In This Issue
Dear Friends
Don’t worry about the economic woes
It was always going to be a safe bet that the Reserve Bank would keep interest rates on hold this month rather than start cutting them.
I’m not really a punter, but the RBA’s latest rates announcement did come on Melbourne Cup Day after all, as it always does in November.
The reasons for keeping rates on hold were the same as they have been since November 2023. Australian inflation remains above the RBA’s 2-3% target range, and our labour market remains relatively strong.
That’s despite the fact that the Australian economy is growing at its slowest pace in decades, with GDP (gross domestic product) growth per capita remaining at negative levels.
We all know, economically speaking, that things aren’t that great at the moment. It’s more expensive to live, thanks to price rises on just about everything. As such, many of us have chosen to tighten our spending belts a few notches.
Younger people, particularly those with large mortgages, are under increased financial pressure. Rates are unlikely to start coming down until well into 2025.
Yet, despite the current conditions, now is definitely a time NOT to panic. In fact, when you really think about it, there’s a lot of things that we should be grateful for, and likewise there’s a lot of good things to look forward to.
For one thing, Australia is a great country to live in, and Australians are financially wealthier now than they’ve ever been. That’s largely thanks to ongoing rises in asset values, particularly across the housing market, investment markets, and our best of breed superannuation systems.
Based on most pundits’ predictions, Australia is unlikely to fall into a recession. I have been warning of a pending recession for the last two years. That’s the economist in me. Economists have, after all predicted six of the last three recessions!
We haven’t had a significant economic downturn since the Global Financial Crisis more than 15 years ago. The important thing is that your portfolio is well structured to ride through any economic downturns that may occur, regardless of their severity! Those of you who were my clients during the GFC can attest to that.
AMP Investments chief economist, Shane Oliver, says the re-election of Donald Trump to the White House will have a range of implications for investors. You can read his analysis here.
Superannuation balances are continuing to benefit from buoyant global share markets, which have been hitting record highs. Strong earnings growth has enabled many companies to maintain and, in some cases, increase their dividend payouts to shareholders.
Also, although interest rates will gradually start to reduce over the next 12 months, they’re widely expected to remain higher for longer and are unlikely to fall back to record low levels. That’s especially good news for those with higher exposures to fixed income assets.
So, where to from here? As always, the best course of action is to stick to your long-term plan and focus on the things you can control.
This includes reviewing your spending regularly and making sure you’re invested in financial products that have low management costs. After all, the lower your investment costs the more money you get to keep.
And finally, stay diversified. Diversification will offset the risks of being too exposed to one asset class.
One more thing
Over the last 12 months or so I have been reminding everyone to be on guard against scammers and to follow the Federal Government’s scam watch: http://www.cyber.gov.au/protect-yourself
One of the layers of security our clients have is the personal relationship with their adviser and our team. We recognise voices, we know the individuals, we are business ‘friends.’
And another thing
I absolutely love what I do, but I’m about to do something extraordinary. I’m just letting you know that I’m about to take my first major holiday since I started Marinis Financial Group 26 years ago.
There’s a first time for everything. My daughter has just got married, and my wife and I are about to head to the UK and Europe before coming back in late December.
If there’s something urgent you need to discuss during this time, please feel free to contact any one of my capable colleagues on (08) 8130 5130 or via admin@marinisgroup.com.au
Yours sincerely
Theo Marinis CFP®, B.A., B.Ec., CPA., MCIFAA
Financial Strategist
Authorised Representative