So the RBA cuts it's official rate by 1% and the banks only pass on 0.8%. Anyone else not give a rats ass that they arnt making the normal amount of profit they would make because borrowing money for them is more expensive now?
I want me other 20 basis points!
RBA Interest Rate cut
Moderator: Officers
RBA Interest Rate cut
"Looks like Maz was right.. - Thoraf"
"Looks like Maz was right.. There can add me to your sig! - Kofn"
"*sigh* 'the maz is right' strikes again! - Zurt"
"Have you noticed that nobody who thinks 'Maz is right' still plays? - Melo"
"Now Melo doesn't play! Cursed! - Fny"
RBA raises its rate - the Banks ALWAYS always always pass along the full increase.
Cuts now thats a different matter we wont make as much money any more /cry cry /pat on poor blue chip, never make a real loss private business' head. Lets hang onto .2% as a way to make more profit by claiming the cost of us borrowing money has gone up!
Cuts now thats a different matter we wont make as much money any more /cry cry /pat on poor blue chip, never make a real loss private business' head. Lets hang onto .2% as a way to make more profit by claiming the cost of us borrowing money has gone up!
"Looks like Maz was right.. - Thoraf"
"Looks like Maz was right.. There can add me to your sig! - Kofn"
"*sigh* 'the maz is right' strikes again! - Zurt"
"Have you noticed that nobody who thinks 'Maz is right' still plays? - Melo"
"Now Melo doesn't play! Cursed! - Fny"
Heheh have you even looked at the stock market today?
"Looks like Maz was right.. - Thoraf"
"Looks like Maz was right.. There can add me to your sig! - Kofn"
"*sigh* 'the maz is right' strikes again! - Zurt"
"Have you noticed that nobody who thinks 'Maz is right' still plays? - Melo"
"Now Melo doesn't play! Cursed! - Fny"
Whilst I appreciate everyone's desire for a lower interest rate, the reasoning here is quite simple and sound.
The cost of money for banks is not set simply by the Reserve Bank. The reserve has a significant impact on the supply of money which affects one side of the supply/demand equation. As such, when they offer bills at a certain rate (the official cash rate) it has a significant effect on interest rates across the board.
However, the drop was significantly more than expected (which means those higher return term deposits and the like are now significantly "out of the money", for example), and there are other funding sources that have not lowered their rates.
Banks like lower rates. Why? They can charge a higher margin and still have sufficient demand for lending at the given price. So lowering rates is a good business decision so long as the margin represents an adequate return.
Although the banks are posting billions of dollars in profits, you need to understand the hundreds of billions of dollars in transactions that are needed to generate those profits - as a return on investment, the banks do OK but not particularly better than many other corporations.
The underlying issue in the US (and globally, but mainly in the US) has nothing to do with sub-prime mortgages or the like. The problem is a lack of liquidity which is a double edged sword. Because of a lack of funds, the banks can't lend as much (and in some cases have non-viable capital ratios - hence they go under) and because they're not lending as much they're not getting deposits which, yes, means they have less to lend (this is credit creation process - a reasonably basic but extremely significant economic priniciple).
So when the RBA cuts that rate and the banks pass on most of it, it's a good sign. Our banks are rated extremely highly for their sound financial standing, structure and operations. You want the bank making that 0.2% and staying viable a whole lot more than that $16.67 a month per $100k of loan because if the banks start to go under you probably won't have a job or a loan. The collapse of the banking system in any economy is catastrophic. Don't worry about stock market crashes - they recover. A banking system crash is essenentially the death of an economy and there's really no returning to anything like the previous existence inside a generation. This is why the US bill was so important - it had nothing to do with bailing out corporations and everything to do with ensuring the continued survivial of the US economy.
In Australia, we're not immune despite being well insulated - these are reasonable commerical decisions and given the lack of liquidity (lack of supply = higher price) it's about right in representing the change in the cost of funding for local banks.
You can expect any further cuts to likely be passed on in full as such cuts will be factored into medium and long term cash rates and because the liquidity situation should be under control throughout the G20 which will basically stablise things globally (albeit it with capital markets at significantly reduced levels).
Also, since someone is likely to relate it, the lower value of the AUD is part of the self-cushioning of our economy against external factors combined with a lower demand for AUD caused by a reduction in interest rates and a declining stock market.
The cost of money for banks is not set simply by the Reserve Bank. The reserve has a significant impact on the supply of money which affects one side of the supply/demand equation. As such, when they offer bills at a certain rate (the official cash rate) it has a significant effect on interest rates across the board.
However, the drop was significantly more than expected (which means those higher return term deposits and the like are now significantly "out of the money", for example), and there are other funding sources that have not lowered their rates.
Banks like lower rates. Why? They can charge a higher margin and still have sufficient demand for lending at the given price. So lowering rates is a good business decision so long as the margin represents an adequate return.
Although the banks are posting billions of dollars in profits, you need to understand the hundreds of billions of dollars in transactions that are needed to generate those profits - as a return on investment, the banks do OK but not particularly better than many other corporations.
The underlying issue in the US (and globally, but mainly in the US) has nothing to do with sub-prime mortgages or the like. The problem is a lack of liquidity which is a double edged sword. Because of a lack of funds, the banks can't lend as much (and in some cases have non-viable capital ratios - hence they go under) and because they're not lending as much they're not getting deposits which, yes, means they have less to lend (this is credit creation process - a reasonably basic but extremely significant economic priniciple).
So when the RBA cuts that rate and the banks pass on most of it, it's a good sign. Our banks are rated extremely highly for their sound financial standing, structure and operations. You want the bank making that 0.2% and staying viable a whole lot more than that $16.67 a month per $100k of loan because if the banks start to go under you probably won't have a job or a loan. The collapse of the banking system in any economy is catastrophic. Don't worry about stock market crashes - they recover. A banking system crash is essenentially the death of an economy and there's really no returning to anything like the previous existence inside a generation. This is why the US bill was so important - it had nothing to do with bailing out corporations and everything to do with ensuring the continued survivial of the US economy.
In Australia, we're not immune despite being well insulated - these are reasonable commerical decisions and given the lack of liquidity (lack of supply = higher price) it's about right in representing the change in the cost of funding for local banks.
You can expect any further cuts to likely be passed on in full as such cuts will be factored into medium and long term cash rates and because the liquidity situation should be under control throughout the G20 which will basically stablise things globally (albeit it with capital markets at significantly reduced levels).
Also, since someone is likely to relate it, the lower value of the AUD is part of the self-cushioning of our economy against external factors combined with a lower demand for AUD caused by a reduction in interest rates and a declining stock market.
"But if the while I think on thee, dear friend,
All losses are restored and sorrows end."
Here, here
No matter what "excuses" the banks have, there is absolutely no valid reason in my eyes for them instantly increasing their interest rates by 100% of whatever the RBA goes up by, but only decreasing their rates by 75% of what the RBA drops by.
They cannot justify that as far as I'm concerned, either make it 100% of both or 75% of both, be honest, fair and congruent. Our banks are none of those things.
No matter what "excuses" the banks have, there is absolutely no valid reason in my eyes for them instantly increasing their interest rates by 100% of whatever the RBA goes up by, but only decreasing their rates by 75% of what the RBA drops by.
They cannot justify that as far as I'm concerned, either make it 100% of both or 75% of both, be honest, fair and congruent. Our banks are none of those things.
There is no right or wrong, there is only a path...
http://www.bankers.asn.au/Default.aspx?ArticleID=593
Sure I dont want the banking industry to collapse I just think its still extreemely ripe saying they have to turn the profit that they do quite redily buffering their own variable rates by arround 45 base points now different from the variable cash rate. They are just padding their margin more.
ahuhProfit Cycles
Bank profits tend to follow the economic cycle.
With a competitive marketplace resulting in a squeeze on bank interest margins, it would be reasonable to assume bank profits should have declined.
With the strength of the Australian economy however, there has been an increase in the volume of lending and this has lessened the impact of the cut in margins.
Profitability has been reviewed regularly by RBA annual reports on bank fees. Although banks have grown significantly in size, their income has grown much more slowly.
In its latest report on bank fees in May 2004, the RBA found bank fee income continues to grow ‘roughly in line with growth in domestic balance sheet assets’. The RBA also found ’the reduction in net interest margins has more than offset the increase in fee income’. That means home loan customers, in particular, are winning from the reduction in the banks’ profit margins on loans.
Yeh I still say they should have passed on the whole lot considering they already passed onto us their own rate increase on home loans because of financial "hardship" earlier in the year. They are still posting profits - what hardship really are they talking about precicely?Do banks put shareholders first?
Banks will only achieve long term success by paying close attention to balancing shareholder rights and customer needs.
By law, company directors are required to give primary concern to the interests of the company (shareholders) above all others, including their own personal interest.
How do bank customers benefit?
Customers get a safe, stable, reliable and highly competitive banking system, providing a wide range of products and services.
Many customers are also shareholders, so they benefit from the growth and development of Australia’s banking sector.
Sure I dont want the banking industry to collapse I just think its still extreemely ripe saying they have to turn the profit that they do quite redily buffering their own variable rates by arround 45 base points now different from the variable cash rate. They are just padding their margin more.
"Looks like Maz was right.. - Thoraf"
"Looks like Maz was right.. There can add me to your sig! - Kofn"
"*sigh* 'the maz is right' strikes again! - Zurt"
"Have you noticed that nobody who thinks 'Maz is right' still plays? - Melo"
"Now Melo doesn't play! Cursed! - Fny"
Loved your reply thanks Creac !!!
I am studying Macroeconomics right now and this has been extremely interesting watching things progresss and learning about it at the same time....thanks for the post !!
I am studying Macroeconomics right now and this has been extremely interesting watching things progresss and learning about it at the same time....thanks for the post !!
Aedryen -The Everdying Druid
Civin - The Purple Bard
Nevyen - No-one...
Retired: Fladora, Healior
Civin - The Purple Bard
Nevyen - No-one...
Retired: Fladora, Healior
With all due respect, Nys, you can think whatever you want, but you appear to not understand what's going on. If my post wasn't helpful or clear, then I apologise. I understand that most people don't study economics, so I'm by no means having a dig at anyone who doesn't understand what's going on at the moment.
Historically, the banks here have given the full value of domestic changes in official rates (be that up or down). At the moment, however, they are under significant strain in terms of their funding.
If the RBA hadn't reduced rates then it's quite possible that they local institutions would have increased their rates by 10 or 20 points to cover the increased costs from global funding.
Since the RBA did drop rates, they were able to pass most of that along and cover their increased costs. This is an unusual time and situation. If we weren't facing these global liquidity issues then there's no reason they wouldn't pass on the full extent of a cut.
This is really similar to the situation under the Hawke-Keating government with the "recession we had to have" and people screaming at the banks for high interest rates when, all along, the government through the RBA was controlling the underyling cost of money in the economy. The banks love low interest rates because they can afford to have larger margins. If the overall rate is 5% people really don't care too much about an extra 0.25% they might be paying (or even 0.5%) just as for other "cheap" goods and services one might buy. But when the price increases margins need to be cut in order to maintain volumes (it's basic supply and demand).
Still, people take it out on the banks and essentially claim that they have no right to make money. Well, if you don't want banks to make money, don't use them. Don't borrow, don't have a credit card, don't transfer money, etc etc (oh, and make sure your superannuation fund doesn't invest in banks or use their services to your benefit).
We have substantial levels of regulation in Australia (good levels, for mine) to ensure that the banks play fair in balancing between providing for customers and maintaining a sound financial position and reasonable returns to investors (shareholders and depositors alike, really).
As I said already, once the short and medium term deposit rates have a chance to move down (bearing in mind that rates had been increasing consistently for years and so deposit rates had predicted this trend) and once there's a little more stability in global liquidity systems then you would expect the banks to follow offical cash drops in full (and perhaps even drop ahead of that, but probably not for 18-24 months).
Ultimately, money is like anything else - its price is determined by supply and demand - official cash rates simply alter the supply side. So if the market thinks the price is too high, then it will stop borrowing and that will force the price down due to lower demand. At the moment, however, people are still borrowing (and, for that matter, people are still racing to invest in deposits at rates like 7.25% being offered by BankWest at the moment, for example). Higher returns to depositors only come from higher returns to banks from borrowers.
Historically, the banks here have given the full value of domestic changes in official rates (be that up or down). At the moment, however, they are under significant strain in terms of their funding.
If the RBA hadn't reduced rates then it's quite possible that they local institutions would have increased their rates by 10 or 20 points to cover the increased costs from global funding.
Since the RBA did drop rates, they were able to pass most of that along and cover their increased costs. This is an unusual time and situation. If we weren't facing these global liquidity issues then there's no reason they wouldn't pass on the full extent of a cut.
This is really similar to the situation under the Hawke-Keating government with the "recession we had to have" and people screaming at the banks for high interest rates when, all along, the government through the RBA was controlling the underyling cost of money in the economy. The banks love low interest rates because they can afford to have larger margins. If the overall rate is 5% people really don't care too much about an extra 0.25% they might be paying (or even 0.5%) just as for other "cheap" goods and services one might buy. But when the price increases margins need to be cut in order to maintain volumes (it's basic supply and demand).
Still, people take it out on the banks and essentially claim that they have no right to make money. Well, if you don't want banks to make money, don't use them. Don't borrow, don't have a credit card, don't transfer money, etc etc (oh, and make sure your superannuation fund doesn't invest in banks or use their services to your benefit).
We have substantial levels of regulation in Australia (good levels, for mine) to ensure that the banks play fair in balancing between providing for customers and maintaining a sound financial position and reasonable returns to investors (shareholders and depositors alike, really).
As I said already, once the short and medium term deposit rates have a chance to move down (bearing in mind that rates had been increasing consistently for years and so deposit rates had predicted this trend) and once there's a little more stability in global liquidity systems then you would expect the banks to follow offical cash drops in full (and perhaps even drop ahead of that, but probably not for 18-24 months).
Ultimately, money is like anything else - its price is determined by supply and demand - official cash rates simply alter the supply side. So if the market thinks the price is too high, then it will stop borrowing and that will force the price down due to lower demand. At the moment, however, people are still borrowing (and, for that matter, people are still racing to invest in deposits at rates like 7.25% being offered by BankWest at the moment, for example). Higher returns to depositors only come from higher returns to banks from borrowers.
"But if the while I think on thee, dear friend,
All losses are restored and sorrows end."
I think part of the reason people are annoyed is the fact the banks all raised their rates when the RBA didn't and then they ummed and ahhed about lowering them even to the point they did.
I understand what you are saying Creac but it's just a bit hard to understand (or what ever) when the banks are all saying they are making record profits.
Personally I don't want to see the same thing happen as what did with Keating and Hawke, so I do hope that what they are doing is going to minimise that from happening again.
I understand what you are saying Creac but it's just a bit hard to understand (or what ever) when the banks are all saying they are making record profits.
Personally I don't want to see the same thing happen as what did with Keating and Hawke, so I do hope that what they are doing is going to minimise that from happening again.
Well rates are certainly on their way down, so you won't see the super high rates we saw under Hawke-Keating out of this cycle.
As for record profits - that's true in terms of the straight up dollar amounts, but as a return on investment it's good without being record breaking.
The economy is going to slow and rates are going to come down as part of the current direction. Eventually, that will cycle around again. Obviously the extent of this problem wasn't predicted (you'll see some people claiming to have predicted it, but you'll also find all they ever said was "the bubble will burst" which is about as prophetic as saying "the sun will rise"
and the RBA's last rate rise was a reflection that they didn't expect this (and part of why we've seen such a big cut just now).
The primary concern here is to ensure liquidity and a functioning banking system. Stocks will fall or even crash, but that doesn't break an economy in the way that a failed banking system will.
For now, enjoy interest rates on the way down with relatively low inflation and at least for the moment reasonably good employment rates (unemployment will likely rise with slower economic growth or even recession) but Australia is in a good position in relation to much of the global community.
To be honest, the area to pressure interest rates is really on unsecured lending - ie credit cards. There's far more room to move there (although higher rates are appropriate given the unsecured nature of the loans). If you look around, I reckon you'll find some really good deals on credit cards coming up. You may find it harder to get them, but you should be able to transfer to lower rates/special deal or threaten to do so to get a special offer from your current provider. If you have any substantial CC debt then that could save you heaps (the secret, of course, is to maintain current payment levels in order to burn the debt levels down faster to really maximise the savings).
Similarly, on home loans, if you're not happy with the rates from your bank, look for other lenders (particularly with the federal government's decision to buy some prime Non-Bank mortgages to improve liquidity and reduce funding costs for the Non-Bank lenders (credit unions, etc) to promote competition. As always, check fees to ensure that you will really save money and always speak with your current lender and point out the offers from others and ask them to match it to keep your business.
As for record profits - that's true in terms of the straight up dollar amounts, but as a return on investment it's good without being record breaking.
The economy is going to slow and rates are going to come down as part of the current direction. Eventually, that will cycle around again. Obviously the extent of this problem wasn't predicted (you'll see some people claiming to have predicted it, but you'll also find all they ever said was "the bubble will burst" which is about as prophetic as saying "the sun will rise"
and the RBA's last rate rise was a reflection that they didn't expect this (and part of why we've seen such a big cut just now).The primary concern here is to ensure liquidity and a functioning banking system. Stocks will fall or even crash, but that doesn't break an economy in the way that a failed banking system will.
For now, enjoy interest rates on the way down with relatively low inflation and at least for the moment reasonably good employment rates (unemployment will likely rise with slower economic growth or even recession) but Australia is in a good position in relation to much of the global community.
To be honest, the area to pressure interest rates is really on unsecured lending - ie credit cards. There's far more room to move there (although higher rates are appropriate given the unsecured nature of the loans). If you look around, I reckon you'll find some really good deals on credit cards coming up. You may find it harder to get them, but you should be able to transfer to lower rates/special deal or threaten to do so to get a special offer from your current provider. If you have any substantial CC debt then that could save you heaps (the secret, of course, is to maintain current payment levels in order to burn the debt levels down faster to really maximise the savings).
Similarly, on home loans, if you're not happy with the rates from your bank, look for other lenders (particularly with the federal government's decision to buy some prime Non-Bank mortgages to improve liquidity and reduce funding costs for the Non-Bank lenders (credit unions, etc) to promote competition. As always, check fees to ensure that you will really save money and always speak with your current lender and point out the offers from others and ask them to match it to keep your business.
"But if the while I think on thee, dear friend,
All losses are restored and sorrows end."
I am just looking forward to the now 1.05% cut from when I picked up my investment property.
My home loan is still fixed at 6.5% from when I refinanced. Will drop nicely into the lowering rates when its over next year.
I am expecting another housing boom in australia on the back of this latest international finance fun and games also which can always be good.
My home loan is still fixed at 6.5% from when I refinanced. Will drop nicely into the lowering rates when its over next year.
I am expecting another housing boom in australia on the back of this latest international finance fun and games also which can always be good.
"Looks like Maz was right.. - Thoraf"
"Looks like Maz was right.. There can add me to your sig! - Kofn"
"*sigh* 'the maz is right' strikes again! - Zurt"
"Have you noticed that nobody who thinks 'Maz is right' still plays? - Melo"
"Now Melo doesn't play! Cursed! - Fny"
There certainly needs to be more housing - in Sydney a few weeks ago there was a quote that there was a total of just over 700 properties listed for rent in a city of nearly 4.5 million.
The mean price of a new house in Sydney is somewhere around $500k.
There will be some negatives in terms of unemployment and tighter credit (it will be harder to get loans - you probably won't see too many 100% mortgages with 80% being more the norm), but typically reduced rates will provide a stimulus to housing and of course that's part of the plan.
Once there's some stability, you can expect confidence to grow and that is a fundamental requirement to growth.
The mean price of a new house in Sydney is somewhere around $500k.
There will be some negatives in terms of unemployment and tighter credit (it will be harder to get loans - you probably won't see too many 100% mortgages with 80% being more the norm), but typically reduced rates will provide a stimulus to housing and of course that's part of the plan.
Once there's some stability, you can expect confidence to grow and that is a fundamental requirement to growth.
"But if the while I think on thee, dear friend,
All losses are restored and sorrows end."
I picked up my unit about 13km south south west of brisbane for 290K. 3x2.5 lockup single garrage.
"Looks like Maz was right.. - Thoraf"
"Looks like Maz was right.. There can add me to your sig! - Kofn"
"*sigh* 'the maz is right' strikes again! - Zurt"
"Have you noticed that nobody who thinks 'Maz is right' still plays? - Melo"
"Now Melo doesn't play! Cursed! - Fny"
Just mean rental prices will go up. Yay for meCreac wrote:There certainly needs to be more housing - in Sydney a few weeks ago there was a quote that there was a total of just over 700 properties listed for rent in a city of nearly 4.5 million.
The mean price of a new house in Sydney is somewhere around $500k.
There will be some negatives in terms of unemployment and tighter credit (it will be harder to get loans - you probably won't see too many 100% mortgages with 80% being more the norm), but typically reduced rates will provide a stimulus to housing and of course that's part of the plan.
Once there's some stability, you can expect confidence to grow and that is a fundamental requirement to growth.
When are you expecting this boom Maz. With the reading I am doing at the moment I can't see any growth for a while. Would be interested in checking out a few of your sources.Jarinu wrote:I am just looking forward to the now 1.05% cut from when I picked up my investment property.
My home loan is still fixed at 6.5% from when I refinanced. Will drop nicely into the lowering rates when its over next year.
I am expecting another housing boom in australia on the back of this latest international finance fun and games also which can always be good.
I must say I also don't agree that you will loose money investing in property at this point I just don't see how it will boom anytime soon.
I am currently deciding whether to invest further in property or look at the Share Market at the moment losses that have occurred. Perfect time to get in I would say over the next 6 months.
Is this the only unit you have at the moment mate ??Jarinu wrote:I picked up my unit about 13km south south west of brisbane for 290K. 3x2.5 lockup single garrage.
You were originaly talking about one up near Townsville/Cairns weren't you??
Kysumu
I'm not really too concerned about interest rates and stuff like that and I can appreciate that the cost of housing will probably drop in the short term but I expect it will get back to what it is now within 2 years, if that.
As for housing appreciation, I bought my inner city trendy suburb free standing house for $11,500. I will not sell it for under $1.5 million. I expect to make a tidy profit on it. Then, I hope to buy a nice place in the country with a bit of land attached for around $500,000. Should leave me enough money to very cautiously invest the money and live off the interest without touching the capital.
PS. How much per annum interest DO you earn on $1 million anyway?
As for housing appreciation, I bought my inner city trendy suburb free standing house for $11,500. I will not sell it for under $1.5 million. I expect to make a tidy profit on it. Then, I hope to buy a nice place in the country with a bit of land attached for around $500,000. Should leave me enough money to very cautiously invest the money and live off the interest without touching the capital.
PS. How much per annum interest DO you earn on $1 million anyway?
Miruwin
Eagles may soar, but weasels don't get sucked into jet engines.
Eagles may soar, but weasels don't get sucked into jet engines.
When you have that amount of cash miruwin generally you can broker yourself a better deal than you could get on a fixed term deposit. Banks tend to be a bit more accomodating when you have lots of money you just want to park.
"Looks like Maz was right.. - Thoraf"
"Looks like Maz was right.. There can add me to your sig! - Kofn"
"*sigh* 'the maz is right' strikes again! - Zurt"
"Have you noticed that nobody who thinks 'Maz is right' still plays? - Melo"
"Now Melo doesn't play! Cursed! - Fny"
Your best bet is to talk with your bank and a financial advisor. Preferrably a couple of them to see what they say.
There are a variety of low risk investments that will return a little better than cash rates and many of them can be tax effective, too.
Insurance bonds, for example, but there are many products and you need someone qualified to run through the numbers with you.
At the moment, I'd expect you could get 8% with rock solid safety giving you $80,000 p.a. pre-tax. If you wanted to protect your investment against depreciation due to inflation, you'd have to reinvest between 3-4% at the moment and then it becomes a little more tricky dealing with tax and still having a useful income afterwards. It is important to protect your capital otherwise that $80k ends up being effectively $40k 10 or 20 years down the track (depending on inflation) which may be fine, but you need to be aware.
That's why it's best to speak with someone who can look at all the options and work out a plan that meets your needs in terms of capital protection (both in terms of inflation protection and investment risk) and post-tax income.
It's probably worth speaking to a couple of people now to get an idea of what you would be looking at so you're better informed when the time does come.
There are a variety of low risk investments that will return a little better than cash rates and many of them can be tax effective, too.
Insurance bonds, for example, but there are many products and you need someone qualified to run through the numbers with you.
At the moment, I'd expect you could get 8% with rock solid safety giving you $80,000 p.a. pre-tax. If you wanted to protect your investment against depreciation due to inflation, you'd have to reinvest between 3-4% at the moment and then it becomes a little more tricky dealing with tax and still having a useful income afterwards. It is important to protect your capital otherwise that $80k ends up being effectively $40k 10 or 20 years down the track (depending on inflation) which may be fine, but you need to be aware.
That's why it's best to speak with someone who can look at all the options and work out a plan that meets your needs in terms of capital protection (both in terms of inflation protection and investment risk) and post-tax income.
It's probably worth speaking to a couple of people now to get an idea of what you would be looking at so you're better informed when the time does come.
"But if the while I think on thee, dear friend,
All losses are restored and sorrows end."
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