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Real After Tax Term Deposit Returns for Australian Savers are Negative; Savers Punished. Debtors Rewarded. Tax and Inflation Work for Borrowers and Against Savers.
Topic Started: 6 Mar 2012, 11:00 AM (20,805 Views)
Blondie girl
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You do need some cash for life's emergencies & it depends if you need to employ people ...
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$
It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged
Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do.
Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
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Admin
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Quote:
 
Commonwealth Bank removes deposit interest rate offers from May RBA cut

July 6, 2015 - 2:58PM
Clancy Yeates

The Commonwealth Bank has reversed its May decision to raise two deposit account interest rates, a move it had said previously was influenced by consideration of savers.

In a tactic that was copied by several rival banks, the CBA did not pass on the full value of the Reserve Bank's May cut in interest rates to home loan customers, but took the unusual step of raising some deposit rates.

At the time it said the deposit changes – a 55 basis point lift in 8-month term deposits and a 5 basis points increase in its GoalSaver account – were recognition of the importance of interest income for the 7 million customers who had savings accounts, especially retirees and the young.

But in recent weeks these moves have been reversed. In late June the bank cut the interest rate on its 8-month term deposit by 55 basis points – the same amount as the May increase – to 2.5 per cent.

It also made a 15 basis point cut to its GoalSaver account, to 2.9 per cent. This is a deeper cut than the 5 basis point rise in this product in May.

The changes bring CBA's offers in these segments into line with rivals and have occurred as other banks also cut term deposit rates in the face of fierce competition in home lending, which is eroding profit margins.

The term deposit change was highlighted in a note by Deutsche Bank analyst Andrew Triggs, who wrote that term deposit rates had continued to drift lower, providing a "tailwind" to large bank profit margins.

Rival banks Westpac, ANZ Bank, and National Australia Bank also cut various term deposit rates during June, figures from RateCity show.

Read more: http://www.smh.com.au/business/banking-and-finance/commonwealth-bank-removes-deposit-interest-rate-offers-from-may-rba-cut-20150706-gi5vkd.html
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Foxy
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Zero is coming...

What is the "real" return on investment house rentals???
Anyone got a 20 year chart on that??
Peter
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Cory
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foxbat
6 Jul 2015, 07:02 PM
What is the "real" return on investment house rentals???
Anyone got a 20 year chart on that??
Peter
House prices have increased by a few % above inflation for the last 4-5 decades on average

So a good estimate would be 2-3% pa real capital growth plus 3-4% net yield, for a total of 5-7% return pa
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stinkbug
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Cory
6 Jul 2015, 09:25 PM
House prices have increased by a few % above inflation for the last 4-5 decades on average

So a good estimate would be 2-3% pa real capital growth plus 3-4% net yield, for a total of 5-7% return pa
I'd argue it's possible to do a bit better by buying carefully, but it would be in that ballpark.
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While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Cory
6 Jul 2015, 09:25 PM
House prices have increased by a few % above inflation for the last 4-5 decades on average

So a good estimate would be 2-3% pa real capital growth plus 3-4% net yield, for a total of 5-7% return pa
Or if your leveraged with a 20 pc deposit and 80 pc mortgage then the rent will be cancelled out by the interest but you'll get 5x the capital gain after leverage, for a 10-15 pc annual return.
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Khaderbhai
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Shadow
6 Mar 2012, 11:00 AM
This chart shows the real (inflation adjusted) after tax returns on term deposit accounts for Australian savers. Savers who leave their money languishing in bank accounts are obviously being severely punished for their foolishness. The effective return on their capital is zero to negative.

Meanwhile, sensible homeowners enjoy capital gains, no rent to pay, stability of tenure, negative gearing benefits, and inflation reducing the real value of their home loans, leading to a comfortable rent-free, debt-free, asset-rich retirement. No wonder so many smart people aspire to home-ownership.

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More bad news for those who leave their money languishing in a bank. But good news for homeowners and property investors...

http://www.smh.com.au/business/banking-and-finance/savings-account-interest-rates-dip-below-inflation-20170109-gtonot.html

Savings account interest rates dip below inflation

In a sign of the miserable returns being paid to many savers, including retirees, analysis shows several banks, including ANZ Bank and Westpac, cut interest rates on savings accounts in December.

Canstar, an interest rate comparison website, said there had been 13 cuts in savings account interest rates across its database of banks in December, compared with only two increases. There were also 16 cuts in savings account rates in November, compared with one increase.

The changes come as Reserve Bank of Australia figures show the average interest rates paid by banks on online savings accounts - before "bonus" interest - fell 0.05 percentage points to 1.25 per cent in December.

That is lower than the latest annual inflation reading of 1.3 per cent and suggests many savers are going backwards in "real" or inflation-adjusted terms, even before they pay tax on interest earned.
Edited by Khaderbhai, 10 Jan 2017, 09:05 PM.
Banks can't repossess your home simply because the market value falls. Australia's Consumer Credit Code says consumers aren't liable for things ordinarily outside their control and can't be held to obligations that could only be met by selling their home. Click for details.

"The truth is that there are no good men, or bad men. It is the deeds that have goodness or badness in them. There are good deeds, and bad deeds. Men are just men."
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Trollie
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Khaderbhai
10 Jan 2017, 09:05 PM
More bad news for those who leave their money languishing in a bank. But good news for homeowners and property investors...

http://www.smh.com.au/business/banking-and-finance/savings-account-interest-rates-dip-below-inflation-20170109-gtonot.html

Savings account interest rates dip below inflation

In a sign of the miserable returns being paid to many savers, including retirees, analysis shows several banks, including ANZ Bank and Westpac, cut interest rates on savings accounts in December.

Canstar, an interest rate comparison website, said there had been 13 cuts in savings account interest rates across its database of banks in December, compared with only two increases. There were also 16 cuts in savings account rates in November, compared with one increase.

The changes come as Reserve Bank of Australia figures show the average interest rates paid by banks on online savings accounts - before "bonus" interest - fell 0.05 percentage points to 1.25 per cent in December.

That is lower than the latest annual inflation reading of 1.3 per cent and suggests many savers are going backwards in "real" or inflation-adjusted terms, even before they pay tax on interest earned.
This is exactly what we were trying to tell that oxygen thief timo.

He still doesn't get it i'm sure.
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Khaderbhai
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Trollie
10 Jan 2017, 09:25 PM
This is exactly what we were trying to tell that oxygen thief timo.

He still doesn't get it i'm sure.
The bears are all praying for this once-in-a-lifetime opportunity that will simultaneously...

1. Make Australian house prices crash
2. Allow them to get their money out of the bank
3. Let them keep their jobs so they can buy the crashed property

I blame Steve Keen and Macrobusiness for selling them a compete fantasy. The reality is in 20 years they'll still be in the same position, renting, scared to buy a home because of the 'imminent 40% crash', and with savings that have gone backwards massively against inflation and house prices. And they'll blame the bulls for the mess they're in, even though it was the bulls who warned them what would happen. Silly bears.
Banks can't repossess your home simply because the market value falls. Australia's Consumer Credit Code says consumers aren't liable for things ordinarily outside their control and can't be held to obligations that could only be met by selling their home. Click for details.

"The truth is that there are no good men, or bad men. It is the deeds that have goodness or badness in them. There are good deeds, and bad deeds. Men are just men."
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Chris
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Trollie
10 Jan 2017, 09:25 PM
This is exactly what we were trying to tell that oxygen thief timo.

He still doesn't get it i'm sure.
And there is only one alternative, leverage those savings into a debt ladened asset.

I know you see this as a great transition but it further scares the shit out of me. They will soon put the screws into term deposits and this will be the beginning of the end, the first step in the road to nowhere.
Khaderbhai
10 Jan 2017, 09:33 PM
The bears are all praying for this once-in-a-lifetime opportunity that will simultaneously...

1. Make Australian house prices crash
2. Allow them to get their money out of the bank
3. Let them keep their jobs so they can buy the crashed property

I blame Steve Keen and Macrobusiness for selling them a compete fantasy. The reality is in 20 years they'll still be in the same position, renting, scared to buy a home because of the 'imminent 40% crash', and with savings that have gone backwards massively against inflation and house prices. And they'll blame the bulls for the mess they're in, even though it was the bulls who warned them what would happen. Silly bears.
Yes, definitely Steve Keen is to blame for every person who ever thought property wasn't perfection.

We all know your views Shadow, ah Pete, I mean khaderbhai………no wait Trollie?

Anyway we are all aware of YOUR opinion of Keen and the incessant need to air your quite PERSONAL grievances with him on this forum. It's clear you are someone in economic circles who believes this type of anonymous sniping makes you superior.

Edited by Chris, 10 Jan 2017, 09:41 PM.
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