Tough economic times continue

The economy continues to give off mixed signals this year with employment remaining strong and the rate of inflation remaining high, despite a surge in business bankruptcies, home loan delinquencies and falling consumer sentiment.

Although there have been some encouraging signs regarding price increases, it’s unlikely the Reserve Bank will move to reduce interest rates until inflation is well below 3 per cent for a sustained period of time.

Increasingly, economists are now thinking it won’t be until next year and possible later next year that there will be any relief on the interest rate front, despite the economy, both here and overseas, continuing to trade strongly.

Nonetheless the local share market continues to trade at record highs, spurred by a surge in dividend returns and solid results, showing management are still able to make good profits despite rising costs across the board.

As those who keep a close eye on their share investments know, there is a flood of dividends once again flowing through the share market with some $19 billion in dividends being passed on to shareholders last week.

For those in retirement, who have their finances correctly set up and are holding significant direct shares investment via their superannuation funds, their dividend returns will be boosted by a third as most dividends bring with them a surge in franking credits.

For those receiving a full or partial pension, they will have noticed another increase with pensions up 1.78 per cent as part of Centrelink’s twice-yearly indexation measures.

While the age pension has always been subject to indexation or increases to keep it in line with price rises, these increases have only become noticeable in recent years due to the local pickup in inflation. For those finding it tough to make ends meet, here are some simple tips that might help.

However, while few can avoid the cost-of-living crisis, those with pets are among the hardest hit with recent figures from the Australian Bureau of Statistics showing pets and related costs, have climbed by a massive 22 per cent during the past two years, while veterinary costs rose 14.5 per cent.

While these increases are tough for anyone, they are particularly hard for those on a fixed income and my article this month suggests some much needed ways you can reduce your costs if you like me, have a furry loved one in your life.

Many people make the mistake of thinking superannuation is simply about saving significant amounts of money year after year with the vague hope that when they do reach retirement, there will be enough money there to see them through financially.

While many people don’t want to think about taking out personal risk insurance, superannuation can provide a very cost-effective way of taking out life insurance as well as total and permanent disability insurance.

Take a moment to stop and consider do you need life insurance, and if you already have life insurance, is it sufficient to look after you and your loved ones if something were to happen to you. Using your superannuation to boost your insurance coverage may be a good decision for you.

I often think the thought of seeing a financial planner is much the same as the need to see a dentist.  We all know that we should see a dentist regularly but most of us put it off until circumstances mean we must see a dentist.

It’s much the same with seeing a financial planner. Most people leave it until they are about to retire and are so overwhelmed by their financial position that they reach out to a financial planner in desperation more than anything.

This is made worse by the fact that it can appear relatively expensive to speak with a financial adviser and that as with most things these days unfortunately, it is just getting more and more expensive to do so.

Not seeing a financial planner though could be the worse decision of your life.

Finally, just a quick note. Some of my financial planning clients are receiving unsolicited and unwelcomed scam emails from other financial planning business trying to trick them into moving their affairs to a new financial planner that they know nothing about.

If you receive an odd email from another financial planning company, please forward it to me so I can take steps to ensure they stop sending out these unsolicited emails.

Patricia Howard

0427 429 817

Patricia@patriciahoward.com.au