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June 04 newsletter
It's almost half way through the year, so we thought we might take a break from introducing new topics to review two topics that have made headlines recently.
Is it a good time to invest in residential property?
In our What are the media saying? page, the Shape of Money follows media reports to capture the flavour and general consensus of market opinion. Trends such as rising interest rates, falling net migration numbers and the lengthening of sale durations, all point to, at best, a stabilisation of house prices and, at worst, a fall in house prices.
Residential property investment is a long-term investment option. If you are seeking a quick capital gain on a new investment opportunity, you would be wise to park your cash in the bank for a few months until market price levels stabilise.
If you are a long-term investor, you'll be able to see out any short-term fluctuations in house prices. However, if house prices aren't going to go anywhere fast for the next year or two, why not consider postponing the investment? Earn some interest in a safe term deposit and use the time to undertake more market analysis.
What about those fees charged on managed funds?
Consumer magazine was recently highly scathing of the fees charged by all 13 of the balanced funds they investigated. Over a ten-year period, the after-tax and fee returns were not able to beat investments in simple bank term deposits. Their conclusion, after taking into account tax and market movements, was that the fees charged by the various funds were excessive.
What more can investors do to protect (and grow) their retirement nest eggs?
We would like to offer the following suggestions: