Putting your money in the bank is not a bad idea, cash in the bank is the safest place to put your hard-earned coins.
If you’re saving for a house then cash is still the best option. If you would suffer significant damage to your goals if a market decline were to happen at the wrong time then it’s obvious that you should stick to cash. There’s no point risking a large portion of the money for a fixed-date/short-term goal just because you’ve lost 0.5% of interest income.
But if you’re not saving for any particular goal then it could be risky move to stick to cash for the long-term. Who knows how long interest rates are going to stay this low? They could go even lower over the next 12 months. They could stay low for many years – just look at Japan!
This is why I think it’s important to know how much risk you’re willing to take on. Investments like Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD) may seem like safe options, but every business has operational risks. Investors may be valuing the cashflows too highly.
The same could be said of some real estate investment trusts (REITs) like Goodman Group (ASX: GMG) and Charter Hall Long WALE REIT (ASX: CLW), which are trading at much higher levels compared to their underlying assets.
You could consider bonds as a way to boost investment returns, such as the Vanguard Australian Fixed Interest Index ETF (ASX: VAF), but this has its own risks as well.
I believe it’s very important that investors need to stick to investing principles like investing at reasonable valuations, or else you could be swept up in the search for yield & growth, and overpay for assets.
It’s quite hard to find good value shares at the moment, which is why you have to search or be patient. Three of the investments I’m considering at the moment are: MFF Capital Investments Ltd (ASX: MFF), Vanguard FTSE Asia Ex Japan Shares Index ETF (ASX: VAE) and Vitalharvest Freehold Trust (ASX: VTH).
These leading ASX growth shares could also be very good options to invest in at the current prices.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited and Transurban Group. 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.