However, bank term deposit rates have fallen and are likely to fall further, possibly to around 4%, as the RBA continues to reduce the cash rate to help the economy. So it makes sense to look elsewhere.

Our view is that the RBA will cut official interest rates from 3.5% currently to 3% or just below over the next six months on the back of sub-par business and consumer confidence, disappointing growth and benign inflation. While the RBA is currently putting out a relaxed and comfortable message it should be noted that it put out a similar message earlier this year only to commence cutting interest rates again in May.

To read more about investments that might deliver a decent yield, click here.

30 July 2012

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