27 May 2019
When compulsory super was introduced 25 years ago you could rely on cash and fixed income. These days, the RBA cash rate is 1.5%, 10-year bonds yield less than 2% and you can get 2.5-3% with online savings term deposits or investment grade bonds. With people living longer, these are very low rates of income for 20+ years of retirement, particularly given risks of rising costs of health and aged care. Investors don’t appear to have any alternative but to allocate some portion of wealth to equities as an income-generating asset class. If you can generate a decent income from equities, it would seem an appropriate choice in this environment of low rates.
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