An income injection

There has never been a harder time to be holding cash and as we head towards the festive season and the end of 2019, it is not going to get any easier.

By ·
25 Nov 2019

2019 has been the year of records; record highs in equities and bond prices but also a year that saw record low yields in term deposits and fixed interest.

The RBA stated in its November minutes that it almost pushed the rate cut button for a fourth time in 2019. The minutes have led all economists to now forecast a fourth cut to come in early 2020. This will mean further cuts to your term deposit rate and just another reason cash as an investment is becoming harder.

However, this doesn’t mean a lump of coal in your investment stocking this festive season.

In fact, 2019 has shown that investment yields are still attractive in Australian equities. It has also illustrated why total returns (capital growth plus income) are so important to your investment returns as they are currently double the yearly average, turning that lump of coal into a nice yearly present indeed.

December is the final month of distributions from Exchange Traded Funds (ETFs) and managed funds and these distributions are usually quite attractive.

The ASX 200 ETF we use in our portfolios, IOZ, has a current projected yield of 5.43 per cent. The fixed income ETF we use, IAF, has a projected yield of 2.14 per cent, 24 basis points better than the average 12-month term deposit and has the added advantage of capital appreciation. IOZ and IAF are due to make their final distribution at the very end of December, as is the international holding VGS which has a projected yield of 2.46 per cent.

To be eligible for the distribution you need to invest prior to the record date which you will find on the distribution statement released by the ETF. 

The aforementioned ETFs are held in our four diversified portfolios. Every holding in the portfolios pay quarterly distributions except for the BetaShares Australian High Interest Cash ETF which pays monthly. Investing in our diversified portfolios before the record dates will make for a late Christmas income distribution present in your investment stocking.

 

Click here for more information on the InvestSMART Diversified Portfolios or start a chat with the team in the bottom right hand corner.  


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