Worried investors moving to cash
Share market investors are fleeing plummeting markets and looking for the safety of bank deposit products. The amount of money on deposit in banks has increased three per cent in just one month. ANZ has attracted a 23 per cent rise in bank deposits in three months. Commonwealth Bank, ING, Rabobank, BankWest have also experienced strong inflows to their deposit products. Only NAB has seen a slight decline in household deposits held according to the banking regulator APRA. Seniors are delaying their retirement plans and suffering stress induced health problems as their investments and superannuation balances are decimated on share markets.
Average superannuation balances have lost almost eleven per cent in the year to September according to superannuation research firm SuperRatings. Financial advisor Frank Gayton from industry Funds Financial Planning says people who are worried and stressed about their investments should think about moving to cash. "Some advisors say if you move now you will crystallize your paper losses, but I have news for you – a loss is a loss, you can't change that you can only change the future.
"It is part of the propaganda of financial advice – the fact is if you have money invested and it has gone down you have incurred a loss, it is not paper it is real.
"If your investments have gone down say 10 per cent and you decide to move into cash now you could pick up six or seven per cent in the next year.
"If you stay where you are, you may possibly pick up, say, eight per cent. So for the sake of maybe getting an extra two per cent you are going to carry all that risk with you.
Frank Gayton says risk and worry have a cost that has to be factored into the financial plan as well.
"I say to people it is more important to look after your health – it is only money after all."
Source: Sunday Mail