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Where I’m going to invest with falling interest rates

It seems Australia’s interest rates are headed even lower according to every economist and their dog.

It’s questionable whether the interest rate cuts by the Reserve Bank of Australia (RBA) would actually help. Households are already finding it tough with interest rates as low as they are and savers would be punished even further by more cuts. Very low interest rates can have odd effects on an economy.

One of the most likely effects of interest rate cuts would be for the Australian dollar to fall compared to other currencies. If that occurs then shares with US earnings and US assets would do well.

The problem is that many of the best US earners are trading very expensively such as CSL Limited (ASX: CSL) and Altium Limited (ASX: ALU).

That’s why investing in some of the some of the best listed asset businesses like Magellan Global Trust (ASX: MGG) and MFF Capital Investments Ltd (ASX: MFF) could be better options to consider. I think they’re the best investors because they have been producing excellent market-beating returns.

I think other good options to think about could be long-term income-producing assets that aren’t trading at high premiums to their underlying assets. Arena REIT No 1 (ASX: ARF) and Goodman Group (ASX: GMG) are two real estate investment trusts (REITs) that are trading expensively, but Vitalharvest Freehold Trust (ASX: VTH) and WAM Microcap Limited (ASX: WMI) are valued at around their underlying asset value and have compelling long-term futures.

Foolish takeaway

I’m keeping my eye out for opportunities and I think some of the ones I’ve named are very interesting opportunities. At the current prices I’m most attracted to the ideas of Vitalharvest and WAM Microcap, as the US market is actually valued quite high at the moment.

Another option for dividends could be this exciting income stock which is quickly growing its dividend payment to shareholders.

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Tristan Harrison owns shares of Altium, Magellan Flagship Fund Ltd, and MAGLOBTRST UNITS. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of Altium. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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