What's going on with the banks? My monthly interest payment on savings is almost halved now with Westpac.
They have been given a cash-cow by the Government for people to have there money safe guarded with guaranteed bank deposits.
But interest rates have come down. Is banks capitalizing?
I hear ya Jaffa,
however at present whilst cash might not be king as far as return is concerned, it is safer than in the stock market. Buying the banks and relying on yield may give you a higher return however no one knows what further punishment is to come from the smoke and mirrors in US financial system and the ultimate wash up here.
The market can often stay irrational longer than investors can stay solvent. I'm sitting on my hands at present and looking, researching and if (and only if) something comes up that has appealing numbers with subdivdabnle infill land with great amenity, I will buy. Other than that keeping some buffer in cash (despite the woeful yield). I don't have any offsets to park funds in.
I've got two fixed term loans coming off mid year so looking forward to that. My opinion is that with falling interest rates, LVR's are also moderating to give the banks sleep at night factor. This is not the market to be aggressive with LVR's IMHO.
Banks appear to be playing very safe.
My interest rate in my SM super with CBA Bank is woeful, I had about 2 months where it was great.
On top of that, interest earned is fully taxed with no allowance for indexation.
Bad news! but not as bad as loosing 40 to 50% in the share market.
It's an effective but boring financial survival mode.jaffasoft,
Why have you got money in the bank?? as dr house says its fully taxed on the very small amount you are paid. You end up with less than inflation!Buy shares in the banks and enjoy the fully franked yields.
If you have spare cash them you should have it in an offset account, if you don't have any loans then get out there and buy something, as long as its got potential. This may be hard at the moment of course, but just buy something small, like a townhouse by the beach or near the station.
As Michael888 says, we are waiting for prices to drop so we can jump in. But waiting is boring, but in the long run it will be worth it..
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