Challenge for retirees as interest rates (and confidence) plummet

Falling interest rates are scaring Australians, with confidence falling to a four-year low.

The challenge for retirees

Falling interest rates are scaring Australians, with confidence falling to a four-year low and many retirees struggling to generate an income from their nest eggs.

Confidence in the economy has hit its lowest point since July 2015, according to the latest Westpac consumer sentiment survey.

Confidence plummeted 5.5 per cent in October, above and beyond the forecast 0.3 per cent decline, after the Reserve Bank of Australia (RBA) cut the official interest rate for the third time this year, this time to 0.75 per cent, with further cuts forecast.

Commonwealth Bank senior economist Belinda Allen said the results showed that rate cuts were actually scaring Australians and that that negativity was likely to weigh further on the economy.

Consumer confidence is continuing to plummet, down a dramatic 5.5 per cent in October to a four-year low, according to the Westpac survey.

“Consumer sentiment has fallen after each rate cut by the RBA and the reaction has been larger after each subsequent rate reduction,” Ms Allen told Business Insider Australia. “The falls have been 0.6 per cent, 4.1 per cent and 5.5 per cent after the June, July and October decisions respectively.”

Ironically, that’s the opposite of what the RBA had hoped would happen, she added. Lower rates typically encourage spending, but as the economy has continued to weaken, they appear to be scaring Australians.

“There had been hope that lower interest rates, tax rebates and now rising house prices would help elicit an improvement in consumer spending in late 2019,” Ms Allen said.

“Persistently weak consumer sentiment does raise the risk that we do not see an ongoing lift in consumer spending. The RBA has noted it expects to see half of the rebate spent and half to be saved. A more negative view of family finances apparent in the sentiment figure does place this expectation at risk.”

Breaking down the survey, Australians are particularly anxious about where the economy will be in 12 months and five years.

Superannuation research house SuperRatings said late last week that while superannuation fund pension returns had held up well as official interest rates had fallen this year, it was a challenge for funds to deliver income to those in retirement.

The hunt for yield was intensifying, he said.

“Pension returns are holding up well,” he said, “but the split between capital gains and income is critical for retirees, because they rely on income streams to fund activities in retirement.

“Over the past few years, we’ve seen super funds steadily reduce their allocation to bonds in favour of other income-generating assets like alternatives and property in order to generate their required yield.

“We expect this theme to continue to play out as rates remain low and possibly move lower over the next year or two.”

In light of the Westpac survey, Ms Allen said CommBank believed the Government needed to spend more to take the pressure off the RBA to right the economy

“We have been saying for a long time now that extra fiscal support in the way of further personal income tax cuts and more infrastructure spending would be more beneficial than taking the cash rate lower,” she said. “The evidence on the efficacy of lower interest rates is sending some negative signals.”

Are you concerned that the economic circumstances could wreck your retirement?

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    COMMENTS

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    Karl Marx
    14th Oct 2019
    10:33am
    My bank asked me if I wanted to retire, I said there's no interest in it. Lol
    *Loloften*
    16th Oct 2019
    3:26am
    Hahaha...luv it

    14th Oct 2019
    10:38am
    Maybe the time has come to start using some of that nest egg instead of only living off the proceeds. I have seen 18% interest rates and made use of them and now we see close to 0% and we have to use the capital. Why do most Aussies believe in keeping the nest egg for the next generation instead of using it for their old age?
    TREBOR
    14th Oct 2019
    11:38am
    More of us have seen 18% interest rates and paid them ... feel free to live off your nest egg.... for many their nest egg is their home, currently under siege by a rapacious horde of Mongols called government and their allied tribes....

    ... lock in D), Eddie ...... because once the nest egg is gone... it's gone..... and the way things are going, they might not get a pension.... and then the only right to leave inheritance will go to the rich who will one day own the earth and all who dwell in it....
    Rosret
    14th Oct 2019
    11:53am
    The nest egg is what we need to live off the proceeds. If we can have a cache large enough not to burden the Government pension fund then everyone should be happy.

    Remember that nest egg is devaluing with every inflationary increase. We need at least 5% above the inflation rate to make the nest egg work for us. If there is something left over at days end then I hope it will bolster my children's superfund so they can live comfortably in retirement.

    -and yes, lowering the Reserve rate did make me inclined to batten down the hatches for the storm that's brewing.
    TREBOR
    14th Oct 2019
    12:00pm
    ... when I bought my first small farm, interest rates rose to 14.5% on mortgage... I was made redundant from a job and didn't eat to pay the mortgage... then found a job again.... worked 100 odd hours a week....

    I figure I've earned my keep..... and my right to Rebellion™ .... a right not restricted to the kids about climate change.... if only they had the tiniest inkling what true revolutionary motivation was.... uni quadrangle sidewalk cafe' socialists the lot of them... wait 'til they grow into their noses, get a degree and get a job in politics with the luxury run for life... they'll never look back ... meanwhile the Roots of Heaven of any viable society - those who actually do the toil, will grow poorer and poorer...

    Good movie, that Roots of Heaven... applicable to many areas of society, not just elephants.... elephants are the allegory....
    TREBOR
    14th Oct 2019
    12:22pm
    .. it's pretty obvious a typhoon is coming when the government agency battens down the hatches and lightens topside... maybe they're hoping a Halsey's Storm will come, and only three destroyers founder instead of the whole fleet...
    TREBOR
    14th Oct 2019
    12:23pm
    (in the dark days of 1944-45, before weather radar and accurate weather reporting - a huge Tai Fun hit Adm Halsey's fleet - he turned into it since he was attempting to 'weather it' head-on ...
    Rae
    14th Oct 2019
    12:28pm
    Maybe because you don't know what health costs or maintenance costs or how expensive things might get. Foolish to blow all your savings and then not be able to afford the goods or services you need as you age. I don't believe it's about leaving money at all. That is a Grattan idea designed to rob savers as they think they are all wealthy. Grattan works on averages which distorts the real situation.
    TREBOR
    14th Oct 2019
    12:41pm
    Indeed - health costs - we are all living longer - I frankly wouldn't be here without advances in medical science... (lucky you lot) ... and all that has a very high price tag....

    Either as a society we need to shoulder the burdens of healthcare imporvement costs and a few other things - or go on the way we have been and whine about it endlessly - with governments repeated saying there is no money in the till, when they live the life of Reilly and spend like drunken sailors on unnecessary things like 'PC' and ''social science' issues - many of which are already covered by existing infrastructure (see 'discrimination commissions' etc and courts/contracted out work already done by PS).... but which provide nice little lifetime earners for a few of their chosen mates...

    Grand Theft Canberra, and as good as a Central American Republic giving out all the plum jobs to friends and family ... I speak with my cousin, ze treasurer, por favor.. a deal can be made...
    MacI
    16th Oct 2019
    9:01am
    I absolutely agree with Cowboy Jim. Too many retirees deprive themselves of a decent retirement by being too conservative with their spending. With the current Age Pension system a couple who own their home retiring with $300K in Super could reasonably expect to live on $48K a year (indexed for inflation and standard of living increases) and still have a small amount in Super at age 90. According to ASICs MoneySmart Retirement Planner they could live on $48K a year (including Age Pension) with their Super conservatively invested, i.e. inflation at 2% and investment return at 3.8% before inflation and still have $54K in Super in today's dollars at age 90.

    I'm certainly not advocate blowing retirement savings in the first few years for a rollocking good time but I think it is plain silly to live out your remaining days worrying about what might happen in the future. The same couple could choose to live on $44K a year and only have and extra $20K in Super at age 90.

    Another couple retiring with $500K who choose to live on $48K a year would have $125K in Super at age 90. Only $76K more than the couple starting with $300K! Granted having more in savings gives you a buffer to cope with the challenges that may come along but the more you diminish your savings on these things the greater is your entitlement to the Age Pension. Surely this in itself mitigates some of the risk.
    Rae
    16th Oct 2019
    2:38pm
    That is fabulous Maci and far better even that a defined benefit income stream. Obviously there is no need to worry at all. Also under $50 000 a year still allows a bit of aged pension and concessions.
    hyperbole
    17th Oct 2019
    12:20pm
    Totally agree. Know a number of retirees living on the smell of an oily rag when there is no need to do so. Won't even go out for a coffee, a meal with friends. NOthing at all. Stay at home squirrelling away every cent. Just do not understand it at all.
    Paddington
    14th Oct 2019
    10:47am
    Retirees have families so it is not just about us but our families moreso.
    .75% interest rate is actually quite scary and a possible error. Why aren’t people spending? Those with mortgages put any spare money there which is understandable. Many poor people are living pay to pay and just making it or not. So the tax cuts have not worked.
    The government has been told repeatedly to raise Newstart to cause more spending. If the money goes to where the spending actually happens then that makes sense to do that. Government is beholding to big business which is a catastrophe because that is where the solution most likely lies. If all those paid tax that money would cover all pensions and benefits. This makes it welfare to big business instead of throwing the money where it would actually stimulate the economy. So sad!
    TREBOR
    14th Oct 2019
    11:41am
    Watch out, Paddo - someone here will leap at your throat for being 'Bolshie' for suggesting that white trash and other layabouts should get a rise in subsistance money, to support a failing economy.

    Too 'Socialist' that - and what would Maggie thatcher say... you'll run out of other people's money.... god, what an economic illiterate... no idea of government revenue...
    TREBOR
    14th Oct 2019
    11:51am
    ... soon with endemic unemployment and prejudicie/discrimination, we'll have some running around saying:-

    "Shiftless Whites - drink and drug all day, bash their women, won't work, dress and live like trash, and make land claims because their ancestors once worked the land, so they say..."

    The Future of Austrochine ©... ... Austrochine is MY book and MY work...
    TREBOR
    14th Oct 2019
    11:51am
    ... sorry - I left out serial parenting etc... and going walkabout all the time...
    Horace Cope
    14th Oct 2019
    12:03pm
    Yes TREBOR, I'll challenge Paddington although not exactly a throat jumping challenge. It's very easy to make spurious claims that big business doesn't pay tax or their fair share of tax but that's singing from the Labor song sheet with no proof of the claim. The ATO investigates taxpayers, including big business, and prosecutes those who evade tax as opposed to those who avoid tax by using current legislation. Be nice if you could define "big business", Paddington, and also give examples of those who are not paying the tax that they are required to by law.
    TREBOR
    14th Oct 2019
    12:19pm
    As I've said many time - the REAL issue is not tax rules for the peons - it is the vastly different tax rules for business, those rules being set up at a time when only those over a certain net worth even had the vote - and the tax rules and deductions allowable for the peasant.

    Hasn't really changed since the Industrial Revolution days ... now that's what I call 'conservatism'.... difference is - it IS broke, so needs changing....

    Either the peons get to deduct 'home office' and 'travel for work' etc - or the companies don't get to deduct those... cannot be both ways.
    Rosret
    14th Oct 2019
    12:20pm
    Paddington I wont argue with you that Newstart is too low. However, if you understand the LNP view point on the economy its easier to understand the rationale.

    The LNP invest taxation $ in the most likely place where it will give optimum return. That is without a doubt the working population with families. They are the people who fund Newstart and the Pension etc. If they go under then there is no money for social welfare. The countries with the lowest taxation and the cheapest utilities have thriving economies.

    When the Labor party gave $1000 to taxpayers Australia was in a very strong position compared to other nations so everyone went out and bought plasma TVs. At the moment $1000 is going into restocking the reserves. ie you don't waste water in a drought.
    Horace Cope
    14th Oct 2019
    10:56am
    I wonder how much of an SMSF is held in cash. I know my super fund has a mixture of investments and cash is well down by percentage. Is the low cash rates for investors really a big problem or is it just another reason for pessimists to have a say?
    VeryCaringBigBear
    14th Oct 2019
    11:20am
    I hold 4 years of pension payment in cash in my SMSF.
    TREBOR
    14th Oct 2019
    11:45am
    ... very iffy stock market..... oh, well.... Crash and Burn and start again.... five year plans and New Deals and demands for rampant and unconstrained capitalism - the peons can live off the countryside or in the company housing and off the company store...

    https://www.youtube.com/watch?v=tfp2O9ADwGk
    VeryCaringBigBear
    14th Oct 2019
    12:31pm
    That's why I have four years pension in cash so I simply don't have to sell in down markets.
    MacI
    16th Oct 2019
    10:11am
    According to ATO stats in 2017 SMSFs with balances between $500K and $1M on average had 27% invested in cash, 27% directly in Australian shares, and 13% in property. Generally the lower the SMSF balance the greater % held in cash. SMSFs with balances under $200K had between 45% to 55% held in cash.

    For me, I can't see the benefit of SMSFs for most people - even for those with balances between $500K and $1M and especially for SMSFs with less than this amount. The diversification and the scale is poor. If the Australian economy crashes they will be in dire straights. Even now with such a high proportion invested in cash things can't be looking good. Add to that the administrative costs and hassle - why would you bother. The average administrative cost of running a 'low fee' SMSF in 2014 was about $2500. I paid $650 in admin fees for my Industry Fund last year.
    TREBOR
    14th Oct 2019
    11:35am
    The economy is on life support and right now, nurse, needs an adrenaline shot to the heart... hand me the infrastructure hypodermic with the solid based economic activity needle.... and, orderly, keep a very close eye on those vitals... and team - get the paddles ready......
    VeryCaringBigBear
    14th Oct 2019
    12:33pm
    The economy should be booming and would be only we had a stupid government that spent way too much and just kicked the can down the road. We have just about caught up with it now.
    TREBOR
    14th Oct 2019
    12:47pm
    I'd like to see that, BB - we are foundering as we speak - and the current lot have held the reins since 2013.. just reminding you... and their expenditure is amazing and their debt ceiling astounding... and a lot of it spent is not returning to this nation in any way ....

    As before - when you give Faroffrance a contract to build lead airships for you, there is no similar contract in the offing for Faroffrace to contract Australia to build its lead-bottomed steam driven submarines... what we give out to the world instead of our own we never get back....... and its billions and billions at a time.... then we have a separate Airships Corporation to duplicate/triplicate the Departments of Defence and Defence Procurement... nice for a few old mates.. nice little earners for doing nothing and copping it sweet..... AGAIN...

    El Presidente would be most pleased.... El Grande Republica da San Austrador is going well... very fast downhill... but no politician will suffer in The Downfall... their retirement stash is hidden away from our tax department's grasping hands.... Offshore!
    TREBOR
    14th Oct 2019
    12:55pm
    Think of it this way - when the economy collapses and the average income crashes to $10,000 pa on mega tax to make ends meet .... your average politician will be a two-eyed man in the land of the blind... raking in an indexed for life $200-300k pax..... without tax.

    You get this picture yet????? You see where we're headed? and you trust these people to run your country?

    Now - all those peasant men.. you recall the 1930's? The Great Depression where men took to the roads to find work, any work, and were 'moved on ' from town to town and often arrested for being 'vagrants' etc, and were generally treated like scum? (vestiges of this remain to this day with the incredible redneck attitude in some areas about 'new blokes in town without a job'.... somehow these are automatically criminals and are treated as such without any reason - trust your courts? Only after they've been burnt to the ground...)

    Those were the men who rushed to enlist in 1939...... same will happen when The Next Big One begins.. and what a disgrace that is....

    Review 'Band of Brothers' - jeez - one of those guys, an American Indian living on a reservation, signed up instantly to defend 'his' country ..... then the rights of Indians were abused for decades after and still are in some ways... then there are the coal miner's sons..... enlisted, and fought and often died. First to answer the call... in a nation that despised them...(see modern day Australia)...

    Good morning and welcome to Around The World With Trebor - the show for the thinking Australian - man or woman.... good morning, good day, and good grief!!
    Anonymous
    14th Oct 2019
    4:35pm
    TREBOR - maybe it's time to take a Bex and a lie down. Easy Man!!
    Thoughtful
    14th Oct 2019
    7:53pm
    @Trebor - Not only a disgraceful situation re: The Next Big One, but it is not going to happen. "The Next Big One" will not require anywhere near the "foot soldiers". Technology has seen to that. With regard to Cowboy Jim's suggestion to take a Bex and lie down, don't forget that Bex powders contained phenacetin which killed people - the reason they are not on the market now.

    All of these arguments are from the economics of the 60's. When or if the politicians open their eyes ( tho unlikely according to your arguments ) we will see that massive change in welfare and tax laws is the only way forward.
    TREBOR
    14th Oct 2019
    11:33pm
    I wouldn't put too much faith in technology - the best outcome would be a brief air war.... but the old maxim still remains - technology can savage a foe, but only ground troops can hold ground...

    Of course, a future war should not be about 'ground' (property, property - it's all about property - James Jones in "TheThin Red Line") - it should be about 'instrumentalities' - meaning economic factors primarily rather than defeating an enemy on the ground.

    That is the basis of 'Asian Pacific Basin/Region' Studies that are part of my terrorism/counter-terrorism study... the Region (as opposed to the physical fact of the Basin) is comprised of economic and social factors... we see this line of reasoning in the current agreement with Fiji for a peacekeeping force in the ME.... in order to secure (national security/international security) this region, we (the West) are better served in forming alliances and power groups, than in building up isolated atolls... and the Melanesian-Polynesian section has many social, economic and physical issues (such as sea level change (??) - hence it is a good move to consolidate existing links with these area - for national and international security reasons...

    Hence I can see what Morrison is doing here - but it would not be his own idea... his security advisors told him the way to go....

    I know - I know - I get a bit hirsute and abstruse for many .... sorry - to me this kind of talk is a daily common event...
    OJ21
    14th Oct 2019
    11:40am
    Monetary Policy used to work well under a regulated financial system. Not now it's deregulated.
    TREBOR
    14th Oct 2019
    11:43am
    Careful, you'll be labeled 'Socialist' as well and a promoter of Big Government and all its waste... gee - look at the cost of using the roads and power and gas caused by... oh, wait a minute... caused by giving control of them out to a few chosen mates.... all rapists of the economy and the Treasury....

    Back to the drawing board...
    Tanker
    14th Oct 2019
    11:58am
    We are headed down the path of austerity beloved of right wing governments to whom a surplus is the Holy Grail. Health, education and welfare will all be cut bit with tax cuts for the wealthy. If you don't believe that look at the UK under it's Conservative government and that policy had nothing to do with the EU.
    Tanker
    14th Oct 2019
    11:58am
    We are headed down the path of austerity beloved of right wing governments to whom a surplus is the Holy Grail. Health, education and welfare will all be cut bit with tax cuts for the wealthy. If you don't believe that look at the UK under it's Conservative government and that policy had nothing to do with the EU.
    TREBOR
    14th Oct 2019
    11:34pm
    Yes - austerity dragged Britain out of the doldrums and into near collapse...
    Curious
    14th Oct 2019
    12:01pm
    I think the intergeneration warfare is on. RBA lowered the cash rate to assist the young ones to have access to housing affordability at the expense of the retirees' interest income. However, this didn't stop some institutes accusing us, the pensioners and retirees, being conservative in spending our money, selfishly holding on our big mansion and claiming OAP, and being mean in not paying taxes on our home, and taking our lots to the graves without paying inheritance tax.

    Let me remind everyone, we only live in a system that allows us what to do. We either enjoy our lives while we can or not. Is there someone wants to make our lives miserable because theirs are?
    Rosret
    14th Oct 2019
    12:24pm
    Very true Curious. Lucky we are democracy and our voice still counts. Or at least our $ does. (:
    TREBOR
    14th Oct 2019
    12:59pm
    It's enough to make you SKI....
    Rae
    14th Oct 2019
    12:25pm
    Just undoing the damaging asset and income test changes the LNP introduced and undoing the Fair Work Commission penalty rate changes would stimulate the economy. Those changes did effect spending as the data shows very clearly.
    Tricky
    14th Oct 2019
    12:31pm
    PENSIONERS TAX called the Deeming Rate on cash term deposits!
    VeryCaringBigBear
    14th Oct 2019
    12:35pm
    Deeming rate has nothing to do with the cash rate at all. Many SMSFs made over 15% last financial year which makes the deeming rate way too low.
    TREBOR
    14th Oct 2019
    12:59pm
    We're not talking about SMSFs, BB...
    Tricky
    14th Oct 2019
    1:01pm
    Cash rate has everything to do with Deeming Rates that are not adjusted to reflect interest paid on term deposits. We have been here before! Over 600,000 pensioners and part pensioners are impacted upon by the hypocritical government. It is a fraud committed by this government, they tell banks to pass on interest rates to borrowers yet the government will not reduce the Deeming Rate on fixed term cash deposits that are deposited in these secure financial institutions!
    KSS
    14th Oct 2019
    1:02pm
    With interest rates as low as they are, further reductions make almost no difference to an existing mortgage. A person with a $400,000 mortgage would be saving around $500 a year had the banks passed on the full amount. For that sum it is not worth reducing your monthly repayments. Further, over the last few years people have been encouraged to leave repayments alone so they can build a buffer into the mortgage against the inevitable rises that will come.

    With stagnant wages and everything from bus fares to rates increasing, it is not surprising people have little if anything left to spend.

    As for retirees, they are not helping themselves by keeping all their assets in cash with rates as low as they are. If you have more than 2-4 years living costs in cash, then you need to be reviewing your financial plan and look for investments that will generate a far higher return than the best term deposit. If you are not prepared to do that, then use the capital. If you don't like that idea either then you seriously need to look at what you holding on to it for. - Children? Grandchildren? If so than accept your fate and stop moaning about it. That is your choice - live with it.
    Anonymous
    14th Oct 2019
    4:42pm
    Why are we talking about people with a $400'000 mortgage? This is supposed to be a forum for oldies. If an oldie has that kind of mortgage he should be in a loony bin (mental institution for PC people). How many years have we got left?
    ollie
    14th Oct 2019
    1:29pm
    We all had an opportunity to fix the mess this government created they only look after the rich the only people who keep the economy moving are us peasants its not rocket science the less money you have the less you spend no good complaining if you voted for them. They have stopped wage growth cost of living has increased gas and power prices have gone through the roof and surprise surprise the rich are getting richer
    Anonymous
    14th Oct 2019
    2:02pm
    Olle the bad point being is that you only have two groups to vote for in elections. There are many interlinked matters that impact as well as interest rates. Such as Foreign ownership in this Country, immigration, foreign mineral rights over our Country. I worked in mining exploration in the 1970s when mining exploration outcomes were required to have 51% Australian ownership for development. You can even throw in other ideologies such as gender preferences.

    Our Country is weak in our manner of ensuring our own outcome above conforming to extraneous ideologies.

    Interest rates???? Well our interest is declining.

    14th Oct 2019
    1:50pm
    Well I'm staggered that you have to have a University degree to come up with a monumental financial management plan that is based on lowering interest rates. Why do we need associated house price price rises that requires people to borrow more money. Why do we as per today's news item, have to concentrate on Banks for their attitude to applying the full reduction in accord with the reduced interest rates. The enquiry needs to be into the Government and the RBA, for the Government's management of the economy being based on an artificial factor of interest rates being the responsible cause of economic poor performance, and for the RBA for adopting tunnel vision on interest rates and on behalf of the Government reducing interest rates. What is the point in the t5argety of having higher priced housing for which people borrow more.

    Why do self funded retirees not receive consideration. Why do pensioners not receive consideration other than 'raise the pension'.

    We have placed ourselves in a stagnated position with interest rate reductions. Does lowering interest rates further look beneficial. Rising the interest rates will be impossible because of forced foreclosures as a result. It will force retirees to make some ill judged change to their investments and sedate income returns. Meanwhile those with retirement packages similar to those making these interest rate changes and quit pro quo arguments in support can rest up with there government based pensions as are effective for retired politicians.

    We have dug our own hole.
    ollie
    14th Oct 2019
    2:18pm
    I agree with what you are saying Ray but the facts are that the reserve bank had no choice but to drop interest rates to try and keep the economy moving the government is not prepared to spend money
    Anonymous
    14th Oct 2019
    2:42pm
    The main thing Ollie, is that some artificial and abstract factor like interest rates are being blamed, while fixing productivity and input to achieve desired outcome/productivity. On any playing field you achievement is directly linked to your input, not the playing field. Far out, I must come from that older generation that was self accountable. ie do not blame abstract cop outs or shift the blame. Recognise the shortfall of your own performance and fix that. Not the playing field. Cheers.
    mogo51
    14th Oct 2019
    3:42pm
    I have just had an update on my Super, only a small one unfortunately, as I started late in life.
    Where before I was earning 8% +, now it is 3% and in this market that is about par for the course. Industry fund with low fees, so I should think myself fortunate in this current climate. Deeming rates are a joke, as it the amount they allow you to 'earn' in retirement.
    If one partner is retired and the other earning small salary, they take .50c for every $ above $300. Now if this is not counter productive, I don't know what is!
    When will they leave the cattle at the feeding trough alone and look at the big end of town?
    Agnes
    14th Oct 2019
    4:02pm
    Mmmmhhh....3%??? Is that for the last year? I would have expected better. I have an SMSF (managed by my financial advisor ) and over the past year it has returned 11.2%, but but I am sure my fees are more than yours as well. But I do question the performance of your fund.
    ex PS
    15th Oct 2019
    11:00am
    Most Super Funds give you options, they range from low risk investments to high risk, given that most people have no capacity to make up the losses that will come from continual high risk investments, chasing the higher rates may not be a wise oprion.
    It is up to the individual to decide just how much risk they want to manage.
    I have a mix of investments in my fund, they range from low/medium to high. The high risk portion went from a return of 18% last year to a negative return this year so far. I am not concerned, any one who has a good advisor knows that there are higher risks for higher returns, the trick is not to panic and understand how the market works. And of course, don't risk too much on high risk investments.
    GeorgeM
    14th Oct 2019
    9:08pm
    Ms Allen is quite correct that "..that rate cuts were actually scaring Australians and that that negativity was likely to weigh further on the economy."

    Govt needs to get off their backsides, stop bleating about the projected surplus, and start spending on major Infrastructure projects, as well as hand out spending money to those on low incomes - Newstart, Age / Disabled Pensions, anyone else earning less than x amount taxable income - rather than leaving it all to the RBA. Of course, RBA can help by printing some money. The Govt needs to get really serious fast before the sh.t hits the fan and this "lack of confidence" turns into a recession. It is disgusting to watch (not often luckily) the complete wastage of time (taxpayers money) in Parliament especially in Question time where NO Questions are answered by the Govt, and the Opposition only asks Questions to score political points. Looks like a completely failed model of a so-called Democracy - certainly NOT Govt FOR the people.
    TREBOR
    14th Oct 2019
    11:43pm
    I was considering the New Snowies Scheme thing - and the blow-out in time and costs involved.... leaving aside the sale pitch that it will exert downward pressure on power prices (never going to happen), what this scheme upgrade should do is provide more power for the future... and thus it is not a bad thing, and when it comes to 'renewables' and infrastructure (something I harp on about endlessly here etc), you have to start somewhere....

    However the biggest issue current is WATER.... and not only the amount of it, but how it is being perverted into another cash cow for some via a licencing system that somehow has been turned into 'ownership'of the water in a licence, and thus the 'right' to sell it off for profit.

    I say a licence is for using water - USE IT OR LOSE IT!

    Time for some drastic changes away from this 'business' model that has wrought so much harm to Australians, the nation and the economy.

    We want our power, our gas, and our roads back for a start - and we want water to be declared common property of all... not some 'saleable' asset' that can be bought and sold via a false interpretation of licencing.

    (word for today - licencicing - the icinng on the cake of a licence).

    If I get a driver's licence to use the roads - do I suddenly take on absolute personal ownerhip of the roads?

    Anyone want to buy my Freeway between Sydney and Brisbane? Or my part thereof.. I've got a licence!!
    ex PS
    15th Oct 2019
    9:59am
    Of course they do GeorgeM, but the government has far more important things than the economy to worry about. They will achieve there overcooked budget surplus no matter how many people go to the wall to achieve it.
    And some people will reward them for their duplicity by voting for them on that basis even though a budget surplus is not going to help the economy.
    ex PS
    15th Oct 2019
    10:07am
    And we still have to contend with an inflated DEEMING RATE. The government can't rely on the Reserve Bank to fix the economy, it has to do its share of the lifting.
    After all, it is the government, time for them to start governing.
    But hey, they stopped the boats, much better for people to use planes, as 90, 000 new arrivals will testify to.
    VeryCaringBigBear
    15th Oct 2019
    11:09am
    If interest rates were 10% you would love our current deeming rate.
    ex PS
    15th Oct 2019
    12:09pm
    If interest rates were 10% our thieving government would set the deeming rate at 15%, and they wouldn't wait very long to do so.
    The deeming rate has little influence on me one way or the other, I access no entitlements or benfits that are tied to it.
    *Loloften*
    16th Oct 2019
    5:01am
    When will the Reserve Bank CEO realise that lowering interest is NOT working, for 2 simple reasons:-
    1) 1st home buyers usually have their home deposit savings in a term deposit bank a/c...earning "bug*er all" in recent yr or 2
    2) majority of OAPs have their "nest eggs" in bank term deposits...also earning "bug*er all," especially in past yr+.
    These 2 generations are approx 30+% of our population & have had to cut back their spending drastically to...
    1) (youngsters) - ensure their "dream" re buying a home comes to fruition in forseeable future, and
    2) (OAPs) - be able to pay their ever increasing elec/gas/water bills + 'new' internet & mobile phone bills; many have been forced to discontinue their prior long-standing Private Hospital insurance; "cut back" on their childrens, grandchildren, siblings et al birthday & Christmas presents; no dental visits nor appliance repairs/replacements eg:dishwashers/microwaves et al + new clothes, shoes & minimal social gatherings with friends replacement clothes, shoes etc etc etc.
    This is why our economy is almost in recession, in fact it is in recession altho' the Pollies/Reserve Bank won't admit it as it's their fault....idiotic policies aren't working, haven't for approx 3+yrs - "they" keep telling us that we need to spend, can't as per above + ridiculously stagnant wages of all workers apart from their & Public Servants. "Their" ignorance is frustrating, perhaps b/c "they're" doing well with ever increasing salaries/perks/huge "special" Super & retirement benefits etc.
    Farside
    16th Oct 2019
    1:09pm
    For some time now the RBA has been warning the government of a faltering economy and saying that rate cuts won't be enough to stimulate it ... but the Government is not listening, despite Treasury and most economists backing the RBA. Even today Frydenburg is still lauding the low rates for borrowers and wasting money chastising the banks for not lowering them further. Borrowers will not take on more debt than they need in these uncertain times and those with savings will not spend more than necessary because of the low interest rates on deposits.
    Rae
    16th Oct 2019
    2:49pm
    Yes Farside and as rates fall so does the Australian dollar causing imports to rise and even export food prices as we compete with billions of consumers who have money with better value to compete buying the best quality protein foods etc.

    I see it as 30% odd mortgage holders getting a bit of relief on the mortgage but everyone paying more for most consumables. Consumption has to fall under those conditions.
    Fair Dinkum
    16th Oct 2019
    4:55pm
    The government are complaining that banks are not passing on interest rate cuts but they are ripping pensioners of by charging them 3.5 % deeming rates they are worse than the banks but think what they are doing is ok .
    Fair Dinkum
    16th Oct 2019
    4:55pm
    The government are complaining that banks are not passing on interest rate cuts but they are ripping pensioners of by charging them 3.5 % deeming rates they are worse than the banks but think what they are doing is ok .
    Nard
    17th Oct 2019
    11:27am
    If you are drawing 4, 5 or 6% of balance as pensions then in a lot of cases the capital may be required. If the investment portfolio/super balance is still growing then you must treat the total return from capital and income as your pool to draw from. In recent times it is not that difficult to achieve a return in excess of 6% (assuming portfolio is not held in cash/TDs alone).

    If on Centrelink the treatment is the same whether it be cash or shares etc.

    Structuring investments into defensive assets (for use in drawing capital - allow up to 7 years worth of drawing requirements) and growth assets to be retained for capital growth

    At current interest rates living off income is not sustainable unless you have an enormous pool of funds