The cash rate is a useful starting point when assessing the relative merit of assets as its allows you to assess whether the additional return is adequate.
With the cycle of low rates having turned dramatically and as the cash rate gets closer to the top, it’s time for self-managed super fund investors to review their asset allocations regarding the risk-free return now available.
For years the cash rate or the “risk-free” return was close to zero, forcing investors to seek yields from investments with varying risk/return metrics.
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Ben Smythe is a partner and principal adviser of Minchin Moore Private Wealth.
