Interest rate rises have been discussed for quite some time now, but we’re seeing clear indications that it’s to be expected at some point across 2022. Economists over at Westpac are tipping a gentle 0.15-percentage-point cash rate rise in August, followed by another 0.25-percentage-point increase in October. Those two moves would add $103 a month to interest repayments on a typical $500,000 mortgage. Now is a good time to check in with your bank or your mortgage broker to prepare yourself for any changes coming up in the year ahead. When it comes to your finances, preparation is always key.
Smart Money upside #52
Because people don’t often talk about the full ins and outs of their money, it’s hard to learn lessons from hearing what good and bad choices other people make. This story is from one of our clients to help you take your money game to the next level.
Couple; early 30’s, income ~$210k, total assets ~148k, savings~ $5k annually
- Not Saving Enough
- Not knowing if they’re making the right decision
What they wanted from us / the advice process
- Clear strategy and plan
- Awareness of finances with control over cash flow
- Manage cash flow to be able to invest in property/stocks
What success looks like for them
- Having more security
- Purchasing family home for around ~$2m
- Investment property
- Overall sense of confidence
- Clear financial plan in place
What money strategy they were following before we went through the planning process
No clear strategy around savings or investing
What money strategy they chose to pursue from our planning work
Agree to use current cash balance for emergency and use the remaining to set up banking accounts and investment accounts
Key benefits of going through the process
Agree to use current cash balance for an emergency fund and use the remaining to set up banking accounts and investment accounts
Value of advice after all advice fees year one: $4,693
Year 20 upside after advice fees: $4,073,473
If this story resonates and you want to chat about how to get these sorts of results, you can book an intro call here.
Giving update of the week
This week a couple of our amazing clients settled on their first investment property, and we’ve celebrated by providing 365 days of shelter to underprivileged people in India, as part of our ongoing commitment to make a difference in the lives of our clients and simultaneously make an impact on our world through our partnership with B1G1 (Buy 1 Give 1). You can check out more information about our giving here.
If you’re sitting on a bit of property equity, it might come as a surprise that it could be working harder for you. I share exactly what to do this week in our upcoming event. Check out the full list of events that are coming up and click through to register:
Event schedule and links to book here:
How to use property equity to invest when your LVR is below 50%: Tuesday, Jan 25, 2022 12pm
Employer share plans 101: Tuesday, Feb 1, 2022, 11am
How employer share plans work (deep dive): Monday, Feb 7, 2022, 2pm
Employer share plan tax hacks and mistakes to avoid Thursday, Feb 10, 12pm
How to make more profit from your employer share plan Tuesday, Feb 16, 2022, 10:30am
How to invest if you’re saving more than $5k monthly: Thursday, Feb 24, 12pm
Money Hack of the week: How financial advice can save your marriage.
When was the last time you and your partner fought over money? Butting heads is normal, but it can be difficult to work through when financial matters come into the mix. Jon Hollenberg and I recently talked about how financial planning was crucial in taking their money issues off the table. By engineering a system for guilt-free spending, Jon and his partner don’t clash about money even 13 years later. Check out our full chat here.
Share market wrap
Australian gold stocks rallied on Thursday but interest rate-sensitive property trusts and defensive consumer staples posted falls, holding the index to a 0.1 per cent gain. On Wall Street on Wednesday, all three major benchmarks were in positive territory in early afternoon trade and then they flipped with selling accelerating into the close.
Key sharemarket numbers:
- The ASX ‘All Ords’ (top 500 shares in Australia) finished the week -0.30% lower than last Friday, on 7,490.10 points.
- The US ‘S&P 500’ (Top 500 shares in America) finished the week -5.31% lower than last week, at 4,482.73 points.
- The US ‘Nasdaq’ (Top 2500+ mainly tech shares in America) finished the week -7.15% lower than last week, at 14,154.02 points.
- The Global FTSE ‘All World’ index (largest 3100 companies in the world) finished the week 0.28% higher than last week (Friday AEDT), at 7,585.01
- The S&P Cryptocurrency ‘Mega Cap’ Index (tracking market value of Bitcoin and Ethereum) is currently at 4,721.92 for the month, down -8.67% for the month to date
Investment story of the week: Jcurve Solutions Limited (ASX:JCS)
Jcurve Solutions Limited (JCS) works collaboratively with organisations to drive growth through the effective use of technology. Serving as a trusted guide in an on-demand world, they help build growing and resilient organisations to withstand market disruption. The company has business management solutions, consulting services, field service management and digital marketing services. The company has positioned itself to help transform businesses. The company does not pay dividends, but rather reinvests a high proportion of profits into the business, which helps its high earnings growth. Over the last 12 months, JCS is up over 60%, with the company continuing to enjoy strong growth in 2022, up over 15% this week. With its unique services offering a holistic approach to helping develop and grow businesses, it’s worth keeping an eye on throughout 2022.
Money mistake of the week: How your mindset can hold you back from better choices.
What’s holding you back from making better money choices? Whether we’re aware of it or not, we have the power to improve our circumstances – or make them worse. In this episode, I chatted to Kym Power to discuss how the subconscious choices we make can lead to bad habits and unhealthy patterns. Check out our full chat here.
Jargon Buster of the Week: Honeymoon rate (Via Mozo)
Honeymoon rates are low introductory interest rates offered by lenders to make their home loan offers look more attractive to borrowers. Also known as an ‘intro rate’ a honeymoon rate typically lasts for the first six to twelve months of the loan, before reverting to a higher ongoing rate.
Wherever you see a honeymoon rate being advertised by a lender, be careful to check what rate it reverts to once the ‘honeymoon’ is over. Some lenders try to tempt borrowers with low intro rates only to charge high ongoing rates once the intro term is over. This can come as a shock to borrowers as loan repayments can dramatically increase once the ‘honeymoon’ is over. Generally speaking, most borrowers will be better off with a loan that offers a low ongoing interest rate for the life of the loan.
Podcast from last week: #152 Money chat w. Avani – Eliminating guilty spending and setting solid financial foundations
In this session, I chat with one of our lovely Pivot clients Avani about her recent experience with going through the process and setting up a plan for her money and investments, which had a bit about guilty spending and, and guilty saving and how it is easy to fall into the trap of feeling like you’re not saving enough, how she tackled ethical investing and setting up an ethical investment portfolio that aligned with her values as well as setting a really solid financial foundation for someone that was early on in the workforce and had recently moved out of home for the first time she unpacked some of the tips and the things for people to be thinking about so that when you go through the process, you get the results you’re after.
PS: If you want a hand to get on the front foot with your money in 2021, check out our 45-minute one-on-one sessions here. We’re donating 100% of the money raised to charity, so you can up your money game and do something good on the planet at the same time.
I know you’re smarter than someone that would need me to write the words that come next, but our compliance peeps are real hard-asses so here we go… This information is not personal advice, poetry, or a map to where Jimmy Hoffa is buried. It may only be regarded as general advice, and definitely shouldn’t be considered something worthy of inclusion for Donna Hay’s next cookbook or the Archibald prize. This is actually just an email communication that has been sent to a bunch of people and doesn’t even have your name on it. Your personal objectives, needs or financial situation have not been considered when preparing this email, but I want you to know that I have spent a lot of time thinking about the Venn diagram intersection of poetry, landscaping, and essential oils – if you’re fascinated by this same phenomenon please reply so we can compare notes. You should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs, and if necessary, seek advice before acting on it. You should also consider other people when getting on and off public transport, smiling more, eating healthy, and listening to your mum when she tells you that you’ve been working too hard. Where the information relates to a financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product. Where the information relates to a hilarious joke I’ve made, you should consider belly laughing deeply. Worth noting also that past performance is not a reliable indicator of future performance when it comes to investments, and definitely not when it comes to the Wallabies. Financial services guide. All jokes aside and just to be clear, this information may only be regarded as general advice. That is, your personal objectives, needs or financial situations were not considered when preparing it. You should consider the appropriateness of any general advice we have given you, having regard to your own objectives, financial situation and needs, and if necessary, seek advice before acting on it. Where the information relates to a financial product, you should obtain and consider the relevant product disclosure statement before making any decision to purchase that financial product. Past performance is not a reliable indicator of future performance.