“Get your fightback on”
By Tim Henry, Financial Adviser, Aspire Planning.
More than most, this year is one that needs some reflection. In many ways, 2023 has been a very messy year. And there are so many of us feeling under pressure right now, we are this hearing from many clients and from many other people in my community.
The imposing combination of bigger mortgage payments (due to rate increases) and general cost of living pressures has many people ‘on the ropes’ – feeling like they are fending off these pressures and trying to stay above water. This theme is a constant in our client meetings right now.
In the latter part of this year, we have been privy to a number of job redundancies, amongst clients and friends. Coming at such a volatile time, redundancies can throw a massive curve ball into any financial plan.
Food costs, utility costs and insurance costs are skyrocketing.
Recently my wife and I were in the supermarket and looked at each other in shock when we picked up a $8 tub of butter! What??? Sometimes its these little moments that can cause anyone of us to freak out about rising costs.
Insurance costs and in particular the Life Insurance that we recommend to clients has seen very high increases each year for the past 3 years. Much of our work with clients is how they can responsibly manage this risk in line with what they can afford.
Superannuation balances and personal investments performances have plateaued over the past 2-3 years. This is another factor that feeds into a narrative of “we are all working so hard, yet have little to show for it”. Some may even feel like they are going backwards. For many, that feeling is a reality.
So how do we process all of this and move forward with some confidence into 2024 and beyond?
It may feel like a fight for survival and to use a boxing analogy, 2023 has thrown many punches and you are still standing!
We have adapted and endured.
Just maybe, we have got this!
Mortgage Rates
Lets tackle the biggest worry for many – Interest Rates.
Starting in May 2022 and ending May 2023 – there were 11 interest rate rises. The RBA cash rate rose from 0.10% to 3.85% during that time.
Since May 2023 there has been only 2 more rises – one in June and the last rise in November. The current cash rate is 4.35%
Whilst that last rise was a real punch in the belly to many of us, the rates ARE stabilising.
Could there be more rises? Answer – Maybe. It is possible. Of course we need to prepare for that.
But it does feel like we have weathered the worst part of the storm.
Cost of Living Pressures
There is no way to sugar coat this. There is no magic wand. No quick ‘hack’ to fix the problem.
Yes, costs have risen across the board. But that doesn’t mean you can’t impact your own situation!
And if you need to make cuts or to change spending habits, it doesn’t necessarily have to be permanent.
For absolute ESSENTIAL items, you are in a position of limited control when costs increase.
But for many items in our expenditure, you have the ULTIMATE control. But this does take commitment, it does require a structure and does require you to stay focused.
By making a proactive impact, you will feel like you regain some control.
Note
In 2022, our podcast, ‘The Grass is Greener’ had the privilege of collaborating with Financial Coach – Karen Eley to produce a 30-Day Savings Challenge.
Over 5 episodes we broke down the process:
- Vision and Values – Seting your Financial & Life Goals
- Your Financial Reality Check (the Ugly Truth)
- How to bridge the Gap
- What gets measured gets managed
- Check in and Wrap up
Each episode has downloadable resources to help you build each step.
Link to 1st episode https://bit.ly/3BRderF
Superannuation and Investments
Discussing investments (including Super) is always exciting. The possibilities that come from a consistent and sustained investment strategy are bountiful.
But investment markets have not felt exciting for a few years now. When people look at the performance of their Superannuation or their personal investment, they may feel deflated. It has been a grind, returns have been quite flat.
When you spend your working life (as a Financial Adviser) analysing and building financial plans, you do learn a few things about the impact of statistics and timing.
When things are ‘flying’ – the numbers are amazing. Green lights everywhere. Cut the figures any which way, its looks great. We are big on long term performance and 1-2 good years can make the 10-year average look wonderful. Everyone is very happy in this environment.
When the environment is flat or negative, the numbers are dull and uninspiring. They tend to look average no matter how they are positioned. The longer term average is dragged down. People start getting restless. Understandably they want some action!
This latter situation is where we are right now. Conversations I am having on daily basis are linked to the restlessness we are feeling.
My guidance to all is that if you don’t have to, now is not the time to change your investment strategy. Time and time again – patience has been rewarded! This moment in time will be no different.
Summary
We are further into these tough times that you might realise. As we move into 2024, it is appropriate that you acknowledge much you have dealt with already! Give yourself some kudos, re-set and get ready push forward.
It might sound like a positive perspective, but it’s one I truly believe in.
You HAVE got this.
Times might be tough, but YOU are tougher.
FOCUS on what matters and what you can control.
IGNORE what you can’t control.
Taking control will give you CONFIDENCE.