Beat the income squeeze
For Australians who rely on cash savings to fully or partially fund their lifestyle, the past few years have been challenging. Since 2011 the official cash rate has tumbled from 4.75% down to 0.1%, and it’s putting a serious squeeze on household incomes.
Ten years ago, an investor with $500,000 in a 12-month term deposit could have earned a return of 6.05% to generate annual income of $30,250. Fast-forward to 2021 and that same nest egg is likely to earn an average of 0.3% in a similar deposit, producing a meagre annual income of just $1500.
Chris Andrews, chief investment officer and deputy CEO of La Trobe Financial, whose 12-month term account has taken out Money’sBest of the Best award for mortgage-backed credit funds in each of the past 12 years, says he hears daily from investors regarding the challenges of today’s low-rate environment.
Sarah Harding, financial planner and principal of Sydney-based WY Advice, adds:
