Investing in shares is becoming increasingly popular over the last few years and especially now in 2020. With such low interest rate returns currently from the banks on savings (most banks offering less than 1% at time of search), tenants from both residential and commercial properties being given the green light from the government to pursue rent reductions if they have been financially affected by Coronavirus (COVID-19) and banks themselves being very cautious with their lending, this leaves us with shares as an option.
Australian shares have traditionally yielded about 10% growth per annum for the last 30 years. Although past performance is no indicator of future performance, if one were to simply invest in safe blue chip companies or exchange traded funds (ETF’s), my guess is one would still be better off leaving money in a savings account with the bank.
With interest rates at below 1% on offer, even if the share you picked grew by 5% per annum, you would still be better off.
You could be saving up for a deposit to buy a house within the next 5 years, if this is you, putting your money into shares may not be suitable. Investing in shares is almost like the Melbourne weather. A sunny morning can often be followed with rain in the afternoon. If you do not have the stomach to watch your shares go down by 50% in value and wait for it to recover, then you may want to reconsider investing in shares.
If you do have at least a 10 year time frame to with available cash in the bank to invest, then investing in shares could be suitable for you.
I personally used to be afraid of shares because I always felt they were “risky” until I fully understood the benefits and disadvantages of shares as an asset class. Please keep a look out for more future posts on shares and I shall attempt to share what I have learnt with you.
Money Melbourne 