With rising property prices easily being the hot topic of the last 12 months, it’s now closely followed by discussion around rising interest rates. Financial markets aren’t focused enough on the fact that Australian banks unilaterally lifting mortgage rates has huge consequences for both when the RBA decides to start raising its overnight cash rate and by how much. Banks are gradually raising borrowing costs for a range of reasons that are worth understanding. The interest rates were artificially suppressed by the RBA’s suite of cheap money policies. Both policies have now expired, which means the banks have to pay a lot more to borrow two- to three-year money to lend to households and businesses. So what does this potentially mean? It could mean that house prices will start to cool. However, there are a lot more recovery factors in play in a post-pandemic lockdown world.
Giving update of the week
This week one of our clients had their first baby, so we’ve celebrated by providing a safe childbirth for 100 disadvantaged women in Kenya. This is 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.
We still have two more events to come this year. Next week tune in to find out how you can buy your $3m dream home. Check out the full list of events below and click through to register:
Event schedule and links to book here:
How to buy your $3m Bondi dream home: Thursday 18th November 12pm
What next after making your first million dollars?: Thursday 2nd December 12pm
Why you need a financial adviser if you make more than $250k p.a: Thursday 13th January 12pm
How to use property equity to invest when your LVR is below 50%: Tuesday 25th January 12pm
How to invest if you’re saving more than $5k monthly: Thursday 24th Feb 12pm
Employer share plan tax hacks and mistakes to avoid: Thursday 10th Feb 12pm
In the News: How to save $94,000 on a $500,000 mortgage
With sky-high property prices around Australia and equally eye-watering mortgage debt levels, paying down your mortgage can seem like a mammoth job. And it clearly takes some serious work to make it happen but there are some simple hacks you can use to get there. In this piece for news.com.au, I share those top tips.
Money Hack of the week: How a tax plan can save you in the future.
Any seasoned taxpayer knows that tax preparation can be a difficult, time-consuming, and often perplexing procedure. But, it doesn’t have to be this way. I sat down to chat with Stuart Reynolds about the biggest areas people go wrong with their tax planning and why it’s his job to make sure you don’t get caught out down the line. Check out our full chat here.
Share market wrap
Another week passes and more talk of inflation. Ray Dalio sounded the alarm bell on Friday our time, after inflation in the US surged to the highest level since 1990 and warned followers that rising portfolio values don’t actually signify increasing wealth. On Friday the Australian sharemarket advanced in the opening minutes of trade, buoyed by solid gains from iron ore stocks which are benefiting from a rebound in the price of the bulk commodity. In crypto land, Twitter is launching a new team focused on cryptocurrency, which should come as no surprise to anyone that follows CEO, Jack Dorsey.
Key sharemarket numbers:
- The ASX ‘All Ords’ (top 500 shares in Australia) finished the week -0.1.% lower than last Friday, on 7,765.80 points.
- The US ‘S&P 500’ (Top 500 shares in America) finished the week -1.07% lower than last week, at 4,649.27 points.
- The US ‘Nasdaq’ (Top 2500+ mainly tech shares in America) finished the week -1.9% lower than last week, at 15,704.28 points.
- The Global FTSE ‘All World’ index (largest 3100 companies in the world) finished the week 1.45% higher than last week (Friday AEDT), at 7,384.18%
- The S&P Cryptocurrency ‘Mega Cap’ Index (tracking market value of Bitcoin and Ethereum) is currently at 7,111.25 for the month, up 4.79% for the month to date
Investment story of the week: Gold Road Resources Ltd (ASX: GOR)
Gold Road Resources Limited (GOR) is a mid-tier Australian gold producer with a Tier 1 mine and exploration projects in the underexplored and prospective Yamarna Greenstone Belt in Western Australia’s north-eastern Goldfields. GOR has popped in and out of the spotlight across the last 12 months after it successfully mined gold and also distributed maiden dividends. Whilst there’s been minimal movement on this stock most of the year, it has rallied over the last couple of weeks after the company announced acquisition plans for an off-market takeover of Apollo Consolidated Limited (ASX: AOP). This has also sent the AOP share price up significantly in the last few weeks and it’s up over 100% across the last 6 months. Small caps are volatile and risky, reviewing all three parties involved across the last year demonstrates that clearly, but when they rally they are a ride.
Money mistake of the week: How uncertainty and inaction can risk your future.
The fear of uncertainty is REAL. When you’re on the fence about getting help with your finances, you’ll never know what opportunities could be passing you by. I chatted with Pivot Wealth client Luke Olsen about why he was unsure about taking the leap of faith with financial advice and how he’s feeling now, nearly a year in. Being time-poor and unsure about the costs, he now wishes he’d done it sooner. Check out our full chat here.
Jargon Buster of the Week: Balance transfer (Via Mozo)
A balance transfer is the act of transferring a debt from an existing credit or store card to a new credit card, to take advantage of a lower interest rate. Many credit cards have extremely competitive balance transfer offers. For example they might charge zero interest for the first six months on a balance you transfer from another card. Balance transfer rates are generally offered for a limited time only, so you should always check the ongoing interest rate that will apply once the balance transfer offer ends.
Podcast from last week: #142 w. Shaun Lordan – Fintech mortgage market disruption
In this episode, I chat with Shaun Lordan who’s the Chief Product Officer at Nano Home Loans. He’s a massive FinTech nerd and someone that’s really passionate about bright financial products and user experience. I’ve known Sean for a bunch of years. He is really across all of the movements in the FinTech space.
We unpack sort of what is driving the disruption in the mortgage market. Some of the things that mortgage holders are demanding and what they should be looking for when they get into the market, as well as his money journey, how he migrated from the UK and some of the resources that are used along the way, and the biggest money, less than that.
Shaun is the Chief Product Officer at Nano. He has vast, global, financial services experience from leading brands such as Barclays, Westpac, HSBC and Australia’s first neobank, Volt. Shaun is a community partner for Fintech Connector, Warwick University Alumni Ambassador, holds extensive qualifications in finance, mortgages, leadership and economics and is an all-around fintech enthusiast.
Smart Money upside #43
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, household income ~$310k, saving $60k annually, investment property ~$550k with $300k mortgage and $200k super, no shares.
No path to financial security, realised they have an opportunity to get more out of what they have. Financial stress about the future.
What they wanted from us / the advice process
Clear path to family home, second income stream to reduce reliance on employment income.
What money strategy they were following before we went through the planning process
Buying family home @$2.5m, paying down investment property debt, small extra super contributions.
What money strategy they choose to pursue from our planning work
Leverage equity to buy two investment properties, clear family planning for time out of the workforce, and buy a family home.
Key benefits of going through the process
Substantial investment upside, confidence in their financial future, the achievable pathway to family home.
Value of advice after all advice fees year one: $592,057
Year 20 upside after advice fees: $1,162,545
If this story resonates and you want to chat about how to get these sorts of results, you can book an intro call here.
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.
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