The 93 Year Old Barefooter



I am a 93 yr old self-funded retiree. We’re in a comfortable position, however the drop in rates has dented our income badly. We have $156K in Commbank’s Hybrid securities known as PERLS, which are terminating on April 16th, and they are offering to convert it to Perl VIII. The rate is attractive: bank rate plus 5.2%, but there is added risk too. Would you agree and is there a better alternative? Not interested in capital gains – only income.


Scott's Answer

Hi Reg,

I wouldn’t let my grandparents invest in these so-called hybrid securities. CBA’s PERLS are sold as an alternative to term deposits, but in terms of risk they’re closer to shares, mainly because there’s no guarantee you’ll get your money back, or get paid interest. There’s a lot of fine print, but that’s the guts of it. I’d be even more conservative, and stick with term deposits. Remember, you also have the option of drawing a little bit down, conservatively.