Lowest interest rates since 1959?

[catsnknots]

Is that true??? 

And what was the drama that caused it to go that low? 

Swannie says you can congratulate him.... that this is a good thing and think of all the money you can save on your home loan... 

Well I heard that the statistics for home loans showed that the majority of people don't have one... tried looking for statistics to compare but was not lucky... might try again later... 

To me it seems that a small percentage will be better off but in reality a lot of people that are self funded in retirement are worse off... and that this will actually push them onto the Government Pension as their income is reduced... 

These interest rates cuts are because the economy is on a downturn... things are not looking good... 

And Swan wants to tell us all things are ok???? 

[the_hawk*]

i give up LL, "there is a risk having money tied-up in any stock" where would you put your money LL?

The financial industry gave the NBN a miss, the ALP underwrote it,  that is a risk with our " money tied-up"

so there is no risk ? i have 5 children 3 under 16 i dont put money anywhere but into the usual junk and essentials. i have a parcel i was given instead of other forms of payment, it has grown into something substantial but it doesn't interest me in any other way.

the NBN jibe is wasted on me too. its a great far-sighted scheme .. it uses money in a manner beneficial to all (despite inane protests) and i'm very happy it isn't owned ny some leech-miner like telstra. btw, do you think telstra will gift the copper network to turnbull ? he thinks so..

there is always a risk, life is a risk, just getting out of bed is a risk but it doesn't stop people from doing it.

As you say your holding has grown into something substantial, it was clearly put together by someone that was interested and had an idea about what they were doing for that to occur, its a shame you are not as interested. One day your income and quality of life will depend on the decisions you make over the next 15 years or so.

BTW Speculating is something a day trader does, it is totally different and opposite to what John does.

Both require different skills and effort but both require educated decisions based on data and information.

[lakeland27]

hawk i actually agree with john and you on this, apart from johns insistence its 100% foolproof /safe. more like high 90's.  the person who passed the share portfolio on to me probably knew even less than me.. it's growth is most likely just dumb luck. 🙂

[nero_bolt]

THE GOOSE WHO LOST THE GOLDEN EGG

Treasurer, Wayne Swan, trotted out Penny Wong to give the bad news of a $17 billion deficit (it will be closer to $20 billion) while he was preparing to front up for the good news of an RBA rate cut.

Good news? Did he really say “good news”?

A record low “emergency” cash rate level is only good news for mortgage holders who had the foresight to pay over the odds to acquire a variable rate.

Those on a fixed rate will be feeling sick while the banks hang on to previous rate cuts anyway.

I wonder why Swanny boy didn’t offer superannuants and retired investors a consoling word.

The trouble with a lower rate is that it does little to budge foreign investment either way because it’s still higher than struggling US and Euro economies that offer near to zero rates.

Therefore it will have little impact either way.

But Swanny wants foreign investment in mining and debt financing via our better bond rate, yet complains of a high dollar.

So, at least a lower interest rate should shunt investors back into securities. Nope.

Banks will stick with their overly conservative “risk management” and become ultra selective in taking on new mortgages. When rewards aren’t as great, bad loans must be minimised.

Selectivity is the key and you better not have been late with that power bill.

As I said in a post last year, 2013 will see the cash rate at an unprecedented low of 2%... and Swan thinks that’s good! Crumbs.

Swan also gets excited about low inflation. Hate to tell you Swanny boy but low inflation means a stalled economy, low demand and a reluctance to spend despite import prices being pushed down by the high dollar.

The economy, Mr Swan, is crying out for stimulus. That’s why the RBA continues to cut rates!

The only reason we don’t have deflation is that the CPI is propped up by skyrocketing water and power costs due to Labor’s rusting desal plants and crazy Carbon pricing.

If you could take the Labor Government out of this economy we’d be doing fine.

Then we get that hoary chestnut... jobs!

Swan boasted that 71,000 jobs had been created in February this year while the Bureau of Census and Statistics was busily reporting that more jobs had been lost in that month.

Swan/Labor spin has morphed into outright lies.

“We have this investment pipe-line”, says Swan. It has proved an investment pipe-dream as miners put lines through Australia on their exploration maps.

Perhaps Swanny doesn’t watch the news, it might be too depressing for him.

Our economy is in a tailspin over lack of confidence and, fair dinkum, who could possibly be confident with this corrupt rabble at the wheel?

The lower the cash rate the less effect any ensuing rate cut has.

And that’s the US/Euro dilemma we are fast approaching saddled with a debt near enough to get Greece off the hook.

Our dollar will stay high. Only a devaluation or a US recovery will settle it down where it should be. Neither is likely.

The RBA is desperately fiddling with the knobs but some one has pulled the plug.

-------------------------------------------------------------------------------

As there are so many precious people on here and super sensitive ones with itchy BP fingers I cant post a link to the story as I will be BP'd yet again....   LP wrote the story and all credit for its contents go to LP

[the_hawk*]

hawk i actually agree with john and you on this, apart from johns insistence its 100% foolproof /safe. more like high 90's.  the person who passed the share portfolio on to me probably knew even less than me.. it's growth is most likely just dumb luck. 🙂

Nothing is foolproof and some blue chip companies were hit hard in 2008 and still haven't recovered and may never because the world has changed.

What I do is different to what John does, but I understand his method and over all it should provide reasonable returns over a long period of time from modest capital gains and fully franked dividends.

Just imagine a stock you purchased at $5 that was paying 5% fully franked say 10 years ago, today its worth $20 and still returning a 5% fully franked dividend. that's the same as getting a 20% tax paid at 33% return on your original investment. 

Whats even better is that if our imputation credits are worth more than the tax you owe you actually get a tax returned to you.

Now knowing John for many years I imagine he has taken advantage of dividend reinvestment schemes over the years to further increase his holdings without outlaying any extra money.

Where the safety comes from in Johns method of investing is that he only buys blue chip companies and spreads his risk by having a balanced portfolio, this doesnt provide the highest returns but provides the most stable and the least amount of work.

So John how did I do?  

[monman12]

LL: "if westpac  went belly up tomorrow there  is no guarantee i'd get anything for them.. this means there is a risk having money tied-up in any stock, regardless of pedigree. it is speculation."

As I said LL we live in different economic worlds, and with differing knowledge.
"if westpac  went belly up tomorrow" it would require a catastrophic event that would  be of consequence to the whole country, and most probably the world, because we have a public "central bank" (RBA) that lends directly to the private banks, also we have a banking regulator, APRA, to ensure that the banks hold enough "capital" to cover liquidity shocks, and finally the banks can depend on "extraordinary government support" in a crisis."

"Today Australia's prosperity relies on four colossal banks — or "oligopolists" — worth around $50 billion each. They control 80-90% of all financial transactions executed across the country. Importantly, the introduction of In all properly-functioning financial markets there is an inexorable trade-off between risk and return. The higher the risks you take, the higher the returns you generate. But in Australia this maxim has been turned on its head: in Australia, the supposedly lowest risks banks with the highest credit ratings — the majors — are somehow able to yield the highest shareholder returns. for the first time during the GFC bequeathed them with a unique comparative advantage.

In contrast to their smaller rivals, the four majors are now regarded by credit rating agencies and investors alike as "too-big-to-fail". The majors get the benefit of credit ratings that have been explicitly lifted "two notches" higher than they would otherwise be because Standard & Poor's thinks they alone can depend on "extraordinary government support" in a crisis."

In all properly-functioning financial markets there is an inexorable trade-off between risk and return. The higher the risks you take, the higher the returns you generate. But in Australia this maxim has been turned on its head: in Australia, the supposedly lowest risks banks with the highest credit ratings — the majors — are somehow able to yield the highest shareholder returns.

My portfolio is not speculative, but blue chip investment in safe dividend stock which passed the GFC, and continued to pay dividends throughout.

[vampire-teddy]

i think that home loans should be available based on a proventrack record of paid rent.  we have paid $410 per week rent for nearly 3 years in our current house (with a long rental history before that) and could easily buy a house that this would cover but we would find it hard to get a loan because of our income.  this would boost the housing market immensely.

[newstart2380]

 if people can take the step to find work away from the cities housing is affordable.Try the mining and CSG areas, great wages, great housing opportunities, great life style and communities.

:O:O:O Newstart, have you any idea what housing costs in Port Hedland, Karratha, Tom Price for example.?

No sorry should have clarified that a bit more, talking about regional NSW.

[cherry*135]

Where on earth in regional NSW are their plenty of jobs? Broken Hill?

There aren't many jobs (High unemployment rate) in the regional part of NSW I live in, plus the house prices are still very high.

[cherry*135]

You would still need a reasonable deposit to buy a house, vampire. Buying a house without a deposit or a very small one is not a wise move. Banks are now required to make sure borrowers have the right %  of deposit for the amount they are borrowing for a home loan.

People may need to sell the house in a couple of years due to unforseen circumstances and if they only had a small deposit and the house is worth slightly less than they paid for it, the seller will end up owing the bank money which must be paid off, after the house is sold.

[newstart2380]

Where on earth in regional NSW are their plenty of jobs? Broken Hill?

There aren't many jobs (High unemployment rate) in the regional part of NSW I live in, plus the house prices are still very high.

In the northern tablelands area where mining and csg are providing jobs around tamworth, Glousester, Gunnedah, Boggabri, Werris Creek etc.

housing prices are still affordable.