Hello {FIRSTNAME Subscriber}

Welcome to our September newsletter

Australians are in an enviable position right now, with one of the only economies in the world that is showing signs of growth.

Key data reported early this month would seem to affirm what most economists have been suggesting over the past few months: our economy is improving.

Gross domestic product (GDP) – a measurement of the output of our goods and services – rose 0.6 per cent for the June quarter. Also it has just been announced that the unemployment rate dropped to 5.7 per cent.

What this means for most of us is that the dreaded eight or nine per cent unemployment level that was bandied about earlier this year now looks unlikely to materialise.

With an economy that is gathering pace again, businesses can feel more confident about their prospects moving forward and that will translate in to fewer job losses – and even new jobs created in some sectors if growth continues.

The fear of high unemployment is one that strikes deep with any homeowner and we are all doubtless relieved to see this diminish.

What we will have to brace for, however, is the very real prospect that interest rates will soon start to climb. The Reserve Bank of Australia (RBA) and the government were quick to react when the economic outlook was bleak but with improvements now showing through the RBA is likely to begin to raise rates quickly.

As you will have heard by now the Reserve Bank increased rates by 0.25% p.a. on Tuesday 6th October. The banks will surely pass this on in full.

As we enter a new upward rate cycle take time to consider your current position and what shape your finances will be in once the now inevitable rate rises come into fruition.

Now may be a good time to consider the pros and cons of a fixed rate mortgage or perhaps to look at bundling a number of debts in to one easy to manage pool. If you’d like to chat through your options or would simply like some help in setting a budget please feel free to give me a call.

Sincerely,

The fruits of property investment

If you’re looking to set yourself up for the future, the property market is a great investment choice – and now is the perfect time to jump in.

For as long as most of us can remember owning our own home has been the great Australian dream, but the trend towards owning several properties is growing in popularity and it’s not hard to understand why.

Property investment is increasingly being recognised as a fantastic wealth building tool. To get the most out of property it is best to view it as a long term investment or means of generating what is referred to as capital growth.

Why invest in property?
Historically, property prices in Australia have doubled in value every seven to 12 years, offering a steady path to wealth creation.

Compared to other investment options, such as shares or other complex financial products, bricks and mortar also remain a relatively safe investment.

You won’t need a degree to understand the fundamentals of property investment, and provided you do a little bit of homework there’s a fair chance it will deliver good results.

In contrast to financial markets property has also proven to be much less volatile. Over the course of the financial crisis, the Australian share market lost around 40 per cent of its value while most housing markets only dipped slightly or simply remained flat. According to RP Data, for example, overall property values fell by just 2.6 per cent in the 2008 calendar year.

As well as potential long term capital gains, an investment property can offer you good returns now. The rental income you receive on a property can help cover your mortgage repayments, and in a market such as today’s – when interest rates are low – your rental income may even cover all, or more, than your loan commitments. This will leave you with positive cash flow while your investment essentially pays for itself.

Current opportunities                                              
Current fundamentals in the property market are shaping up to offer some of the best conditions in years. With house prices having softened over the last few years, intense housing shortages combined with low interest rates make positive cash flow opportunities a reality – now is an ideal time to consider an investment purchase.

If you already own a property you may be able to use equity that has built up to fund a new investment.

In fact, once you have your first property under your belt the opportunities for more investments will continue to blossom, with each property giving you greater leveraging power and opportunity to invest further.  

To find out your investment options be sure to give us a call – we’ll find the ideal financing strategy to suit your needs.

Off the plan considerations

There are many advantages of buying property off the plan but it requires a cautious approach.

Buying a new home or an investment property off the plan is a popular purchasing method for many Australians.

A significant advantage is that it enables you to tap into tomorrow’s market at today’s price.

This of course works best before a property boom or when the market is widely believed to have hit the bottom – which leaves plenty of room for price growth. If you do manage to buy into the right market at the right time, this can generate fantastic returns.

Another upside of buying off the plan is that it generally does not require too much financial commitment up-front.

Most developers require a 10 per cent deposit to secure the property while the remaining balance is not required until the property is complete. This can give you anywhere between a few months and a couple of years to save hard to help reduce the amount you’ll need to borrow when it comes to taking out a mortgage.

This strategy can be ideal for investors who don’t want to tie up too much of their capital but can still secure what they hope will be an appreciating asset.

Purchasing off the plan is also a popular strategy for those who do not want the stress of building a property themselves yet would like to live in a brand new home. There are also tax advantages of purchasing a new property, if it is an investment: you can claim on the depreciation of the building and its fittings.

While this all sounds promising it’s important to tread with caution when it comes to buying off the plan.

If the market takes a downward turn before your property is finished you may be left with a lemon that does not produce returns for some time. Be absolutely sure to do your homework on the property market and purchase in an area that is most likely to offer growth potential.

There are also risks that your developer may go bust or may not be a professional operator. Make sure you choose a developer with a reliable track history, or better still, one that has been recommended by a satisfied customer.

The last, but most obvious downside of buying off the plan, is that you are buying something you cannot see. This is always a risk. But you can do your best to ensure your purchase is what you hope by thoroughly examining all plans and documents and enlisting the expertise of a legal adviser to ensure you are not signing up to anything you don’t want to.

Tracking down lost super

Don’t miss out on money you’re entitled to – track down lost super and boost your prospects of a comfortable retirement.

To really place yourself in the best possible position for the future it’s important to have all of your financials on track. Superannuation is a fantastic way to save money for your retirement but according to statistics from the federal treasury department, roughly one in two Australians have some lost super money – with $12.9 billion in forgotten super sitting idle.

If you’ve shifted jobs a few times in recent years, changed your name or even your address, chances are you may have super you’ve forgotten about.

The obvious downside of lost super is that you may have a substantial amount of money you don’t even know about. Secondly, leaving your super in multiple accounts can result in excessive fees and charges.

So how can you find your lost super? There are a number of consolidation services available that can find your super for you. The Australian Taxation Office also offers a service for finding lost super called SuperSeeker; it is free to use and available online 24 hours a day, seven days a week.

If you know where your super is, you can simply request your existing or preferred fund to roll those accounts into one. If you happen to have less than $200 in any one super account you may be able to withdraw it as cash.

While it’s never too late to track down lost super the sooner you get onto it the better. But be prepared to hit a few roadblocks along the way. Do expect to fill in a bit of fiddly paperwork and spend some time chasing groups, lost documents and sitting on hold. But at the end of the day it’s easy money that you are entitled to, so don’t let it get away!

Wine review

Cumulus Wines Rolling Shiraz 2007 (NSW)

This deep red wine captures the spirit of the NSW Central Ranges, with its regional style of low tannins, low alcohol and lifted, berry bright fruits and a taste combination of spice and licorice. Best imbibed on a warm night as its smooth, approachable, mouth-filling fruit is a memorable personality.

RRP $17.95
www.cumuluswines.com.au

Book review

How to balance your life

The quest to achieve the perfect work / life balance is one many people share, but how often does talk turn into action? Many have written on the subject but the results are often surprisingly short on detail. Enter How to Balance Your Life, a step-by-step practical guide to achieving real, productive and sustainable change in our lives.

Authors: James O’Loghlin
Publisher: Allen & Unwin, 2008
RRP: $26.99

Contact us