A Budget Thought You Won’t Be Expecting – the THREE mistakes people make.

May 15, 2024

The Council of Social Services (ACOSS) always makes a submission to the budget. This year it notes that the top 10% of Australians have over $5.2 million in net wealth and that the gap between the top 10% and those below is somehow inherently wrong.

It also notes that the top 10% have made their wealth predominantly through property – and with their comments they infer this is somehow inherently wrong too.

My “Budget” in Reply comment is for EVERYONE that aspires to own a home – First Home Buyers and Investors alike.

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What is a “Tracker Mortgage”?

April 11, 2024

A report from a government committee has suggested that Australian Banks be forced to issue “Tracker Mortgages” (Aust Financial Review 27 March 2024).

Australian banks have unsurprisingly pushed back.

A “tracker mortgage” supposedly “tracks” the Reserve Bank cash rate so that your home loan rate remains at a fixed margin relative to the Reserve Bank cash rate.

The benefit is that a borrower will not be left (as currently happens) with a rate stranded high and dry well adrift of where it should be.

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Early Retirement – Be careful what you wish for…

April 5, 2024

I once wrote an article titled “A funny thing happened on the way to the cemetery”.

When the pension was conceived, average life expectancy was 62. Retirement age was 65.

The pension was predicated on the assumption that most would never receive it.

Someone born in 1950 had a life expectancy of 62.

But by the time they reached that age – life expectancy had increased to 82.

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Question of the Week: Inter-generational financial support

March 27, 2024

How best to deal with the worry of inter- generational issues…?

In my email last week, I posed the question of how best to prepare for your own future…

One client asked how they could help their (young) children – not yet born – because of their concerns about what the housing market would look like for them – and their ability to buy a house.

Another client asked how to help parents who had sold everything to live life on the road – but that life had caught up with them and the aged parents were now renting.

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Let’s Start a Conversation…

March 20, 2024

I spent time with long term clients and even longer friends over the weekend.

Here was one part of the conversation – and I’d like you to continue it, along any pathway you choose… more of that later.

“How much do I need to live comfortably in later life?”

Average weekly earnings have just hit $100kpa

How much do I need to have in assets to give that income?

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2024 The Year Ahead

January 30, 2024

There are things that can be taken as almost certain this year – so let’s plan for them.

On the money supply side:

  1. At some stage this year the Reserve Bank will start to reduce rates.
  2. When rates fall by 0.25% it is almost certain that banks will act with their usual pattern and cut by 0.25% for new clients and only 0.15% for existing clients.

No need for you to worry here – I will be able to deal with that for you in my scheduled 6 monthly reviews – it’s what I do for you.

So, let’s turn to getting ahead in life this year.

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The Melbourne Cup Rate Rise – Why Did it Happen, What Does it Mean for YOU?

November 14, 2023

This time WHY matters.

The 3-year bond rate in the US is 5.30%, the 10-year bond rate 4.65%.

The 3-year bond rate in Aust is 4.35%, the 10-year bond rate is 4.75%.

Banks BORROW to lend to you at the 3-year bond rate (among many other sources) – so money is COSTING the banks 4.35%

They can also borrow (overnight) from the Reserve Bank at the cash rate 4.10% – but the Reserve Bank also needs to borrow that to lend to the banks – so the Reserve Bank is making LOSSES at 4.10%.

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Interest Rates Have Peaked

August 2, 2023

“The balance of risks now favour the prospect that the RBA is now on hold” – Bill Evans (The Australian Wed 2nd Aug 2023)

I predicted quite some time ago that the “peak” of this interest rate cycle would be 6% (to you) and that you should plan around that – and that appears to be correct.

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Well, that was a surprise…

May 3, 2023

Should it surprise us that 100% of economists on Monday became only 70% of economists by Wednesday?

I will carefully analyse what the Reserve Bank board says as well as Bill Evans.

I think it is possible that with this Reserve Bank board undergoing significant change by September that they wanted to fire one last shot – I will write in detail next week.

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The end of this interest rate cycle..

May 3, 2023

It is with a reasonable degree of confidence that I can say that interest rates have peaked (Bill Evans: The Weekend Australian: Sat 29th Apr: page 30).

At the start of this cycle, I suggested that you plan for a peak of 5.5% (and more recently 6% just to cover a worst case).

Interest rates, to you, have now peaked (if I am correct) at just under that 5.5%.

You should now budget for rates at this higher level for a reasonable period ahead.

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