Spend or save? What does your summer look like?

Posted on Friday, November 19, 2021
There are some things we can control, and some things we can’t.
 
Last week’s article on the seemingly constant increases in insurance premiums, is an example of something we can’t control. Costs like this are very frustrating when trying to budget and plan.
 
But one thing we can control, is our discretionary spending.
 
Coming out of lockdown and into summer, retailers, restaurants, and other consumer-based businesses are banking on us opening our wallets and splashing our cash.

And if the US example is anything to go by, it’s looking good for those businesses. Retail sales in the US in October were up 1.7%, with Walmart and Home Depot both reporting massive gains.
 
From a wider perspective, these strong retail numbers are also a strong indicator that the public is confident to spend money, and that the global economy is recovering from the pandemic.

So what about you? Do you think you will spend more this Christmas than previous years?
 

Why are my insurance premiums always going up?

Posted on Thursday, November 11, 2021
It's almost become an annual event: waiting to learn how much your insurance premiums have increased by. Many of us have untold numbers of insurance policies, including car, home, contents, life, TPD, pet, business, the list goes on and on. And every one of these seems to have a steady year-on-year premium increase that's contributing to the ever-growing cost of living, while wage growth remains essentially stagnant. So why do insurance premiums increase every year? It's a pretty simple answer. Every time someone makes a claim, the insurer pays out, and given insurers are businesses, they want to maintain and grow their profits, so to cover the cost of payouts, they have to increase their premiums. As an example, here's MLC's rate increases for this year: Death cover (stepped and level premiums): up 3.5%. TPD: up 3.0%. TPD – Additional Rate changes: up 15%. Critical Illness: up 15%. Income protection (stepped and level premiums): up between 5-35%. One way t ... Read the rest of entry »

Inflation's up, our dollar's up, what about interest rates?

Posted on Friday, October 29, 2021
A ten second economics lesson: as inflation goes up, the yield of bonds goes up, with the global expectation that interest rates will also go up. But in Australia that’s happening any time soon. Inflation is a critical economic measure that’s reported quarterly. But in my view, it needs to be reported monthly. Despite that, yesterday’s underlying annual CPI rate came in higher than the RBA expected. It landed at +2.1% for the September quarter which is first time since 2015 that the actual rate has snuck into the RBA target range. The general view now is that the RBA will cease quantitative easing by mid next year and increase interest rates in the first half of 2023. The spike in petrol prices and the jump in the cost of building a new house and renovations and the cost of shipping have soared. Any outsized price jumps - and declines - are cut out of the CPI, then recalibrated. What is left is the ‘trimmed mean’ – the RBA’s preferred measure. ... Read the rest of entry »

Are you caught in your own personal Squid Game?

Posted on Wednesday, October 20, 2021
Squid Game – have you heard of it? No, it’s not some weird new sport involving calamari, it’s Netflix’s newest blockbuster show, which is surpassing all records!   The series is based on a Korean children’s game, but in this adult version 456 players who are all deeply in debt compete for a massive cash prize, with a deadly penalty if they lose.   Of course, it’s a fantasy, but there are plenty of Aussies battling their own form of Squid Game right now, with the financial contagion effect of COVID-19 pushing them into a financial squeeze. Many are struggling to pay even the most basic of bills, like power, water, gas, and council rates. These people are being forced into dire situations, but instead of Squid Game tasks, they're being thrust into their very own version of these trials, like navigating high-interest penalties, accruing debt, high interest-bearing loans from predatory pay-day lenders, and ultimately being disconnected from ... Read the rest of entry »

Hot property market heat set to cool this summer

Posted on Thursday, October 14, 2021
The property markets in Australia and New Zealand are soaring beyond comprehension. It’s become harder than ever for first home buyers to get into the market, and the cost of upsizing or downsizing is expensive enough with exorbitant stamp duty costs, let alone booming property process.   Something's gotta give.   This has been recognised by the NZ central bank and the Australian regulator APRA, who both made interesting moves in the last week. New Zealand’s central bank increased their official cash interest rate from 0.25% to 0.5%, which should help to cool their property market a bit.   In Australia, APRA, which supervises and manages the financial services system, changed the rules to make it harder for investors to borrow large sums.   APRA is concerned that in a very low interest rate environment, rising house prices are getting out of control. In the June quarter, 20% of loans approved were for more than six times the borrower&rsq ... Read the rest of entry »