PHOTO: 123RF Rental investment yields have fallen, putting boomers in an awkward financial position.
OPINION: The recent tirade against the Baby Boomer generation, popularised by Millennial falcon Chloe Swarbrick, has focused attention on the wealth accumulation by this now reviled cohort.
Wealth, however, brings its own challenges.
Since the GFC wholesale interest rates have been at historically low levels. Those who have prudently saved for their golden years face meagre returns. A million-dollar deposit at a trading bank will pay a mere 2.5 per cent, and then only if you agree to lock your money in for several years. After tax that’s a return of 1.67 per cent, while inflation is running at 1.5 per cent. A net return of 0.17 per cent.
This means an actual return on a million dollar investment of $1700 a year. At call rates are effectively zero and well below inflation.
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