The Reserve Bank Board (RBA) met today and cut the official interest rate by 0.25% to 1.5%. This decision had been widely anticipated, as expectations of declining inflation for the June quarter were realised with the data released in late July.
Interest rates cut to 1.5%
UK votes to leave
With UK voters narrowly voting to leave the EU markets, and Prime Minister David Cameron announcing his resignation, markets are reacting quite negatively to the news, as expected.
As outlined in the email the blog post below, the ‘Leave' vote will create a period of instability over the coming days and weeks, creating a potential buying opportunity in the short term. This may also add to the case for the RBA to cut interest rates, which was likely to happen anyway.
We’ll continue to monitor the situation, but in the meantime, it is important not to get too perturbed by the media frenzy as this is likely to be a storm in a teacup.
Enjoy your weekend (and stay away from the newspapers!).
For more information, contact Rick Maggi on 9382 8885 or rickmaggi@westmount.com.au.
Budget SPECULATION RIFE
There will be added interest in the Federal Budget announcement next week (May 3rd) as it's likely to be the final major economic statement the Government makes before the election later this year, quite possibly July 2nd. With the opposition taking a strong stance on capital gains tax and negative gearing, we're looking at a focus this year on taxation. Corporate tax could be cut by up to 1.5% however, there is likely to be minimal, if any, relief in terms of personal income tax.
There may also be some changes to superannuation. Some potential changes might be reduced contribution caps, the concessional 15% tax on super contributions, an end to 'Transition to Retirement' pensions and taxes on superannuation pension payments.
Overall, the outlook is for minimal growth in government spending, with spending offset by savings elsewhere in the Budget.
Where sharemarkets are concerned, historically we have seen some sideways tracking in past election years, but there has been no evidence to date of a lasting impact caused by an election. In fact, Australian economic growth has actually been strong during election years since 1980.
We'll be watching the announcements closely next week and will keep our clients informed of any meaningful developments.
For more information, contact Rick Maggi on 9382 8885 or rickmaggi@westmount.com.au.
02/02/16:Super or the mortgage?
Many people wait until their home loan is paid off before investing more in super. However, if you are currently making more than the minimum home loan repayments, you may be better off when you retire if you make additional super contributions instead. Super or Mortgage?
For more information, contact Rick Maggi at Westmount Financial on 9382 8885.
26/10/15: Offset Accounts: Better balance
...a better way to manage your mortgage
If you want to repay your mortgage quickly and still have easy access to your additional repayments, an offset account may be worth looking into. Read more here
For more information, contact Rick Maggi at Westmount Financial on 9382 8885.
Rick Maggi Westmount Financial Clear Focus. Better Solutions.
03/09/15: Keys to de-stressing a mortgage
The causes of mortgage stress...
Don't sail out farther than you can row back. This Danish saying is sound advice for anyone thinking of borrowing to buy a home, particularly now that interest rates are low and house prices have risen sharply.
According to a paper for the Centre of Policy Development and University of Canberra, Australians have a tendency to be over-confident in our ability to repay loans. We also underestimate the likelihood of things potentially going wrong in our lives.
Have you ever heard yourself or someone else say "I'll be able to repay my loan, provided I keep my job, don't get sick and I'm not hit with any large unexpected bills"? Chances are you probably have. but things can and often do go wrong.
For more information, contact Rick Maggi at Westmount Financial on 9382 8885.
Rick Maggi Westmount Financial Clear Focus. Better Solutions.