What are good relatively safe investments?

Hi Paul – thanks for backing MM for another 2 years – glad you are finding it useful. While we cannot give personal advice on what you should do, the below is a good diagram of the capital structure and where you invest across that structure will have a different level of risk with shares/equity being the most high risk. The issue with investing in bonds at the moment is that they are generally fixed rate in nature which means bond prices will fall as interest rates go up and if you are not holding to maturity, you could lose money. My preference is securities like Hybrids which are second from the bottom (so still with some risk) given they are floating rate in nature. While they can move around on the market, staying in major bank hybrids can offer ~4% pa and they are liquid, however important to note, they are not cash and are less secure than term deposits.

One way to get broader exposure to a portfolio of Hybrids is though a Separately Managed Account (SMA) – without sounding like a salesman, Shaw does have a good Hybrid SMA that I have client funds in. You can make regular contributions into it and / or exit at any time. Drop me an email if you’d like some information on this.

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The capital structure – Source: Curve Securities

LAST UPDATED 15/01/2022 06:02

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chart

The capital structure – Source: Curve Securities

LAST UPDATED 15/01/2022 06:02