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List the key consequences, for a real estate investor, of inflation remaining inside the 2- 5 % range for the next ten years.
Answer Dialogue would be on the consequences to get investors of any continued length of relatively low inflation levels ( 2-4%) * The investors should
* Readjust expectations of investment returns
* Have greater concentrate on income development rather than growth * Understand a greater dependence on diversification of assets
* However , prevent the temptation of over-exposure to raised risk purchases * Come to terms with the difference between nominal and real prices of go back * Take full advantage of after taxes return
Rich Khoo is usually considering providing his value portfolio and reinvesting the proceeds in short-term set deposits to fully make use of current large interest rates. What comments do you make relating to his strategy?
Answer Richard Khoo's purchase needs and objectives are generally not known thus care should be given in providing advice. You must make the pursuing general responses in your response: * The total investment will be unbalanced with no equity or long-term fixed interest exposure, and no contact with property possibly directly or indirectly through listed property trusts * If collateral markets go up quickly he may be unable to use the upturn 5. His profile is currently creating high salary derived from immediate interest rates nevertheless this position may change in the event that interest rates fall season * Excessive income may be spent requiring lifestyle changes will need to interest rates and income eventually fall 5. His profile provides simply no protection from inflation as it contains no growth factor
Reasons for having debt investments
The rationale to get holding personal debt securities , could be stated as all or any of the following: * To supply superior expenditure returns to people obtainable coming from short term money market investments, given a portfolio allocation to low risk liquid assets included in the asset portion...