Normal
Because of the inflation, over time the underlying assets of the shares will increase in value with inflation, where as the cash at bank won’t.For example, over time as inflation devalues cash holdings, the range that Iron Ore price trades in will also rise, meaning the decades worth of Iron Ore in the ground, and alot of the long life infrastructure owned by the mining companies will rise in value too.So with the share you will get your 5% franked dividend, along with a rises in the value of your capital base, but with the cash deposit your 10% unfranked interest you have to devote most of it to paying taxes and offsetting inflation, so it’s not a real 10% return.
Because of the inflation, over time the underlying assets of the shares will increase in value with inflation, where as the cash at bank won’t.
For example, over time as inflation devalues cash holdings, the range that Iron Ore price trades in will also rise, meaning the decades worth of Iron Ore in the ground, and alot of the long life infrastructure owned by the mining companies will rise in value too.
So with the share you will get your 5% franked dividend, along with a rises in the value of your capital base, but with the cash deposit your 10% unfranked interest you have to devote most of it to paying taxes and offsetting inflation, so it’s not a real 10% return.
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