Is this the winter to really worry?
For those of you who saw my appearance on Sky News on Saturday morning, either live or on their website, you will know just how pessimistic I am about the Australian economy and the continued inflationary pressures facing it.
Recent figures from the Australian Bureau of Statistic figures released last week showed that while Australia’s rate of inflation eased from 4.1 per cent to 3.6 per cent for the previous twelve months, it is not all good news.
The problem is the Consumer Price Index actually rose for the three months to March, up 1 per cent when the markets and most economists were expecting it to slow to an increase of 0.8 per cent.
It is now very likely the Reserve Bank will move to increase interest rates at a time when most people are expecting rates to fall, in a desperate attempt to pull the rate of inflation back down below 3 per cent.
If were not for the high rate of immigration at the moment, the Australian economy would be in recession now and I believe if the Reserve Bank is compelled to push interest rates higher that it will tip the economy into six months of negative growth.
What this will mean for the share market is difficult to forecast as there are so many factors facing local companies, but I don’t foresee any dramatic falls in the market and if we do, it will be important to just let any downturn wash through. Better days will come.
Sometimes the best advice is the simplest and most obvious. As we all know, the share market is prone to periods of excesses. Times where share prices are driven higher and times when they are pushed lower.
The key to successful investing is trying to pick those times when good quality shares are trading are below a reasonable long-term valuation for them and if you do sell shares, to only sell when the market is high.
So often investors get this wrong. So often investors get caught up with the euphoria of the market as prices seem to climb ever higher and think that they need to buy shares now before the prices go even higher tomorrow.
One of the keys to successful long-term investing is to allow cash to build up in a portfolio which in turn provides you with the ammunition to buy quality shares cheaply if the market takes a step down as it does from time to time.
Once again, the media is being flooded with various stories of retirees being scammed out of their life savings and that despite a lot of huff and puff by politicians very little seems to be done about it.
Just this week, the Australian Financial review has highlighted how one retiree lost some $2.5 million investing in what he thought were fixed interest or basically terms deposits being offered through a company called Macquarie Bank capital.
In this article I provide some simple advice as to how you can best protect yourselves from scams and ensure your precious retirement savings stay exactly where they should stay in your superannuation account.
Finally, gold has for time immemorial been seen as the ultimate wealth safe haven with the argument going that it is a highly sort after precious metal and that there is only a finite amount of gold to be found on the planet.
However, are times changing? Copper is fast becoming the bell weather of economic activity around the globe with the price for copper surging by 25 per cent during the past two years, exceeding price rises in every other raw commodity.
While the Australian economy is battling to bring price hikes under control and interest rates remain high, it is difficult to see too in the way of bad times as international economic activity remains so strong.
Finally, I do know that a lot of financial planners are effectively closing their doors to new clients but as my business continues to grow I more than welcome any referrals of new clients to the practice.
If you know of anyone struggling with managing their savings as they move into retirement, please encourage them to contact me. If they mention this newsletter, I am happy to send them a free copy of my book The No-Regrets Guide to Retirement.
It could be a lifesaving, if not a retirement saving, moment for them.
Patricia Howard
0427 429 817
Patricia@patriciahoward.com.au