Viewpoint: Australian interest in 30 years

Invast Investment Committee

Invast Financial Services

Today the cash rate is at 2.00% and many economists predict it to fall to 1.5% by mid next year. The thing about human beings is that we find it very difficult to see into the future. We’re poor at predicting, opting to stay within the confines of our own control. We like talking about today, tomorrow, next month or next year. But that’s about it. History shows we have been poor at predicting change and our brains can only compute so many variables. An interest rate of 2% means a reward of 2 for every 100 units of effort, over a whole year. Think about how low that is. Investors are parking their funds with the government overnight for 2% or 0.17% per month. We don’t know what interest rates will be in 30 years’ time, but I’m fairly certain that we will look back at 2015 and laugh at how low they reached. We’ll laugh at how ridiculously cheap money was and how short sighted many investors were at a 20 or 30 basis point rise. More (VIEW LINK)

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