Investors forced to look at equity markets

WITH inflation in Ireland forecast to be 4.5% in the current year, Irish savers are faced with a real problem — where to find attractive returns?

Following substantial interest rate cuts over recent years, cash now generates negative real returns, ie deposit rates are lower than the rate of inflation. Irish government bonds also look unattractive, currently yielding 4.1%.

Property has been strong but sharp price increases over recent years has reduced the yield on residential property to about 3% to 4%. Commercial property yields are higher, but also higher risk. Confounded by the lack of positive real returns available from other asset classes, investors are increasingly being forced to look again at equity markets, where high yielding stocks are much in vogue.