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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: john@jgg.com.au 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.



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Accountants & Financial Planners - Mortgage & Finance Services
IMPORTANT NOTICE

On this entire website, information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances.

No representation is given, warranty made or responsibility taken about the accuracy, timeliness or completeness of information sourced from third parties. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate in light of your particular needs and circumstances.

Anthony Klatt, John Grocke and Mathew Wilkshire are authorised representatives of Paragem Pty Ltd. Paragem Pty Ltd ABN 16 108 571 875, is the holder of Australian Financial Services License number 297276 and these authorised representatives trade as Johnston Grocke.

AG Finance Group is a Corporate Credit Representative (396686) of BLSSA Pty Ltd, ACN 117 651 760 (Australian Credit License Number 391237).