The amount of cash Australians are saving has reached over 10% of their income, the highest level since the mid 80’s. It’s high because we lack confidence in any asset class other than Term Deposits, which are booming with new customers. Also, the money we put into Superannuation is increasing as we get more serious about having something when we retire. Therefore, there’s a tremendous pool of cash, quickly growing. At some stage, when some of the fear subsides, billions in this cash pool are going to be allocated to the ‘growth assets’ of shares and property.
Investing in shares and property before all this happens is the potential opportunity, as the weight of all that money will do wonderful things to share and property asset prices.
Many years ago it may have taken a long time for the public to restore their confidence in property and shares (in particular), but today professional investment managers who control our Superannuation are going to trigger the move quickly. They do not have the same hesitations we have, as it’s not their money! They are sitting on a very high cash percentage of 19.3% of their total funds.
So, “when is the right time?” I hear you ask. A complicated answer I’ll avoid by suggesting simply, that a clue would be when term deposit rates go below 5%. At this time many investors will begin looking elsewhere for a better return. Property rents and share dividends will then compare very well against Term Deposits.
So perhaps keep an eye on that rates billboard outside your local bank branch.