Diversified Financial Planners News
Wednesday, 28 February 2018 13:35

Got post-holiday debt lag?

 

Get out of debt and back in control of your finances with our simple money tips.

Have a plan to pay down your travel debt
If your debt is on a credit card, work out how much extra you can put towards your card and crunch the numbers using our credit card calculator. You will be surprised how fast you can pay it off with small extra repayments over a year, and how much interest you will save.

 

Take your product home, pay for it within the specified timeframe, get charged 0% interest. What could go wrong? Branded the modern-day layby, ‘buy now, pay later’ services essentially offer the same thing, except you get the product up front—the outfit, the watch, even certain domestic flights within Australia.

If you haven’t heard of buy now, pay later services, or are keen to know more, we explain what they are, how they work and when it’s possible you could run into financial strife if you’re not careful.

 

A lot has been said and written about Australia’s household debt levels and possible implications on the banking system and the economy more broadly. But could Australian households be even more constrained than the headline numbers are suggesting?
 

The period since the Global Financial Crisis (GFC) has seemed unusual in the sense that periodic crises and post GFC caution prevented the global economy from overheating and excesses building, in turn preventing the return of the conventional economic cycle. Many of course concluded this was permanent and that inflation would never rise again (with talk of structural stagnation, the Amazon effect, etc). However, it’s becoming increasingly clear the global economy is moving out of its post GFC funk – with growth picking up and signs that inflation will too (led by the US) – and arguably returning to a more normal investment cycle. The pullback in shares and surge in volatility seen this month likely indicates an adjustment in investor expectations to reflect this. This note looks at what to watch.

 

We explain the difference between the government's Age Pension, a transition to retirement pension, and an account-based pension.
 
If you’ve heard the term ‘pension’ being thrown around, you may have picked up that there are many types of pensions available in Australia.
Tuesday, 20 February 2018 11:54

What are the benefits of a split home loan?

 

If you can't decide between a fixed or variable rate, a split rate home loan could provide the best of both worlds.

If you’re about to take out a home loan and are looking for some protection against interest rate rises, a fixed rate home loan may sound like the loan for you.

On the other hand, if you don’t want to miss out on the benefits of a potential interest rate cut, and/or you’re looking for additional flexibility, a variable rate home loan could also have its advantages.

Downsizing to a coastal town or regional hub can hold lifestyle appeal, but don't bank on it as a strategy to fund your retirement.

Introduction
If Australia has an Achille’s heal it’s the high and still rising level of household debt that has gone hand in hand with the surge in house prices relative to incomes. Whereas several comparable countries have seen their household debt to income ratios pull back a bit since the Global Financial Crisis (GFC), this has not been the case in Australia. Some worry Australians are unsustainably stretched, and it is only a matter of time before it blows up, bringing the economy down at the same time. Particularly now that global interest rates are starting to rise. This note looks at the main issues.

Wednesday, 14 February 2018 13:45

What high household debt means for investors

“High house-hold debt is Australia’s Achilles heel,” says AMP Capital Head of Investment Strategy and Economics and Chief Economist, Shane Oliver. “I’ve been thinking this for many years now and yet it seems to keep going higher.”

Latest data from the Australian Bureau of Statistics puts total household liabilities at $2.466 trillion, or 199.7 percent of disposable income, putting it among the highest in the world.

Wednesday, 14 February 2018 13:42

Equities riding on fear not fundamentals

“The only thing we have to fear is fear itself,” said Franklin D Roosevelt at his inauguration as US President in 1933.

I think “the only thing we have to fear is the fear index itself” is a better description of where investors are at right now.

It’s been a wild ride on Wall Street and beyond of the past week – the worst in two years for the S&P 500 – with the volatility causing many to ask if the bubble has burst and the equities bull market is over.

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