Cash or shares? The no-brainer income opportunity

Here’s the puzzle: Should you depend on shares or cash for income?

Your ‘at risk’ return from the ASX is represented by an average dividend yield of just over 4 per cent. Picture NCA Newswire/ Gaye Gerard

In the hunt for income over the last decade a generation of Australians have become heavily dependent on sharemarket dividends for income. Your “at risk” return from the ASX is represented by an average dividend yield of just over 4 per cent.

What’s more, we found out in the Covid crisis that it does not take much pressure for key players such as banks to cut dividends when it suits them.

Meanwhile, with a cash term deposit you can still get a 5 per cent rate – government guaranteed. It just might be the deal of the decade. The issue now for investors is how long will it last?

Inside the banking system, two-year deposits are already paying less than one-year deposits, so the writing is on the wall.

Who is the guest?

Liam Shorte of the Sonas Wealth group

Why him?

Shorte is a veteran financial planner with a particular interest in seeking income for older investors.

What are the topics?

• The last of the best of the term deposit deals?

• How to play thematic exchange-traded funds

• Shared equity home loans

• When investment bonds make sense

Question of the week

Regular listener Danella asks: “I have a good income in the top marginal tax bracket. We’ve been given some advice to consider investment bonds but I have read mixed reviews online.

Is it true investment bonds are a superior tax strategy than putting the same deposits

into an ETF directly? The critics claim the investment bonds have high fees and the company tax paid on selling shares within the fund make any benefits negligible.”

Questions always welcome to the podcast, via [e-mail]