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Retirees struggle following rates hold

Retirees struggle following rates hold

03 April 2014 — 1 minute read

The Reserve Bank of Australia’s decision to keep interest rates on hold comes as a blow for “income-hungry” retirees, according to an investment research company.

Van Eyk Research said although it was expected that interest rates would be held steady for the ninth consecutive month, retirees continue to struggle with falling term deposits and volatile equity markets.

The last movement in rates was in August last year, when the RBA cut rates to 2.5 per cent. As a result, the yield on some term deposits will effectively be nil after inflation, Van Eyk stated.

Van Eyk deputy chief investment officer Rob da Silva said challenging market conditions coupled with the “surging” number of baby boomers in, or nearing, retirement has made it “imperative” for advisers to build portfolios that provide a stable income.

He said it is important to “look across all the opportunities in the bond markets, such as sovereign and corporate bonds, syndicated loans, emerging market debt and other credit opportunities”.

Retirees struggle following rates hold
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