Online Savings Accounts Increasingly Getting Worthless. What's The 2nd Least Risky Financial Instrument?

DeafMutePretender on 09/05/2016 - 17:19
Last edited 10/05/2016 - 21:23

OzBargain Open-Book Exam.

Fill in the blanks.

<Savings/Investment Products Risk Tier>

Risk-free
Online Savings Accounts/Term Deposits
(assuming Government doesn't steal it Greece/Argentina style)

2nd Least Risky Product
>

Low to medium risk
"Blue Chip" Shares
Super

Medium to high risk
Shares
Property

High risk
Foreign Currency Exchange
Small Business Entrepreneurship
Shorting the housing market/subprime securitized loans
"Put it all on black, champ" Gambling

Nigerian risk/Financial Darwinism risk
Nigerian "Prince"
Multi-level "Marketing"/Pyramid Scams
Loaning money to your friend, Sheila/Bruce who promises you he/she will pay you back. No, really.

Financial

Comments

  • DeafMutePretender on 09/05/2016 - 17:21
    +4

    In case you didn't know, we recently had a triple whammy:
    1) ING rates down by 0.50% (a double whammy)
    2) UBank down by 0.25%
    3) MEBank down by 0.25% (makes the weekly paywave purchases even more of a chore)

  • mskeggs on 09/05/2016 - 17:45
    +4

    The answer is bonds, government and corporate.
    Unfortunately/fortunately, because you are an individual with less than $x millions, you can access the high yield saver accounts which pay better than government bonds, so that option doesn't make sense.
    Corporate bonds will often pay more, but if the company goes broke you can lose your money.
    Perhaps look at Woolies or Wesfarmers or another business unlikely to go broke.

    • DeafMutePretender on 10/05/2016 - 20:53
      +2

      Unfortunately/fortunately, because you are an individual with less than $x millions

      I'll ask daddy Malcolm if I can borrow a cool million or two.

      • Scrooge McDuck on 11/05/2016 - 13:14
        +4

        An index fund would fit between "Blue Chip" Shares and OSAs.

        • dandandan on 11/05/2016 - 22:08
          -4

          sorry but you have no idea if you think that.

        • Larz128 on 11/05/2016 - 23:24

          What is OSAs?

        • Scrooge McDuck on 11/05/2016 - 23:57

          @dandandan:

          So you think an index fund is more risky than some Blue Chip Shares? Why?

        • sund00bie on 12/05/2016 - 09:45

          Can you provide an example of an Index fund please ? Are they listed on the ASX or are they managed funds ?

          Thanks!

        • bluedufflecoat on 12/05/2016 - 09:56

          @sund00bie:

          Vanguard Australian Shares Index Fund is based on the ASX 300.
          https://www.vanguardinvestments.com.au/retail/jsp/investment…
          This is where you invest directly with Vanguard and you become their client.

          There is an ETF based on the Index Fund, the "stock code" is VAS and it's traded on the ASX.
          http://www.asx.com.au/asx/markets/priceLookup.do?by=asxCodes…

          So, it's sort of both, depending on what version you invest in.

        • sund00bie on 12/05/2016 - 10:10

          @bluedufflecoat:
          Champion. Thanks heaps!

          I had been looking into these based on some of WarrenBuffets comments but was a bit lost as to how to invest in them. This clears things up.

          <dreams>When im a millionaire i will remember you hahaha</dreams>

        • Bunnyburger on 12/05/2016 - 13:06
          +1

          @dandandan: I thought passively managed index funds held for more than a decade were the way to go according to Benjamin Graham because of their cheap fees and resilience to market swings. Why not?

        • Scrooge McDuck on 12/05/2016 - 15:48

          @Larz128:

          What is OSAs?

          See thread title:

          "Online Savings Accounts"

          o_0

        • Larz128 on 12/05/2016 - 19:52
          +2

          @Scrooge McDuck:
          My bad,
          I don't acronym everything in my head :P

        • Hirolol on 13/05/2016 - 00:26

          @Larz128:
          That sounds so basic but i couldnt think of it either :/

        • Jalif on 13/05/2016 - 13:09

          @Scrooge McDuck:

          An index fund is lower risk than a single blue chip stock, but roughly equivalent to a parcel of diversified blue chip stocks.

    • bluedufflecoat on 11/05/2016 - 09:30
      +3

      I think bonds are a bit expensive at the moment, given yields are low?

      • mskeggs on 11/05/2016 - 12:26
        +5

        Completely agree bonds are poor value. There is nothing at all offering yield with a reasonable risk profile.
        The OP wanted to know what fits between a guaranteed bank account and equities, and the answer to that is bonds, but it isn't a sensible investment because the high yield accounts will pay higher that sovereign bonds and corporate bonds have a risk profile just below equities.

        This is the curse world wide due to the central bank money printing. Because money is available so cheaply it has flowed to low risk/high yield investments driving the yields down.

        There is no answer yet.

        • ihbh on 12/05/2016 - 17:28

          "… due to the central bank money printing."

          I don't think this is how monetary policy works. If central banks were printing a lot more money then the world would be faced with high inflation, but this isn't the case.

        • mskeggs on 12/05/2016 - 18:55
          +2

          @ihbh:

          Not sure if you are joking, but in case you are serious, yes, it was predicted that the various Quantitive Easing and other massive money printing operations in the US, EU, CN and Japan would produce inflation, and it has in some areas like AU and CA housing, corporate balance sheets and US equities, but the strong deflationary forces of contracting economic activity have so far countered this.
          The Austrians school of thought says that inflation is just around the corner, but they have been saying that for 8 years. The Keynesians say that the stimulus will off set any inflationary problems.

          In short, the central banks have printed more money since 2007 than ever before by an astonishing factor.

          https://en.wikipedia.org/wiki/Quantitative_easing

        • 1Kenobi on 14/05/2016 - 18:36

          Any insights on a sub index like ethical shares???

          I was lead to believe because these companies have less litigation and a loyal customer base they outperform the rest of the market.

          https://en.m.wikipedia.org/wiki/Stock_market_index#Ethical_s…

          http://ethicalequities.com.au/list-of-ethical-stocks-on-asx/

          Any clues appreciated

        • mskeggs on 14/05/2016 - 20:39

          @sian72:
          Ethical funds? Maybe. There isn't really any reason to exclude them from your investments, so if they make you sleep better, that might be an important part of the overall return.

    • Thenarrator on 11/05/2016 - 22:10

      where do we buy government bonds and corporate bonds and high yield saver accounts

  • watwatwat on 09/05/2016 - 19:33
    +4

    I would suggest Ratesetter and p2p lending as a medium option. Up to 9.9% interest and $100 bonus if you sign up with a referral code.

    • GameChanger on 09/05/2016 - 20:14

      I have read the terms and conditions and I don't like it if the option is long term.

      • watwatwat on 09/05/2016 - 20:30
        +1

        Your call. Ratesetter has been in the UK since 2009 and haven't lost a cent of any investor's funds. Current provision fund for AUS is 1.6 mil.

        • GameChanger on 09/05/2016 - 20:33

          I think its a good option, but it depends on how much you're giving.

        • mskeggs on 11/05/2016 - 12:28
          +11

          Sure, but credit default swaps on 3rd tranche mortgage backed securities had never lost while the US real estate market was cruising upwards. The risk isn't apparent in good times.

        • Baysew on 11/05/2016 - 14:10
          +19

          @mskeggs: Only when the tide goes out do you discover who's been swimming naked. - Warren Buffett

        • drillvoice on 11/05/2016 - 21:30

          @mskeggs: Good point. What do you mean by '3rd tranche mortgage backed securities'? I'd like to understand.

        • bluedufflecoat on 11/05/2016 - 22:06
          +1

          @drillvoice: watch the movie, the big short, ;)

        • mskeggs on 12/05/2016 - 08:11
          +22

          @drillvoice:
          In the old days, Jimmy Stewart ran the savings and loan/bank which lent mortgages to home owners. So the bank was pretty interested in you paying them back.
          Nowadays, they securitise the mortgages, which is a fancy way of saying they sell them to other investors. They create an investment 'fund' that people can put their money in which gets paid off by the mortgage repayments. But they also slice up the mortgages into 'tranches'.
          This means for a fund holding, say, 100 mortgages all paying 6%, they divide them into risk pools. The first tranche/pool pays investors 3% interest on money invested, but each month the loan payments are collected and these investors are paid first. Not very risky at all.
          The second tranche investors get paid 5%, and they get paid each month after the first tranche people. Again, not very risky. The 3rd tranche gets paid 15%, but they get paid last.
          You can imagine what happens. In good times, things go swimmingly for everybody, but when bad times come, some people don't pay their mortgage. This isn't a problem for the first tranche, as all the other people pay theirs, and the 1st tranche gets paid first. The 2nd tranche is probably ok too. But the 3rd tranche doesn't get anything until the first two groups get paid, and that means there might not be any money left to pay them.

          In the GFC, the US housing market fell, causing these later tranches to not get paid. And when some people defaulted on their mortgages, the lower tranches lost everything. Some investors in these lower tranches included local councils, super funds etc. so it wasn't just fat cats losing money.
          The other problem was the credit default swaps. These are insurance you can buy in case the people you are investing with go broke. You can imagine that if you are investing in something like these mortgage tranches you might want to pay a little extra for insurance to make sure you get your money back.
          The CDS' were sold by investment banks and insurance companies. They felt safe selling the insurance because the ratings agencies (Moodys and Standard & Poors) said there is no way the entire US real estate market will tank, the worst that will happen is local downturns, and you will be fine elsewhere.
          When the entire real estate market did tank, CDS holders went to the banks for their payouts, but the banks didn't have enough money to pay. This caused everyone to lose confidence in the banks and many other investments. After all, if the banks could go broke, who can you really trust?

          So the governments of the world rushed in with huge buckets of taxpayer money, bailing out the banks that made these bad insurance policies.
          It kind of worked.

          We avoided a great depression style financial collapse, but caused things like the runaway housing bubble in Australia, and the OP's problem that they can't get a decent return on their savings.

        • [Deactivated] on 12/05/2016 - 16:23

          Just curious, is there any independent proof/analysis of Ratesetters claimed 100% record. Is there an official global risk rating for example. I haven't looked beyond there front webpage.

        • watwatwat on 12/05/2016 - 16:27

          @eotwawki:

          No idea. If it was happening, you'd think you could find one complaint on the internet somewhere of someone losing money.

          But they clearly went through a lot of regulations to get up and running in Aus, and as part of that process I don't think they'd have the capacity to lie and cover up losses.

        • drillvoice on 12/05/2016 - 23:10

          @mskeggs: Thank you so much! The answer is very much appreciated.

        • brettd on 13/05/2016 - 08:04
          +3

          @mskeggs: well done on one of the best gfc summaries I have read

        • congo on 13/05/2016 - 17:40

          @mskeggs: reminds me of the Big Short movie scene with the chef and lady in the bath :)

        • Baysew on 13/05/2016 - 18:05
          +2

          @watwatwat: Dick Smith Gift Cards had 100% record until they didn't.

        • watwatwat on 13/05/2016 - 18:17
          +1

          @Baysew:

          Worst analogy ever.

    • [Deactivated] on 10/05/2016 - 09:55
      +5

      This is unsecured, non-guaranteed lending, right?

      I just want to suggest to people, don't get desperate and jump into the deep-end.

      Unsecured Debentures, online fx/cfd/gambling etc, and high risk shares are a proven way that a 'lot' of people have lost tons of their savings for real.

      Please stick with safe investment, as OP is trying to do. The tides will turn, savings account wise.

      • 17833 on 10/05/2016 - 11:30
        +5

        Completely agree. I have lost a large some of money previously and it is devestating not only on a practical level but emotionally as well. Could go on and on about this but please be careful, do your own research, don't necessarily trust advice even from financial planners, and always keep in the back of your mind the old adage "if it sounds too good to be true, it often is"

      • Serapis on 11/05/2016 - 14:17

        Depends on your character, I've made quite a bit of money on fx/cfd/gambling (poker) so your call.

        Though not recommended if you just want to put money somewhere and let it sit, you need to be actively watching 24/7.

    • DeafMutePretender on 10/05/2016 - 20:54

      Sounds interesting but also sounds pretty risky.

    • mrjames on 14/05/2016 - 10:24

      Make sure you read the PDS. I'm worried that the provision fund won't last if there is another GFC. A lot of the borrowers have mortgages and if there is a downturn with mass unemployment the unsecured P2P loan would be the first to default

  • polol on 09/05/2016 - 23:36
    +5

    ETF/Index fund

    • DeafMutePretender on 10/05/2016 - 20:55

      ELI5?

      So if ASX goes up, I go up, and if ASX goes down, I go down. Basically shares?

      • Doggiie on 10/05/2016 - 21:32
        +1

        Basically shares with risks diversified (making swings in value less effective).

        Obviously they do not track the underlying index 100%, so you will likely to gain less than the natural ASX movement.

        The reason why ETFs are considered safe is because if the ASX comes crashing down to close to zero, your money is likely to be worth nothing anyways because we are probably fighting each other for survival.

        • polol on 10/05/2016 - 22:04

          basically.

          It's the cheapest way to get in to diversified shares. Rather than picking them yourself.

          I have an index in aus shares and one in international shares (non hedged).

        • bluedufflecoat on 11/05/2016 - 09:30
          +1

          @markopolo: do you just buy ETFs / index funds through a broker? Would an online broker like ANZ E-trade have access to those?

        • Baysew on 11/05/2016 - 10:48
          +1

          @bluedufflecoat: Yes, they are purchased via a broker (and on-line brokers as well).

          Also E*Trade Australia is changing its name to "ANZ Share Investing" from 23 May 2016.

        • [Deactivated] on 11/05/2016 - 17:02

          You can also invest in ETF with underlying fixed income securities - doesnt need to necessarily be asx / intl shares as underlying.

    • keithality on 11/05/2016 - 13:54
      +1

      The vanguard aus index fund (Vas.asx) would be my pick, especially for 'second least risky investment'.

      Note it would only be 'less risk' if you don't mind holding it for a long period of time (eg. 10 years) in case the market decides to take a tumble suddenly.

  • inherentchoice on 10/05/2016 - 08:40
    +1

    Put it in your super? But that's probably not the best option if your in your 20s/30s as it locks away your money.

    What about a managed fund? There are so many different ones out there though.

    I had a managed fund through RaboBank and it yielded 10% plus some dividends but then RaboBank decided it wasn't going to offer that product any more.

    • DeafMutePretender on 10/05/2016 - 21:01
      +11

      Put it in your super?

      I forgot about that one.

      Super Pros:
      * Government co-contribution
      * Taxed at 15%

      Super Cons:
      * Government steals our money and runs off to Panama or somewhere
      * Government raises super withdrawal age to 100 or something
      * By the time I can withdraw my super, I would have already gotten a bunch of old-timer diseases including dementia, arthritis, Alzheimer’s and Parkinson’s disease. So I probably wouldn't even be able to enjoy my money. Whatever money that is left after I pay the nurse expenses (she helps me poop). Speaking of which, goshdarnit, I pooped mah pants again. NURSE!

      • sareth on 11/05/2016 - 18:29
        +1

        The other risk is that money may cease to be relevant when some of us retire in 50 years (+ however many years the retirement age gets lifted in the meantime).

      • brotherfranciz on 11/05/2016 - 21:20

        By the time I can withdraw my super, I would have already gotten a bunch of old-timer diseases including dementia, arthritis, Alzheimer’s and Parkinson’s disease. So I probably wouldn't even be able to enjoy my money. Whatever money that is left after I pay the nurse expenses (she helps me poop).

        Yep, that's the whole idea behind Super… Paying for someone to wipe your ass when you're too old to do it yourself (rather than relying on the pension or your children/grandchildren).

        • OzTightArse on 11/05/2016 - 22:35

          By that time euthanasia would be legal, or we can upload our minds to a computer.

          I'd prefer to keep my own money and invest as seen fit rather than having the super industry hold them and play casino with them.

      • [Deactivated] on 14/05/2016 - 15:31

        "The age of entitlement (to super) is over*", J Hockey (born in 1965)

        • = applies to those born after year 1965.

        BTW, joking aside they did indeed want the pension age to start at 70 starting from people - yep, you guessed it - for those born after 1965 when the Abott/Hockey tag team were running rampant!

    • ilikeradiohead on 11/05/2016 - 14:26

      The problem with managed funds is that, on average, no one can beat the market. Managed fund fees also eat into your returns.

      I'd say a managed fund is riskier than an index fund.

      • inherentchoice on 11/05/2016 - 14:36

        Super companies basically invest our money just like managed funds don't they? Therefore a 'balanced' managed fund is only as risky as the 'balanced' investment option from superannuation companies right?

        • ilikeradiohead on 11/05/2016 - 15:37

          Yeah I'd say super and a managed fund are about equal, except for the tax benefits of super offset by the drawdown drawbacks. I was more responding to the original question of what is 'the second riskiest' option.

  • [Deactivated] on 10/05/2016 - 09:33

    Medium to high risk
    Shares
    Property

    I tend to see top shares like Commonwealth Bank, as well as a good investment property, as very low risk really. Both are long term proven earners, so maybe consider a Commsec account and just buy best quality dividend shares.

    I am suggesting exactly what I am doing myself from now on.

    Considering a worse-case grim outlook, 2017 RBA rate may be 1%, Ubank, Ing following with 2.5%. I still recall Westpac offering 8% not many years ago. And Oz average historically I believe is about 5.5%, so what's happened? Loss of faith after George Bush?

    • DeafMutePretender on 10/05/2016 - 21:07
      +1

      I tend to see top shares like Commonwealth Bank … as very low risk really.

      Yes, that is taken into account in the exam paper under Low to medium risk: "Blue Chip" Shares

      Considering a worse-case grim outlook, 2017 RBA rate may be 1%

      Sometimes I wonder if the RBA even know what it's doing. Or do they just have monkeys throw darts on a board: "Hey Bob, the monkey threw darts onto the Lower Interest Rates semi-circle."
      "I'll get right on it Jim".
      "Here monkey, have a banana. Keep up the good work."

      I still recall Westpac offering 8% not many years ago. And Oz average historically I believe is about 5.5%, so what's happened? Loss of faith after George Bush?

      Probably the GFC. Some peeps managed to grab some super cheap property and now they're making bank.

      • [Deactivated] on 10/05/2016 - 22:37

        Thanks for comments.
        RBA Monkeys might be better stated as greedy robots.

        Anyway, I fully agree with your post. 3% bank interest isn't realistically above cost of living, in my opinion.

        I'm going for shares or property this year. Just waiting for ASX200 to drop again sub 5000, then I'm buying $300k aussie shares.

        However, investment property with above 5% gross return is interesting, just seems too much work and risk. What do smart people invest in, property-wise?

        • sareth on 11/05/2016 - 18:31
          +1

          I'm going for shares or property this year. Just waiting for ASX200 to drop again sub 5000, then I'm buying $300k aussie shares.

          Good lord, consider some international diversification. What reason is there to believe we will outperform the USA?

    • dtc on 11/05/2016 - 16:17

      Blue Chip shares like BHP, Telstra, Rio Tinto, Woolworths… all of which have (at times) been up and down 50%

      The banks have not had such a swing in the recent past, but have done so previously.

      An ETF is the only 'share' investment that is unlikely to crash - markets rarely go down 25%, but individual shares have a high chance of doing so.

      Then again, ETFs wont give you 100% returns either

      • dandandan on 11/05/2016 - 22:12
        -1

        give me recent 1 and 2 year add returns?

    • OzTightArse on 11/05/2016 - 22:38
      +2

      Instead of getting out of the way and let capitalism sort out bad business decisions, the RBA central committee comrades are still trying to prop them up.

      These people are not even elected.

  • inherentchoice on 10/05/2016 - 13:13
    +1

    The old saying is it's better to buy shares in the bank than to keep your money in the bank.

    • muncan on 10/05/2016 - 18:39
      +8

      The old saying isn't covered under the Financial Claims Scheme

      • inherentchoice on 10/05/2016 - 19:11

        Yes. But the old saying generally rings true with CBA, ANZ and WBC shares over the last 20 years right? I realise that's not the case for the last 12 months but, that doesn't take into account the dividends.

  • DeafMutePretender on 10/05/2016 - 20:52

    I have made some changes to your exam paper:

    Super added to the Low to medium risk category.
    "Put it all on black, champ" Gambling added to the High risk category.

    • mskeggs on 12/05/2016 - 19:03
      +4

      Super isn't an investment, it is a tax strategy. Once you contribute to super you still have to choose an investment. If you are happy with your super fund's investment strategy, see if they offer a similar fund for non-super. All commercial funds do.

  • DeafMutePretender on 10/05/2016 - 21:09

    How about a combination strategy of Blue Chip Shares from companies that issue nice Dividends?

    Of course the risk is that more dividends to shareholders means less funds available for the company itself and that's not so good long term.

    • mskeggs on 12/05/2016 - 19:02
      +2

      If you had done that you would have included Woolworths (down 20% in the last two years), the banks (all down in the last year) and who knows what else. Maybe you would have off set those capital losses with gains from other stocks, who can say?

      Are you happy to wake up with 25% less money in a few months? If not, then you probably can't handle the volatility in the share market.

  • ukulele on 11/05/2016 - 12:22
    +15

    Savings accounts at the moment are negative returns in the real world. Once tax is figured and inflation, you're actually going backwards. Whilst super is good liquidity is very bad, unless you are close to retirement age.

    My current strategy:
    1) Big chunk of cash in an offset account.
    2) Buy shares every 2 months in packets of approx 2k. I am focusing on shares that have a dividend yield around 4.5% to 5% and have prospects for growth, don't forget franking credits. There are actually many out there. www.dividends.com.au is a good resource and also www.aussiestockforums.com.
    3) As previously mentioned P2P lending. I have been a member of Ratesetter for 5 months now and I'm a huge fan. Ratesetter have been very very open and transparent with their operation; go to their facebook page and you can download the loan history. They do show some defaults there and also late payments. As of right now, P2P lending is a small part of my portfolio because of the risk. I think the best way to treat P2P lending is to lend small amounts over time spreading the risk over many different borrowers; which is essentially what banks do and which is what I try and do. I lend 100 or 150 every few weeks and I reinvest all the interest. Note that if you lend in the 3 or 5 year markets it is a monthly principal and interest repayment which also reduces your capital risk.
    4) I also trade forex and use www.dailyfx.com as a resource. I'm 1.4% down in a bit over a year. I'm determined and will keep going. I don't recommend this unless you are really committed to trading.

    One question we should all ask is how can I get more income to replace the loss of interest. One thing that I have been doing lately is surveys! myopinions, pureprofile, toluna, opinion world is what I use. You should be able to get 20 bucks a week if you're keen. Return on time is low but don't forget earnings are tax free and it's easy to do whilst watching mindless tv.

    • rgr on 11/05/2016 - 20:21

      Do you also have a day job? I wanna start actively trading forex for spare cash but I'm so bogged at work and when I get home I just wanna do other shit to unwind.

    • [Deactivated] on 11/05/2016 - 23:18
      +1

      Even if inflation and tax eats away at any marginal interest gains, you're still getting into a good habit by sticking money away and watching it increase. The ING $1000 minimum on monthly investment is actually quite a good motivation for not spending too much, and putting more of it away.

    • verio on 12/05/2016 - 14:02

      I think it is worth mentioning that once shares are ex-dividend, the price goes down by roughly the same amount as dividend plus franking credits. So it not as easy as 'I buy shares, get dividends, sell shares back'.

    • ukulele on 12/05/2016 - 15:45

      @ rogr
      Yeah I have a day job. My boss is pretty cool; I do trade sometimes during the day and I'm sure he sees. But I don't stare the the screen for 8plus hours. An example from today a truck came right at 10am right at the open and I had a share position open overnight. Luckily, trade went in my favour and it hit my target at around 1030am. I don't suggest to trade unless you are fully committed. I've listened to many podcasts and so many pros start out with "I blew up my first 50k account" another one of my favourites: "I only became profitable in year 3". Have a listen to chatwithtraders podcast, some great insights.

      @ JohnKG
      I agree. Putting money away is a great habit. This is why the majority of my available cash is sitting in an offset account.

      @brightaussie
      You are absolutely right with your assessment regarding ex/div. I would not buy a 10 cent share which last year had two five cent dividends; remember if its too good to be true… My investment horizon is actually 5 plus years so the trade to ex div twice per year doesn't bother me.

      • mskeggs on 12/05/2016 - 19:06
        +2

        "I only became profitable in year 3"

        So that rules out the 90% who were insolvent in the first 2 years.

        • ukulele on 12/05/2016 - 21:22

          Yep. That is my point. Like I said, don't trade unless you are fully committed, even so, no guarantees…

        • congo on 13/05/2016 - 18:22

          @ukulele: the franking credits is a good strategy.

  • vetopower on 11/05/2016 - 14:01
    +2

    It's a frustrating market for someone looking to build a deposit for a house.

    Low return on the only low-risk, short-term investment option available (on call savings accounts) and house prices continuing to rise in many areas, meaning that the amount one has to have for a deposit continues to raise as you are saving.

    Add to all this the possibility of a housing market crash after you buy and it is a terrible environment. Rather depressing.

    • OzTightArse on 11/05/2016 - 14:45
      +3

      The game is rigged unfortunately. I'd just wait for US/Ireland style crash.

      • Hirolol on 13/05/2016 - 00:54

        How long till that happens?

    • ilikeradiohead on 11/05/2016 - 15:44
      +1

      Unfortunately low interest rates harm savers and benefit borrowers, so every month you're trying to save is another month someone else can pay off their mortgage.

      • OzTightArse on 11/05/2016 - 17:09
        +5

        Our comrades at central bank have single-handedly transfer wealth from those who save to those who borrows. The banks and financial institutions are "just happen" to be in the middle collecting fees.

    • isthisreallife22 on 25/05/2016 - 03:52

      Could buy a cheap house and rent it out, and offset against the mortgage. Beats the savings rates immediately

  • OzTightArse on 11/05/2016 - 14:43
    +2

    1) Stash of gold & silver + $250/yr guardian vault account
    2) the rest
    3) casino

    • Cluster on 11/05/2016 - 15:29
      +4

      Gold and silver produce zero income. You may gain money on a change in value, but then again you may as well trade coffee futures or bitcoins.

      I recommend the third option, the casino. Not playing there of course, that's a stupid idea. Invest in the casino instead. There are plenty of people out there who believe they can violate the laws of mathematics and strike it rich playing the pokies. Make money off their mistaken belief.

      • ilikeradiohead on 11/05/2016 - 16:06

        I'm not sure if casino stocks are that great, just looking at Crown Resorts, they've lost 11% since its IPO in 2007. They have been paying dividends in that time though, so you might be better off than the headline number indicates.

        • Cluster on 11/05/2016 - 20:24

          There's Star Entertainment Group too, which is doing well over the past 3 or 4 years. They own casinos around Australia.

      • OzTightArse on 11/05/2016 - 17:06

        I have great satisfaction to see my assets are far away from the reaches of central banks and banks with their fractional reserve lending.

        Bitcoins… still sitting on the fence. I don't like the idea that you need the internet to be functional for Bitcoins to have any values.

        • mskeggs on 12/05/2016 - 19:08
          +2

          They are also an environmental catastrophe. Every mined coin and every transaction uses huge amounts of electricity.

        • OzTightArse on 12/05/2016 - 21:25
          +1

          @mskeggs:

          Debt-driven economy requires constant growth of consumption otherwise the cycle collapse. Iron needs to be dug out of the ground to build houses and structures. And everyone complains if the housing sector slows down. Reduce the interest rate to pump it up!

  • mrtin on 11/05/2016 - 16:46

    Basically risk (and tax) free = mortgage/ credit card/ personal loan etc.

  • zoombie on 11/05/2016 - 16:58
    +13

    I got my investment in eneloops. Now that DSE closed down, their value is bound to go up!

  • baggyred on 11/05/2016 - 18:55
    +2

    A little professional advice

    Cash is typically your only "risk free" asset

    Super - isn't an investment. It is merely a tax vehicle that holds assets. So if you super had cash it would be risk free, if you held shares - your super would be very risky.

    Cash - no/low risk
    Bonds (Govt and multinational) - low risk
    Bonds (Junk +) - anywhere from low to omg i've lost all my money
    Shares (All, including blue chips) high risk
    Property (All) high risk
    Alternatives and Infrastructure… well that is a case by case basis
    Shares (2c hopefuls, junior miners etc) - not a great deal different to the casino.

    In general the longer you intend to hold an asset, the less risky it is.

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