Y is for yield

I recently attended the inaugural breakfast put on by the new women’s networking and education initiative Inforum Group and one of the speakers was a private wealth manager from Macquarie Bank, Noel Yeates.

Now I’ve only been in business journalism for a short time but one thing I’ve learnt is that when you put the words private wealth and Macquarie Bank together, no doubt there should be some pearls of wisdom to come.

Despite announcing that “nothing will save Greece ... by the way if you want to buy olives they will only get cheaper,” Yeates says that he and his colleagues at Macquarie are “quite optimistic about 2012”.

“We don’t think the US will go into a recession,” he added.

While global macroeconomic issues have their place and are important, I must admit they’re not at the forefront of my mind when I’m thinking about how to manage my money and where to invest what little of it I have spare (after food, rent and gig tickets).

So Yeates’ big statement of the morning about mid- to long-term investments caught my ear. Whether it’s property or equity markets, the days of big capital gains are over for the moment. These days, Yeates says “it’s all about yield. Think about the return off that investment.”

In the ’90s and early ’00s, fans of TV renovation shows such as Backyard Blitz and Changing Rooms were convinced that property investment was all about “doing up” a home “with potential”. Buy cheap, add man hours, a lick of paint and an overpriced back deck extension and riches would be yours. Not now, says Yeates. “Renovating is a pretty tough way to make a buck. In future I’m saying don’t do it, it’s a really tough way to make money.”

In equities, Yeates says the time of “sit and forget is over ... investors need to be more dynamic.”

It’s advice that really resonated with me. I could never understand how property prices flew continually skyward. It just seems unsustainable. When I finally do break into the realm of Generation Y investor, I’ll definitely be looking for suburbs with high rental yields and stocks with healthy dividends. I will make my money work for me instead of blindly believing it will grow.

Do you agree? Write and tell me your views.

BRW

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