Dire returns for depositors

Homeowners breathing a sigh of relief as new low interest home loans flood the market following the Reserve Bank’s rate-cutting frenzy in the last quarter of 2008 may want to keep an eye on their term deposits.

The Australian has warned that with the base rate at a 57-year low, the returns on term deposits will not be as strong as they used to be, while further anticipated cuts will be likely to dampen performance even more.

As a result, the newspaper suggests that as 2009 gets into full swing, it may be an idea to cautiously switch some of those savings into a pensions scheme.

Because while the All Ordinaries has plunged hard in recent months and pensions have followed suit, history has shown that Australian shares are good at springing back into a healthy position in the wake of stock market wobbles and crashes.

However, average Aussies may wish to hold off a little longer before re-entering the market as the Age is predicting that shares will remain shaky until at least the second half of 2009.