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Thread: With Reserve Bank of Australia Dropping interest rates should I be moving to stocks & shares?

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    Senior Member DealDude's Avatar
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    With Reserve Bank of Australia Dropping interest rates should I be moving to stocks & shares?

    Hi everyone I've been busy this week and not been posting a lot.

    I've been keeping up with the news and noticed that the Reserve Bank of Australia of dropped the interest rates by 0.25% again to 2.5% a historic low and that they've been down grading the forecast for the economy. I've not got a mortgage, not ready to go down that road just yet. still trying to get a deposit together.

    My saving strategy has been going from instant access savings account to another, staying long enough to get the introduction period interest rate and then moving to the new account.

    I've now got a little bit saved and I wonder if I lock the money in for a term deposit, checked the best rates thanks to Gav's tool very helpful and I noticed for a year I can get 4.2%, which isn't great as I'm getting 4.76% at the moment and I don't want to go for a longer term where I could get a high of 5% but that'd be putting my money away for 5 years and it's only .24% higher than what I'm getting for the next 3 months.

    I'd read on a finance forum that with interest rates going down people are wanting to invest more in stocks and shares. Especially shares that pay dividends or yield stocks.

    Will all that extra money in the share market push prices up? I noticed the ASX fell yesterday.

    Is it better to chase the dividends and hope the share prices will keep going up or to try and find shares that will go up in the short term and earn money by selling them on quickly?

    Very new to the idea, just don't feel I'm getting enough of a return from my cash savings and want more back.



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    Gav
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    Hi DealDude, I will admit that stocks and shares aren't something I know a lot about, when I was in a position to be saving, currently paying as much off a mortgage while interest rates are low and only have put enough away for emergencies.

    My share and stock purchasing in the past I'd put 1 month of savings into cash, then the following into mixed investment products from: Colonial First State: Superannuation, investment and retirement products - Investment products: FirstChoice Investments and Cash Management Trusts :: Colonial First State

    Other than that I purchased a few tech shares that I knew would do well in the near future and purchased a small amount of Fosters shares in December 2001 to get dividends when interest rates were down to 4.25% and the share market wasn't performing very well, I thought it was a pretty safe bet. I got some decent dividends and when the time for sale came around I got my full investment back and about 10%, plus the dividends over the years. Guess it all depends on share prices of the companies you're looking at.

    Hopefully other members may be able to help.


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