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No one wins with cash
There’s no reward for keeping your money as cash in the present economic climate, an investment director has reminded would-be investors.
No one wins with cash
There’s no reward for keeping your money as cash in the present economic climate, an investment director has reminded would-be investors.
Wealthi investment director Stephanie Davies has observed that interest rates the world over have fallen to near zero per cent, with most economists not expecting them to rise anytime soon.
“Rates usually rise when economic activity is strong,” she stated.
“The COVID-19 pandemic has delayed any recovery in growth, which means rates are likely to stay low, benefiting borrowers and punishing savers.”
“Staying in cash has almost no reward, whereas investing in assets that give you cash flow will be absolutely crucial,” she continued.
According to the investment director, a lack of economic activity “will likely continue to have a significant impact on the overall economy, as many Australians are starting to feel the effects of COVID-19 on their disposable income and investment portfolios”.
But there are still options available to grow wealth, Ms Davies highlighted.
She pointed out that low interest rates, numerous government incentives and cheaper property prices are driving the accessibility of “worthwhile investments”.
Anyone with the ability to leverage cash into property at this time would be making a “smart decision”, she said.
From her perspective, it’s a more sure-fire investment strategy than purchasing shares.
While able to provide long-term growth, “the short-term volatility makes it a completely different investment than, say, real estate, which may rise or fall by a few per cent each year”.
At the same time, she did concede that “the recent share market selloff has been the steepest in history but the recovery has also been the fastest”.
Acknowledging that everyone does have a different strategy, Ms Davies said regardless of the assets individuals do choose to invest in, a good money mindset is extremely valuable.
“You must ask yourself: Why are interest rates at zero per cent? How long will they stay here? And what does that mean for my wealth into the future?”
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