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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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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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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There are things that can be taken as almost certain this year – so let’s plan for them.
On the money supply side:
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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House price rose by 25% in 2021 driven exclusively by
There was a segment of the property market that missed this – inner city units – which rose by only 8%.
Unit blocks close to the city were the opposite of what the market wanted.
As Covid shifts gears I am already seeing demand for inner city units return because,
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Bill Evans took up the Chief Economist role at Westpac in 1991 and has consistently been “getting the big calls right for 30 years”.
When he talks – I listen.
Bill Evans predicts (The Australian Sat 11th Sep 2021) “Interest rates will rise… starting in the first quarter 2023… and going up (in steps) by (only) 1.25%”.
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Before we start, the best tip I can give you is… DO NOT DO IT YOURSELF… It took me years to work out that when friends looked at my home renovations and said, “nice tiling … do it yourself?” it was not a compliment. They were being polite. The fact that they could tell I had done it myself said it all.
I was about to start on this article when a thought appeared – why tell my clients (some of whom have been with me for 10-20 years) what they should look for? When instead I could ask them, what was most important to them, so I did.
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The current market mood was caused by negative Government intervention to suppress buyer demand and also the election itself.
Sentiment has changed post-election and now positive Government intervention brings good news again for buyers.
There are 4 key areas that signal this.
We had an election where one of the choices we had to make, in relation to housing, allowed one generation in the population to benefit only at the expense of others.
What we chose instead though is to the benefit of every generation – yes that is possible.
First Home Buyers are the BIGGEST winners.
The cash deposit required has been the largest hurdle for them to overcome. Until now First Home Buyers have needed to find 5% of purchase price PLUS costs to get those keys to the front door. Mortgage Insurance (of around 3.5%) was the biggest cost. On a $500k purchase – this meant they had to find $42,500.
Following the most recent Reserve Bank meeting earlier this month, it is being widely interpreted that the official cash rate is likely to stay on hold until late 2019 (Bill Evans, Westpac Chief Economist. There are now even interpretations of rates on hold until late 2020. ClickHere
The factors in play: the exuberance of regulators (APRA / ASIC) have done all of the Reserve Bank’s heavy lifting. The Royal Commission is causing banks to pull back even further. The Treasurer now mentions an “unintended” credit tightening.