Aww, come on! Can’t we bask in the rosy glow of last year for a little bit?
A year ago, the sharemarket was below 4200 points, property prices were still declining and interest rates were higher. There’s three reasons to cheer FY13! It turned out pretty darn good, I reckon.
But, you’re right, navel gazing will only unearth fluff. So let’s dust off the crystal ball – more likely to be profitable.
The ball’s a little cloudy, but this is what I can make out and what Gen Xers should do about it.
First, it’s going to be an abominable year for coin. Cash returns, after tax and inflation, will be pretty much negative. Hold spare cash in the tax-free zone that is an offset account. But your investment money will need to follow Lou Reed and “take a walk on the wild side” if you seek positive returns.
Second, property seems pretty cheap. It fell for three years from mid-2010. Those declines, plus lower interest rates and still strong employment numbers suggest property’s fortunes are turning. Well, to me at least.
Investment property involves big debt, which isn’t for everyone. But Gen Xers comfortable with debt, who have time on their side, could find now a good buying opportunity (for quality property).
Third, Xers have got to take super more seriously. Boring, I know – you can’t eat your super until you’re 60.
From today, employee’s super contributions rise to 9.25 per cent of salaries. Even sacrificing just $50 a week ($2600 a year) will make a huge difference to your retirement with a few decades of compounding.
Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and principal adviser with Castellan Financial Consulting.