In light of last week’s interest rate drop, Crawford Realty group director Ryan Crawford has revealed how to maximize the benefits of falling interest rates.
The recent cut, he says, has positive consequences for property owners and negative consequences for those with large cash savings.
“Over recent years a growing number of people in Australia have put their money into cash savings as part of their retirement strategy because interest rates have been relatively high,” Mr Crawford said.
“However people with cash savings now face the very real consequence of having the long term value of their savings eroded due to low interest rates.
“This trend has already occurred in countries such as the United Kingdom where very low interest rates have decimated the cash savings of retirees.”
Mr Crawford suggests that to maximize the benefits of lower interest rates, investors with large cash savings should now be investing their money in positive geared property.
“Over the past six months, Crawford Realty has recorded a huge increase in the number of investors with Self-Managed Super Funds moving their money out of cash savings & shares and using it to buy positive cash flow property.
“Investors are turning towards this strategy to achieve rental returns in excess of 11 per cent, plus annual historical growth rates of over 15 per cent in the Pilbara compared to interest savings rates in the banks, currently around 5 per cent and falling,” he said.