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High-yield investments in a low-yield environment

February 12, 2020

February 12, 2020

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High-yield investments in a low-yield environment

In 1985, the average term deposit was close to a massive 12%, then fell to 7-9% ten years later. Since then it has only gone downhill, sliding to record lows of 1.15% in January this year. Many investors and retirees have relied on their term deposit yields for income in the past but are now forced to look for alternative investments that can offer better returns. 

In 1985, the average term deposit was close to a massive 12%, then fell to 7-9% ten years later. Since then it has only gone downhill, sliding to record lows of 1.15% in January this year.

Many investors and retirees have relied on their term deposit yields for income in the past but are now forced to look for alternative investments that can offer better returns. 

The big four bank dividends have also been cut. They were seen as the alternative, but the uncertainty has rattled dividend investors. 

Investors who are used to a higher-yield environment now often face the choice of whether or not to accept more risk to maintain a higher level of income. 

Many traditional investments are high-risk, high-yield, but not all investors are willing to take on that much risk. Fortunately, they don’t always have to.

Today’s low-yield environment has created a market for alternative high-yield investments. 

Cash is cheap, so it is a good time for companies to issue debt securities to grow their company. 

Many companies are choosing to take loans to increase shareholder value. ComputerShare (CPU:ASX), Bluescope Steel (BSL:ASX) and AGL Energy (AGL:ASX) are some of many large cap Australian companies that are increasing value via shareholder buybacks. Other companies are taking loans to accelerate business growth.

Reach Markes have access to high-yield investment opportunities. Our job is to provide investors with access to senior management behind the Companies and in depth information so you can complete your due diligence.

We have extensive data rooms on all of our investments, can organise meetings with senior management and often host online investor briefings with Company CEO’s/MD’s.  

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