Plan B for your New Year's Resolution
By John Grocke (3 Min. Read |Beginner )
Did you incorporate possible Risks into your big plans and goals that involve bigger amounts of money? Did you think about the Australian Economy and possible worst-case scenarios when setting up your new year’s resolution? Me neither, until I had a had a chat with John, our Principle and Senior Financial Planner.
Main Risks for Australian personal debts in 2018
In our economy, eventual rising interest rates, are a significant risk. Looking at the level of personal debt that our economy accumulated, it’s one of the highest personal debts economies in the world. You might be guilty as well. Let’s look into 2018 and highlight what to be aware of and how to stabilise your financial situation.
Mortgages are the main reason for high personal debts; people borrowed huge amounts of money for properties. We seem to be chronically indebted personally, so interest rates have a very big bearing. Every 1% rise in interest rates is $ 100 after Tax per week with a $500,000 mortgage which is common in SA. The worst-case scenario could be a sharp rise in interest rates, which could force some people to sell their houses at lower prices. You might want to be prepared and take a look at your financial situation and current budgeting with one of our Financial Advisors.
Common misconceptions about the Share market
John explains that Interest rates are cyclical and will not stay low indefinitely. He continues and says that he cannot tell us when, but at some point, the longer we go with low interest rates – the much sharper the rise and the higher the impact might be.
Everyone seems to prefer to borrow interest
rate only because it’s cheap - nearly like paying rent, which makes perfect sense now. But what about the near future? The regulator for the Financial sector in Australia (APRA) is instructing the banks to convert Interest Only loans to Principal and Interest.
No one wants to be too pessimistic and think of economic changes and the direct impact on their financial situations. They don’t make plans or have much savings backed up for possible interest rate increases.
Looking at the overall situation, John advises: “If you have the ability to retire debts while the interest rates remain low, DO IT! Putting effort into repaying your debts while rates are still low is what you should do.”
Your bigger picture matters
The new year is possibly a good time to get advice and review your financial status quo as well as possible future plans and life dreams you want to achieve. At Johnston Grocke, we follow a holistic approach, taking your preferences, attitude towards risk, relationship status, income, investment plan structure, business sector etc. into consideration. We give you individual strategic advice for your unique position, needs and goals regarding Mortgages, Financial Planning, Insurance, Repayment Plans, Tax, Retirement planning and want to assist you in turning your life dreams into reality.
If you would like to review your financial situation or have a financial health check, please give me a call on 08 8303 0300 or drop me an email: firstname.lastname@example.org and I will be happy to look into your personal situation and advice you on how to reach a stable financial position so you can focus on the things that matter to you.
See the new year as a new chance. Get your finances reviewed and get advice for your long-term strategy to wealth.