Eureka Correspondence

Bank stocks, staying with cash and proposed pension changes.

Bank stocks

Interesting talk on what to do with bank stocks. 

I don't currently hold any, but of interest has the report called a sell on them for investors who bought in circa the last 18 months? Reading, or should I say hearing, between the lines and for those who truly understand bond yields the call is clear i.e. sell.


James Kirby’s response: We have certainly not put a 'sell' note on banks stocks: Our view is best captured in a recent video discussion between Alan Kohler and James Kirby. We believe traders may be selling off bank stocks. But for investors who are long term holders of banks, there will continue to be very strong franked dividends. Though the bond market is expected to be a drag on bank stock prices, they remain a solid income-focussed investment. 

Staying with cash

Can you please make sure Adam Carr, gets to read this article by Scott Francis: Don't give up on cash . I have already addressed my concerns regarding Adam's previous thoughts on retirement planning in his "finding alternatives to cash". I would also like to thank Scott for his far more cautious, sensible and realistic approach.

Rudi Horvat

Adam Carr’s response: Thank you for your letter. Yes Scott's article was very well written and I'm in agreement with what he says. The point I was making in my note, is that there is no need to hold large balances of cash – not no cash at all. Also that investors should be aware of the cost of holding cash. Liquidity could then be managed by using other payments mechanisms, not for the purposes of getting into debt, but as a prudent and cautious alternative to holding large cash buffers. As always if that option doesn't appeal to you, and you are happy to bear the costs of holding large cash balances, that's fine as well. 

Proposed pension changes

I have just read Scott Francis’ article on proposed pension changes (Hockey’s pension plan will hurt, May 6) and to say the least I am stunned!

As a part pensioner, with about $650,000 in assets, we basically stand to lose nearly half of our annual income! Which is small anyway.

Someone with over $1m of assets loses nothing, as do those who have not saved at all for their retirement. While people like us who salary sacrificed for years to get a bit extra in super. get slugged.

I wonder what percentage of part pensioners, will be in the main loser bracket of $500 to $800k of assets ? Will it be enough to bring down the Government at the next election, or are Labor going to get the boots into the small/mid-range savers as well.

If I knew that this would be the outcome, I can honestly say that I would not have salary sacrificed a single dollar into super, and would now be receiving a full pension!

Hopefully you will be doing what you can to point out to our over paid, politicians, the error of their ways. I note that none of this will in any way affect their generous pensions.


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