reached a record $2 trillion<\/a>, or 10 per cent of total household wealth in the March quarter, as Aussies cautiously stockpiled funds amid economic uncertainty.<\/p>\n\u201cCash, while often considered a defensive investment, does not offer effective protection against elevated inflation, which we are seeing in Australia today,\u201d said Mr Parisi, who argued that commercial property \u2014 a focus of Trilogy Funds \u2014 was an asset class that could provide stable income and long-term capital growth.<\/p>\n
\u201cInvestors may need to consider reallocating some of their cash investments to other income investments to outpace inflation, which the RBA expects will remain relatively high over the remainder of the year given the war in the Middle East.\u201d <\/p>\n
But Glen James, personal finance educator and host of the money money money podcast, offered a different view. <\/p>\n
Cash might net a real return below zero in \u201csome economic cycles\u201d but \u201cthat\u2019s okay, as long as we understand what we\u2019re dealing with\u201d, Mr James told news.com.au.<\/p>\n
\u201cAs a general rule in personal finance, we need cash at hand for emergencies, and we need cash for short-term goals like holidays or other savings targets over the years,\u201d he said.<\/p>\n
\u201cI wouldn\u2019t invest in growth assets without at least a five-to-seven-year time horizon, so for that money, cash is exactly where it should be.\u201d<\/p>\n
Mr James said cash such as an emergency fund should not be invested in the sharemarket to chase a better return, because that would make it less liquid in case it was needed. <\/p>\n
\u201cThe whole purpose of an emergency fund is to be in cash and at call,\u201d he said.<\/p>\n
\u201cThe real effect of inflation on that money is simply the cost of doing business in this life. \u201cThink of it as the cost of an insurance policy for having your own cash ready when you need it.\u201d<\/p>\n
Aussies who were cash heavy and genuinely wouldn\u2019t need that money within the next four to five years, however, \u201creally need to make sure it\u2019s put to work\u201d.<\/p>\n
\u201cIn the moment you might not feel the impact of inflation, but the textbook is right that you\u2019re slowly losing buying power. <\/p>\n
\u201cThe key is always having some plan or strategy for your money. Investing in growth assets is a hedge against inflation.\u201d<\/p>\n
In response to questions, Australian Banking Association CEO Simon Birmingham said there were \u201cplenty of savings and term deposit products on the market offering higher rates than inflation\u201d. <\/p>\n
\u201cAlways check the terms and conditions on your account to make sure you are maximising your rate of return and also talk to your bank to see if they can offer a better rate,\u201d Mr Birmingham said.<\/p>\n
\u201cIt could pay to shop around, compare what\u2019s on offer and make sure your savings are working as hard as you are.<\/p>\n
\u201cIn the year to March 2026, Australian banks paid $128 billion in interest on deposits and banks will continue to support customers to make the most of their savings.\u201d<\/p>\n
Average interest rates for cash in June (source: RBA)<\/p>\n
Online savings accounts: 3.6 per cent<\/p>\n
Bonus savings accounts: 4.8per cent<\/p>\n
Banks\u2019 term deposits (all terms): 3.6 per cent<\/p>\n","protected":false},"excerpt":{"rendered":"Aussies are piling a record amount of cash into savings accounts and term deposits, only to make a…\n","protected":false},"author":2,"featured_media":802306,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[64,63,99],"class_list":["post-802305","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-au","tag-australia","tag-business"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/802305","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=802305"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/802305\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/802306"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=802305"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=802305"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=802305"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}