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How to chase higher returns on cash investments in 2019

Chris Andrews

In a low interest world where authorised deposit-taking institutions are offering as low as 0.10 per cent on savings accounts, savvy investors are looking for alternative cash strategies.

Speaking with Nest Egg, Chris Andrews, senior vice president and chief investment officer for La Trobe Financial, believes investors cannot survive on current interest rates and therefore are hunting for higher returns.

Due to this, he encourages investors to look into higher yields such as 90-day accounts offered by banking alternatives, which potentially offer investors a bigger bang for their buck.

“The fundamental issues that investors have everywhere is obtaining appropriate yield on their investable cash,” said Mr Andrews.

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The ‘guinea pig’ generation 

Mr Andrews believes the Baby Boomers, which are often blamed for issues in the market, are “guinea pigs” that are currently being hurt by market conditions. 

“There was a whole cohort of investors that paid high rates. They were the guinea pigs that first went onto compulsory superannuation. They tried to build a nest egg for retirement; they get their retirement; they get hit around by regulatory change; and secondly they are in this long-term structurally low interest rate environment,” said Mr Andrews.

Investment cycle Boomers faced

Mr Andrews believes market cycles have played a significant role in affecting Baby Boomers’ capacity to fund their retirement, stating that higher rates during working life into lower rates when retiring has hurt them.

“These are the guys that were paying 18 to 19 per cent on their home loans in the ’80s and early ’90s, then get to retirement and are getting 1.5 to, if they are lucky, 2 per cent on their cash in the bank,” said Mr Andrews.

“For me, it’s a real and pressing problem. As population age and we have more and more people move into the retirement phase of their life, this problem is only going to get more acute,” said Mr Andrews.

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How to chase higher returns on cash investments in 2019
Chris Andrews
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Cameron Micallef

Cameron Micallef is a journalist at Nest Egg, writing primarily about personal wealth and economic markets. 

Prior to this, Cameron worked for Australian Associated Press. He graduated from the University of Wollongong with a double degree in communications and commerce.

You can contact him on: This email address is being protected from spambots. You need JavaScript enabled to view it.

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