At the moment, every week that you are invested in cash, the value of your investment is being eroded by inflation.
1. Invest in actively managed, higher-yielding fixed income
Investors can meaningfully increase returns with some additional risk by allocating part of their cash portfolios to fixed income investments.
2. Consider increasing your allocation to growth assets
3. Review your retirement target date
4. Make additional super contributions
5. Talk to your adviser about overcoming the challenges of low rates
Top tips for investing in a low rate environment
- Re-allocate some cash to actively managed, higher-yielding fixed-income funds for some additional risk.
- If retirement is still some years away, consider increasing your allocation to growth assets which offer a higher return potential for higher risk.
- Review whether your retirement target date is still a good fit for you. If you’re thinking of working longer, that extra time will give you an advantage.
- Making additional super contributions can offset the drag caused by low rates. Tax incentives may be available.
- Your adviser can help you review how your retirement plans have been impacted by low rates and propose strategies to combat them.
 Inflation in Australia is measured by the Australian Bureau of Statistics. The Consumer Price Index for the 12 months to December 2020 rose 0.90% - nine times higher than the official interest rate of 0.10%.
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