Cryptocurrency crashes, share-market volatility, property price falls, rising interest rates and skyrocketing inflation have turned many investment portfolios on their head, disrupting traditional ideas of safe-haven investments. New research shows that Aussies now rank high-interest savings accounts and superannuation as the top places to store their money for the best returns in the event of interest rates and inflation continuing to rise fast.
The finding was derived from a survey of an independent panel of 1000 Australians, commissioned by Send Money Australia, a global comparison website that helps Aussies living abroad, foreign nationals in Australia and small businesses find the most suitable and cost-effective money transfer service. They survey asked respondents to choose which out of 10 options presented to them would be the best place to hold their savings and get a return, if rates and inflation continued rising.
The full results, with age and State breakdowns, can be found here: https://sendmoneyaustralia.com/where-will-australians-keep-their-money-to-hedge-against-inflation-and-interest-rates/
The options presented were:
- Investment property
- Stock market/shares
- Superannuation
- High interest savings accounts offered by the banks
- Managed/index funds
- Cryptocurrencies
- Collectibles such as art and antiques
- Gold, silver and/or other precious metals
- Overseas investments rather than local investments
- A stronger overseas currency
High-interest savings account ranked first, with the largest proportion (25 per cent) of respondents choosing this option. The result points to the attraction of liquid financial assets and the probability of many Aussies holding off on investment decisions in the current environment. As interest rates rose this year, several banks have been attracting savers with high interest accounts. These include Macquarie Bank and Rabobank both of which offer a 4 per cent introductory rate, AMP at 3.6 per cent; Ubank at 3.35 per cent; ANZ at 3.25 per cent; and Commonwealth Bank at 3.1 per cent.
Superannuation ranked a close second, with 22 per cent of respondents choosing this option – likely attracted by the 15 per cent tax that this investment vehicle offers.
Traditionally perceived as one of the safest and highest-yielding investment in Australia, investment property was chosen by just 18 per cent of respondents as the best place to put their money. A stark fall from the 2020-21 property boom, this year has seen house prices fall at the fastest rate since the 2008 global financial crisis, due to increased interest rates. In particular, September saw property values fall by 1.8 per cent in Sydney, 1.7 per cent in Brisbane and 1.1 per cent in Melbourne.[1]
With more time to see an unstable property market recover, a higher proportion (31 per cent) of younger respondents (18-34 years) were confident that putting money into investment property would provide the best return on investment. This compares with just 19 per cent of 35-54-year-olds, and just 13 per cent of over-55s.
The Australian share market has experienced periods of extreme volatility in the last two years, with total returns falling by 7.5 per cent in FY2022, after rising 30.2 per cent in FY21.[2] As such, only 11 per cent of respondents believe shares are the best place to put their money.
International markets saw even bigger losses in FY22, including 10.8 per cent for the Dow Jones and 24 per cent for the Nasdaq[3], lowering confidence in international investments as a safe haven. Just 1.6 per cent of survey respondents chose international investment as the best place for their money.
A small minority of respondents (7 per cent) believe gold, silver and other precious metals provide the best return on investment. Historically, gold has seen fractional growth in value in comparison to property and shares, even though it has a long-term record of stability.
Cryptocurrency upheld its reputation for high-risk precariousness in 2022, losing approximately $1trn in value across May and June this year alone,[4] while this same period saw popular coins such as Luna fall from highs of $116 to $0, wiping out approximately $60 billion from the crypto market.[5] Australians are yet to forget this tumultuous period: just 3 per cent of the survey respondents believe cryptocurrencies are the best place to put their money in. Despite the popularity of cryptocurrencies among younger Australians,the lack of trust in this investment was consistently evident across all age groups, chosen by just 2 per cent of 18-34-year-olds, 4 per cent of 35-55-year-olds and zero per cent of over-55s.
The full results, with age and State breakdowns, can be found here: https://sendmoneyaustralia.com/where-will-australians-keep-their-money-to-hedge-against-inflation-and-interest-rates/
