This week I want to ask the questions – Why does the finance industry hate low rates and why has the media finance spokesman never predicted a drop in rates?
Of course it goes with our continuing story – you can’t believe the media if you want to get educated. We know the media are just there to entertain.
Flash Back
Take a look at the below video from Mark Bouris presenting at our 20th Annual Conference – He runs through what journalists do in their stories. He mentions that they, (and himself included) focus on one component. This doesn’t help readers because it takes your eye off the overall view! Each component has a different weight in the sum of what happens to interest rates. Tune in for his thoughts below.
As we stated last week the problem with low rates is that it exposes the high rates that superannuation funds charge.
For example, if we had high inflation and high rates of 10% return, they could hide their high fees of say up to 2%. You get 8%. But conversely now we have low inflation and low returns. If the fund manages to pull in 5% then their high take stands out as a huge greedy grab of the available funds from your money.
“The Emperor has no clothes” yes the greedy funds get exposed. The greedy superannuation managers get exposed when rates are down!
So what’s the good side of all of this?
We were alone in calling superannuation a fraud on the worker. Now more and more people are coming out and saying the same thing. Joe Hockey’s banking inquiry did little to bring competition to the banking sector. In fact it was a failure at this end. What it did do is officially recognise that our industry rates of management fees and charges on your super are obscene.
So the pressure is mounting. Change is coming. Will we see the end of super? While we move towards this end will we see a rapid scaling down of the fees that are being charged against your super contributions? I hope so!
The Result? Lower rates for longer!!
Happy Investing,
Kevin Young
Club Founder of Property Club