The article was discussing the lowering interest rate environment and the alternatives people have to holding cash.  I was asked to comment on moving clients from cash into shares.  In 2012, there has been a pretty strong bias towards stocks that pay high dividends.  Companies such as Telstra and the banks who all pay high dividends, have seen their share prices rise sharply throughout 2012.

As long as people have a long investment time frame and are not in a position where they are forced to sell shares to meet other obligations, buying into quality blue chip companies that pay dividends over 10% per year grossed up is an attractive proposition opposed to holding cash at term deposit rates of approximately 4.5% p.a. currently.  Of course, only a portion of funds should ever be invested in shares, a diversified portfolio should include an allocation to cash, bond, property and shares.

Below was my quote for the article:

“PSK Financial Services partner James Gerrard warns that anyone entering the market should focus on the dividends being paid rather than the value of the stock.

“Where I have moved clients from term deposits and cash into the stock market it has been to obtain the higher yields, and it is on the condition that the share prices will go up and down,” he says.”

To read the full article, click on the link below:

Time to cash in on shares – The Australian Financial Review (Bina Brown – 23 November 2012)