We invited Nick Webb of RSM Financial Services Australia to share his thoughts on the impact of money printing on Investors
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How does QE, or money printing, and QT affects decision making about what assets to purchase?
There is so much money out there in the system. The official figure out of the US was in 2021, they printed essentially 40% of their total currency in circulation, so it becomes a big problem. That’s why we see so many of these inflationary spikes at the moment because people are spending like drunken sailors as there’s so much money that’s being printed.
Ultimately, it very much goes and devalues currency. It’s about looking at different opportunities across the globe as well. So looking in some countries where they haven’t printed to the same extent as places such as the US.
In periods like we’re in at the moment, domestically, and in Australia, even though it is a shallow market, we’ve got a huge benefit from very high dividend or income-paying stocks. We’ve got the benefit of franking credits as well, which makes it nicer on the top line from a return perspective.
When we’re looking at QE and tightening on the other side of the coin as well, it’s very much just taking a broader macro view as to what does that flow through to how is that really going to impact upon listed investment markets and other investments that clients will have in their portfolios, such as direct property or any unlisted investments that they have as well.
But typically, jumping into that commodity space, for a lot of people, they like that because there’s a finite supply of things like gold and silver; whereas, when you turn the money printing press on, there’s an in infinite supply of currency. It’’s just weighing up the current state of affairs and where to from there.
The information contained in the video above is intended to be general in nature and is not personal financial product advice
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