Ep 363: What are the best, safe, income-style investment options?

11 snips

Jul 1, 2025

Discover the safest income-generating investments perfect for risk-averse investors. Explore mortgage offset accounts as a top choice for steady returns. Learn about term deposits and fixed income ETFs, including government and corporate bonds, that offer reliable yields. Delve into hybrid securities for a mix of shares and bonds. The discussion also covers alternative investments but with a cautionary tale about their risks. This treasure trove of insights equips you to make informed, low-risk investment decisions.

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INSIGHT

Fixed Income Provides Stable Income

Fixed income investments provide a predictable income and portfolio stability unlike share market returns.
They reduce risk and are especially suitable for risk-averse or near-retirement investors.

INSIGHT

Bonds Offset Share Market Risk

Bonds tend to be negatively correlated with shares, helping to smooth portfolio returns.
Including defensive assets reduces portfolio risk during share market downturns.

ADVICE

Use Mortgage Offset Accounts First

Use mortgage offset accounts linked to home loans as your primary place to park cash.
They offer a guaranteed, risk-free return often better than other market options after tax.

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In this insightful episode, Stuart Wemyss explores the safest, most reliable income-generating investment options for risk-averse investors or those with short investment horizons. He begins by highlighting why fixed income investments deserve more attention, especially for portfolio stability, retirees, or anyone with a low risk tolerance.

Stuart presents a clear hierarchy of choices, starting with mortgage offset accounts as the most efficient, risk-free return option, often outperforming taxable investments on a net basis. He then explores term deposits, which are secure but less appealing given flat interest rate curves.

Next, he dives into fixed income ETFs, breaking them into categories: government bonds (like VGB), corporate bonds (such as CRED and HCRD), composite ETFs, and hybrid securities (like BHYB), which blend the features of shares and bonds for higher income. These options provide dependable yields (4–6.7% p.a.) with varying degrees of risk and liquidity.

Stuart also touches on alternative investments like unlisted mortgage and private credit funds but warns they often carry more risk, lack transparency, and may offer marginally higher returns not worth the trade-off.

If you're seeking steady, low-risk income from your investments, this episode is packed with practical, evidence-based strategies to help you make informed decisions.

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IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.