash rate cut and driven the Australian dollar higher. At 1700 AEDT on Wednesday, the local unit was trading at 76.90 US cents, up from 76.34 cents on Tuesday.

What this means for you:

If interest rates are on hold for the time being, cash investors can breathe a sigh of relief. But don't forget about Fixed Interest or Bonds as a favourable but low-risk asset class. The long term average return of bonds is around 2% above the return of cash, which would give investors around 4% in today's climate. If you're chasing a "safe" asset class while still getting a slight premium in returns, then consider bonds.

Meanwhile, Christmas isn't too far away and if you'd like your tax return done before Santa arrives, please get your work in to us ASAP. We'll do our best to turn it around for you before Christmas, meaning you might be able to have a refund in your account for the holiday period. Wouldn't that be nice?

Now is a good time of year to review your current structures, in preparation for 2017. If you would like to make an appointment to re-look at your financial affairs, contact us today on 5482 2855.