Trend to cash expected to continue for years
A low appetite for investment risk would continue the trend towards cash with household savings across all banks expected to reach $694 billion by 2015, according to Datamonitor.
Datamonitor senior analyst Harry Senlitonga said it was expected that there would be more than $238 billion in new savings in the next five years. While the growth is modest compared to figures recorded over the last seven years, boosted in 2008 by the Australian Government’s retail deposit guarantee scheme, tax breaks planned to start in the 2012-13 financial year were expected to create a further boost for the retail deposits sector. The tax break will offer a 50 per cent tax discount on the first $1,000 of interest earned.
A Datamonitor survey in 2010 revealed that 35 per cent of investors increased their holdings of cash products such as high interest savings accounts by either adding existing accounts or opening up new ones. It noted that the trend was similar to 2009 when uncertain conditions and a global recession sent investors running to cash products.
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