How self-funded retirees can offset the effect of interest rate cuts

Life became even more difficult for self-funded retirees when the Reserve Bank of Australia (RBA) cut the cash rate by 15 basis points to a record low of 0.10%. With inflation running at 1.6% the cut will effectively result in a negative yield for all forms of cash deposits, including term deposits. CanStar found the best Term Deposits ranged from 1.1% to 1.23% (Nov 2, 2020) creating a major income issues for hundreds of thousands of self-funded retirees.  This was confirmed by a recent survey of over 1,000 Australians aged 40+ that showed 65% of retirees said they were concerned about their income in retirement and almost half (49%) of retirees say they don’t feel confident about their financial security over the next five years. Add to this COVID-19’s effect on the share market that has seen blue chip dividends slashed and the search for high yielding investments becomes far more important.

A secure alternative is to invest in mortgage funds that offer the types of yields to generate a living income. Mortgage funds provide investors with first mortgage security and familiarity and everybody understands the principles of a mortgage and the multi-billion dollar sector is booming as the major banks withdraw from the commercial property sector. The Windsor Capital Core Fund (WCCF)* is offering a forecast yield of 7% based on investments in the commercial mortgage sector.Investor’ funds provide mortgages in the retail, office, industrial and large scale residential sectors with terms ranging from 6-24 months. The WCCF is a Pooled fund that minimises investor risk by spreading investor funds across a range of mortgages and offers returns paid monthly.

For further information on the WCCF go to www.windsorcapital.com.au/WCCFLP

*The WCCF is only available to sophisticated investors with a minimum investment of $50,000