The Joy of Spring

There’s something about the first day of Spring, that makes people feel optimistic and upbeat about all things, including their investments and financial future. But what are the economic indicators telling us?

In this newsletter I look at recent economic signals. Some indicators are showing strong export demand and business investment while others suggest any growth is only being prompted by high migration.

Most Australians are claiming to be in a cost-of-living crisis, spurred on by higher interest rates, petrol prices and rental charges, but this isn’t being reflected in the local share market.

My review of the recent reporting season shows the Australian share market going from strength to strength with both BHP and the Commonwealth Bank posting strong earnings growth and higher profits.

The conclusion from these two articles is to prepare for the worst. Interest rates will go higher unless inflation eases, which in turn will cause the share price of the big banks to ease and most likely drag the whole market lower.

Significant weakness is already appearing within the residential construction sectors with many big players going bust. The private credit providers who have lent heavily to these businesses are already starting to feel the strain.

Many are closing their funds to client withdrawals and many more will follow suit. There is nothing new here as I explain and it’s why you should always think twice before chasing higher returns without fully understanding the risks.

One of the most common questions I am asked by clients and others is “How can I best help my child or grandchild financially. That is, without giving them a lump of cash which they might fritter away?”

While it may sound boring, one of the best options is to make the most of two generous Government backed superannuation schemes, which will let you help your child in a proactive and cost-effective manner.

Of course this is just the tip of the iceberg. Many parents are grappling with how best to manage their estate and ensure their plans help set their children up financially for the future.

Don’t forget the release of my second book, The Bank of Mum and Dad: The No Regrets Guide to Helping Your Children Financially. Only available from my website www.patriciahoward.com.au this is a must read for anyone looking to financially help a family member.

It could be a lifesaving, if not retirement saving, moment for them.

Patricia Howard

0427 429 817

Patricia@howardosmond.com.au