Term deposits offered by Australia's banks have enjoyed staggering inflows that now total billions of dollars.
Investors, particularly retirees, have not only been attracted to the relatively high yields of around 6 per cent, but also to the safety and and capital protection of these products.
Longevity, however, has challenged the notion of whether "safe" assets such as cash will meet the income needs of retirees in the future.
The good news is people are living longer. The challenge now is to invest in assets that will ensure money goes the distance.
Some investment managers argue that shares will provide investors with sufficient income that will meet their retirement needs.
Thanks to our franking credit system, Australian shares have delivered attractive dividend returns.
According to MLC Investment Management strategist Michael Karagianis, the average dividend yield of the Australian sharemarket was around 5 per cent at the start of 2012. This return was further boosted to 1.5 to 2 per cent due to the franking tax benefits.
