As global equity markets remain unpredictable, investors are being urged to start looking at more stable investment options, such as gold and cash.
As global equity markets remain unpredictable, investors are being urged to start looking at more stable investment options, such as gold and cash, with returns on term deposits as high as 4 per cent in some cases.
Data from RateCity show for a one-year term deposit of $50,000, investors can achieve a return of 3.35 per cent from smaller lenders, such as Judo Bank, increasing to 4.1 per cent for three-year deposits. This is more than triple the rates on offer 12 months ago, and these figures will likely improve further as the Reserve Bank of Australia continues to raise interest rates through this year and next.
“For customers who might be a bit nervous about doing that because maybe they haven’t done it very much before, the good thing is the opportunity cost of putting it in cash is no longer as high as it was.”However, one thing to keep in mind when investing in cash is the impact of inflation, which has been running rampant both overseas and locally, and expected to hit as high as 7 per cent in Australia by year-end.
Damien Boey, chief macro strategist at investment bank Barrenjoey, says this high-inflation environment means cash deposits are less attractive than they may appear. With this in mind, both Boey and Auld advise investors to look at investing in gold. While the shiny metal is a regular feature in diversified portfolios, the NAB chief says it is regularly undervalued by investors, noting recent analysis from JBWere shows the optimal weighting for gold in a portfolio is about 10 per cent.
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