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Opportunities ripe for investors in the know

Australia remains a 'lucky country' with bargains both in property and stocks up for grabs for savvy investors, according to accounting firm Chan & Naylor.

With China now the destination of 25% of Australian exports and Australia's national debt-to-Gross Domestic Product (GDP) ratio expected to peak at approximately 21% compared to 110% for the Organisation for Economic Cooperation and Development (OECD) peer group, the firm is confident Australia is well positioned to weather the current economic storm.

Reinforcing this is the continuing strength of the Australian dollar, which is now regarded as a safe-haven currency, as well as the Reserve Bank's continuing expectation of a 3.75% to 4.25% recovery by 2012.

'Even if these figures prove optimistic, Australia is still expected to significantly outperform most other industrialised countries due to slower global growth and returns,' said David Hasib, partner and head of financial planning at Chan & Naylor.

'The stall in growth should take the pressure off interest rate rises locally with the expectation that we may see a rate decrease in the coming months.'

Mr Hasib conceded that in the short term there will be some investment pain as a result of the recent volatility. However he said investors should remember their longer term convictions and look for the opportunity therein.

'Currently stock market investors can pick up attractive shares for a bargain and be paid fully franked dividends to watch their share price recover, in some cases between 9% to 12%, in coming months,' said Mr Hasib.

He also predicts a rewarding outlook for investors who are considering investing in a stable but sluggish Australian property market.

With rental demand strong, Chan & Naylor expects property investments in current market conditions to offer a healthy yield of 5 to 6% as well as long-term capital growth.

'A lot of people are understandably concerned about the current health of both the global and local economy which has resulted in defensive herd-like behaviour,' Mr Hasib said.

'For the focused investor, who is willing to resist the pack mentality, there is considerable upside in current market conditions.'

Smart Property Investment. 'Opportunities ripe for investors in the know'. 18 August 2011. Reproduced with permission.