Finance News

From the monthly archives: July 2022

We are pleased to present below all posts archived in 'July 2022'. If you still can't find what you are looking for, try using the search box.

Inflation: it'll get worse before it gets better

Posted on Thursday, July 28, 2022
If, like many Australians, you’re starting to feel the pinch on rising costs like petrol and groceries, the bad news continues to come.   The latest inflation figures were released yesterday revealing a CPI increase of 6.1% over the year to 30 June. That’s a record high, but it’s not the sort of record we want to be setting.   Unfortunately, the inflation increase all but guarantees another 0.5% interest rate rise in August. And many economists expect price rises to get even worse before things get better, with inflation tipped to reach 7% by the end of the year.   The signs overseas are even worse, with inflation at a 40-year high of 9.1% in the US and 8.2% in the UK, while across the ditch in New Zealand it’s at 7.3% — a 32-year high. In other news, you may have heard that the state government is offering households a $250 rebate to compare and switch energy providers.   Pleasantly, it turns out it’s not a scam! How do I know? I ... Read the rest of entry »

Taking it one week (or month) at a time

Posted on Thursday, July 21, 2022
“We’re just taking it one week at a time.”  If you’re a footy fan, you hear it every week. And you might be tempted to take the same approach with your finances at the moment, given how quickly the world is changing. However, in the money world, I reckon the saying should be, “we’re just taking it one month at a time,” to fit in with the interest rate cycle. Pundits, myself included, are widely expecting another 0.5% rate increase in August, and the ANZ Bank has said it’s expecting that trend to continue through September and October as well. But I’m thinking the RBA might opt to fall back to 0.25% in September, to just test the broader health of the economy. As mortgage holders, we all know we need to be prepared for interest rate rises, which is why many among us are more concerned about our superannuation in the face of growing inflation. I’ve had multiple conversations recently where people have expressed concern about whether they have ... Read the rest of entry »

The share market is not yet at the bottom, NZ hikes rates again

Posted on Wednesday, July 13, 2022
Rising interest rates and high inflation have been the themes of the year so far, and in the US tomorrow morning our time I expect the latest inflation figures to show a 9% rise, which will also likely trigger the Federal Reserve to increase US interest rates by a further 0.75% later this month.   For a “nuts-n-bolts” explanation of how inflation works, check out my spot on 6PR this morning.   For those watching the US dollar, steep interest rate hikes and recession fears have lifted the greenback to the highest levels since March 2020. The surge could be a significant headwind for the profits of many large US firms, and another reason to expect a dimming earnings outlook.   Analysts Core Logic have said the market has not yet priced in any possible decline in earnings estimates this year. They say, “even if earnings estimates stay stable and especially if they decline, the stock market is going to have to fall further before we see an impor ... Read the rest of entry »

The interest rate pain has only just begun

Posted on Wednesday, July 6, 2022
Many of us believe we’re long-term investors. When we say long-term, we’re suggesting 5+ years at least.   And I use the word believe deliberately, as for those not nearing retirement, investments in superannuation count as a long-term.   However, with daily online access to your account and regular finance updates, some investors may feel that going even a day without checking their balance or performance is a long time! While I encourage people to be conscious of their investments, the 2021-22 financial year will report losses across the board. In fact, my early research suggests the average growth fund will be down around 11% for the year. Why has this happened? High inflation means interest rates go up. When interest rates go up, investors sell riskier assets (eg. tech shares) and move to cash or fixed interest. The result is share markets and certain sectors become volatile. Add to that geopolitical tensions with China globally, and the Ukrai ... Read the rest of entry »

Happy Financial New Year! Or is it?

Posted on Friday, July 1, 2022
Happy Financial New Year! Or is it? Higher interest rates, record high gas and electricity bills, higher petrol prices and the cost of food soaring – where's the happiness in that?   The upside is that we are at 40-year lows for unemployment, which means if someone wants a job, they can have one, but it doesn’t mean that the income will be enough to manage the increasing cost of living. On top of that, research house Morgan Stanley has reported:  40% of borrowers are less than one month ahead on their mortgages. 30-40% of loans were originated in the past 2 years, and only 15% were written at rates more than 5%. The good news is that 35% are 2 years ahead, versus 30% 2 years ago. So what does the financial new year bring? Most of the changes are around superannuation. From today, 1st July, employers will need to increase the Superannuation Guarantee contribution rate they pay from the existing 10% to 10.5%. Further, the $450 monthly ... Read the rest of entry »

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