(03) 9020 2905If there was an economic windsock, it would be blowing around in circles. Even if a direction was discernible right now, it would probably be flying the opposite way tomorrow.
The messages in the news and from commentators are about as consistent as Mark Philippousis’s tennis career. (Any West readers able to spare ‘The Poo’ a million bucks?)
The official statistics say we’re not in a recession. The Reserve Bank governor says we are. Interest rates are at generational lows and the government is throwing gazillions at us – helpful to home budgets, sure, but two dead set signs of panic in officialdom.
Good news – imports have fallen heavily. Bad news – exports down nearly as much. The Australian dollar hit the moon, crashed back to earth and has taken off again. Like a North Korean rocket, it depends on which side of the story you want to believe, as to whether it’s a success or a fizzer.
We’re told unemployment will soar, but so far it’s still well below the long-term average. Property prices are jumping at the bottom end, but slumping at the top end.
So, what do you do when confusion reigns supreme, indicators are pointing every which way and John Farnham thinks we want him to do another comeback tour?
Don’t be a bunny stunned by the distant headlights. We don’t yet know if the lights are a B-triple road train or my two-year-old son Ned on his trike. Whatever it is, it will bring opportunity.
Think counter-cyclical. Here are five things most people aren’t doing, or won’t do, which many could benefit from now.
Invest in your business
There are two million small businesses in Australia and when things got shaky last year, they stopped investing in new equipment. The Rudd Government has increased its investment allowance to a bonus 50 per cent and extended it to the end of the year. For example, eligible businesses buying a $30,000 car would get an immediate $15,000 tax deduction, along with their normal depreciation allowance for the vehicle. It applies to other capital items also. While no-one’s buying and the government is giving … take!
Take a holiday
Low demand means airlines and hotels are discounting heavily. You have to take holidays. Now they’re cheap and there’s no crowds. Just pick a swine flu-free location. (Rules out Victoria.)
Invest
Stock markets are forward-looking beasts – usually about 6-12 months. They don’t wait for the actual evidence. The rebound that we’ve seen in the last two months is proof of that. It could be time to dip a toe.
Build a cash buffer
Returns are low but it’s not an excuse to hold no cash. Lose your job and your mortgage will quickly become a struggle. Most people will be able to hold onto the house if they have three months’ salary stashed away.
Super opportunity
This is the last opportunity (for several years) to get a $1500 government handout. If you earn less than $30,342 for this financial year, you could get the whole $1500 (but available pro-rate to those earning up to $60,342).
Yin and yang. Here’s five things not to do.
Don’t expect a payrise
You might have had a great year. But that doesn’t mean the boss and/or the company hasn’t done it tough in “the recession we didn’t get to have”. But it may pay better – as in keeping a job – to not go berserk if you don’t get one.
Don’t rush into property
The first-home buyers’ end of the market is still humming, even if the rest of the market is falling. But that doesn’t mean it’s good value. When the first-home buyer incentives end, many predict prices will soften.
Don’t be lazy with cash
If you are doing the right thing and holding some cash for a rainy day, make sure you’re getting a decent return on it, in the home loan’s offset or redraw account or a high-interest online account.
Don’t get lazy on bills
Insurance, internet, phone, gas and electricity, groceries. There are always, ALWAYS, ways to permanently cut costs from the household budget by finding a more competitive supplier.
Don’t bet the house
Sometimes you hear a compelling case for investment. That’s okay. Just don’t bet the house on it. Make regular, targeted small investments. Diversification is not just about asset classes, but time.
Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and director of Castellan Financial Consulting. Email: bruce@debtman.com.au