The last two financial years will long be up there with the worst, as far as uncertainty is concerned.
But despite all the uncertainty many investors, particularly those in superannuation, will see returns in excess of 15%. This is obviously a great result, considering the global pandemic and associated recession.
So what’s the outlook for financial year 2021-2022?
The Reserve Bank announced yesterday that official interest rates will remain on hold until at least 2024. However, it did make changes to some of its tools, including a slight reduction in some of its stimulus measures.
What this means for you, is that the cash rate and your variable interest rate will remain low, but fixed rates are on the rise as the cost of borrowing for the banks starts to increase.
Cash and bank deposit returns are likely to remain poor, as the RBA is expected to keep the cash rate at 0.1% for the foreseeable future.
Strong economic and earnings growth, along with low interest rates will continue to help the share market too.
And the boom in property prices should continue for the short term, expected to rise 20% this year, but should slow to around 5% next year as poor affordability, rising fixed rates, tighter lending standards, and reduced population growth start to impact.
The Australian dollar is likely to trend down as the US vaccine rollout will strengthen their economy, while ours will likely struggle until our population is fully vaccinated and we can therefore open up our economy completely once again.
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