Are we investing too much in cash and property?
Australians have $2.3 trillion worth of personal investments, with 85% sitting in cash and property alone.
New research by Rice Warner reveals that the personal savings of Australians remain strong, despite recent global economic uncertainty.
According to the Personal Investments Market Projections Report released today, as of June 2016, Australians have a total personal investment pool of $2.3 trillion. This is larger than the value of Australia's superannuation assets, currently worth around $2.2 trillion.
So where is this money sitting? Almost half (44.3%) is currently sitting in cash and term deposits. This is followed closely by property, which holds 40.6% of Australia’s personal investment pie.
While cash, term deposits and property are the clear leads, equities also hold a large chunk of Australia’s personal investments (12.9%).
The graph below shows what assets Australians are investing in as of 30 June 2016, according to Rice Warner's research.
Rice Warner suggests that there are significant risks associated with the continued consolidation of investment into these traditional asset classes of cash, bank shares and property.
Variable mortgage rates are widely expected to rise over the coming years, which will, in turn, make it more difficult to repay mortgages. It could become risky to have so many eggs in the one property basket.
Rice Warner also warns that we could be placing too much confidence in bank shares. The below graph shows the performance of Australian household equities in comparison to the ASX200 Bank Index, showing a strong correlation between the two.
Source: Rice Warner
If you have all of your eggs in one investment basket, take a look at our guide to find out how you can make sure that your money is properly diversified.
