Tutorial worksheet 1.pdf - Tutor class 1 What is money Objective of this assignment To determine some differences between money and other assets Read

Tutorial worksheet 1.pdf - Tutor class 1 What is money...

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Tutor class 1 What is money? Objective of this assignment: To determine some differences between money and other assets Read the following extract carefully and then answer the questions that follows. Time to complete the assignment available: 30 minutes . Cash (money) is trash 1 The typical local Balanced Fund may only realise an inflation-adjusted (real) return of 3.8% over the next five years, compared to a historical real return of 5.9%. This is according to Old Mutual Investment Group’s MacroSolutions boutique, which has created a Balanced Index that represents the typical savings vehicle in South Africa. Analysts have warned for some time that local investors need to adjust their return expectations lower going forward. The table below highlights the expected real returns of various asset classes over the next five years (as at January 12, 2015) and how it compares to the historical real returns. Real return Historic real return (since 1929) View Comment SA p.a. Neutral Neutral More balanced outlook Equity 5.0% 7.8% Neutral Getting expensive with slower growth Property 4.5% 4.7% Neutral/ - Rerated sharply Bonds 2.5% 1.5% + Lower inflation is very supportive Ingé Lamprecht in Moneyweb. 4March 2015. 1
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Source: MacroSolutions (* The international return expectations are quoted in US dollar terms. Any real
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