Term deposits 'increasingly favoured over shares'

By Mozo ·

Australian savers and investors are increasingly turning away from the share market in favour of the stability of cash and term deposits, a commentator has observed.

Sydney Morning Herald business writer James Kirby argued that in the wake of sharp fluctuations and diminishing returns, "many investors simply don't believe in the share market any longer".

Indeed, he pointed to recent Datamonitors research which suggested that more people have been looking to compare term deposits and similar savings products, with one in three investors increasing their cash holding in the six months to Christmas.

Mr Kirby contrasted this with the ASX 200 share market, which, he noted, has been sitting at the 4700 mark "seemingly forever", delivering an average overall return for investors of about three per cent in 2010.

"But three per cent for risking your money on the share market does not hold a candle to getting six per cent for a 12-month holding in bank deposits with the continuing prospect of higher rates," he commented.

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