Ask Paul: I'm 75 and my term deposits are going backwards


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Dear Paul,

I have kept an eye on you for years, Paul.

I am 75 years young, married, with no dependants, and we own our own house. I'm very disappointed with the returns on my term deposit. 

ask paul clitheroe im 75 and my term deposits are going backwards

I feel I should take the plunge into the stockmarket but I have no experience and need some Dutch courage.

I am a disaster with tech stuff (I don't even have a computer), but I have more than $750,000 to play with. 

Over to you, Paul ... stay safe. - Raymond

I hope, Raymond, that I have stood up to your "close eye" over the years. I guess I must have done as you are kind enough to ask me for my opinion, something I do value and appreciate.

The returns on term deposits really are tragic. We all understand why: money is cheap right now.

You have had years of experience following markets, nearly a decade more than I have.

So, like me, you will remember back to the early 1990s when a term deposit was paying 16%. The bad news for those, like me, with a mortgage back then was than mortgage interest rates were over 18%!

As a debt-free homeowner, with surplus investable cash of over $750,000, you certainly should consider taking on more risk for better returns. Here we could have a long discussion about risk. For me to give you more than information and an opinion, I'd need to know a lot more about your total assets, income needs, age pension (if any) and a host of other details. This is a large amount and I would strongly suggest you talk to a fee-charging, professional adviser.

But what I can say is that at 66 and debt free, my wife and I hold our investable assets in a broadly balanced portfolio of shares, infrastructure, fixed interest and, yes, we do hold some "rainy day" money in term deposits.

What I would like you to discuss with an adviser is something similar. If you are keen to "DIY", a way to get broad market exposure at very low cost is to chat to a couple of large, reputable and low-cost managers such as BlackRock or Vanguard.

Like most professional managers, they have broadly diversified funds. Another way to get broad sharemarket exposure at a low cost is through one of the large listed funds such as Argo or AFI.

I'd certainly prefer to see you with a great manager offering diversification to better protect your money.

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Paul Clitheroe AM is founder and editorial adviser of Money magazine. He is one of Australia's leading financial voices, responsible for bringing financial insight to Australians through personal finance books, the Money TV show, and this publication, which he established in 1999. Paul is the chair of the Australian Government Financial Literacy Board and is chairman of InvestSMART Financial Services. He is the chair of Financial Literacy at Macquarie University where he is also a Professor with the School of Business and Economics. Ask Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section. View our disclaimer.
Alex. L.
December 3, 2021 6.38pm

Hi Michelle,

I love that story of Rich nan/Poor nan,

I wish I had read something like that when I was a teenager.

I believe that we all have a right to enjoy at least the basics and necessities in life, without feeling guilty etc...

Kerri Moore
December 4, 2021 8.38am

We are in exactly the same position as your reader.I knew nothing about shares but spent some time learning about blue chip shares

We now have a portfolio of 13 shares bringing in an income of approximately $50,000 plus franking credits A very comfortable lifestyle for us Sometimes they go down ,but have learnt not to panic as they always go up. But for us it's ALL about the dividends our income Give it a go on paper first for a couple of months then contact a broker good luck cheers Kerri