It takes a big man to admit when he’s wrong.
But at least Reserve Bank Governor Philip Lowe was able to do that this week.
For the past two years since interest rates were dropped to 0.1%, he’s constantly assured us that rates wouldn’t go up until 2024.
I for one never believed it because since late 2020, inflationary red flags have been surfacing like teenage acne.
The problem is, his rhetoric has lulled waves of borrowers into a false sense of security thinking rates wouldn’t go up for ‘years’.
It was reckless at best.
But now we have a potentially bigger problem.
Instead of tapping the breaks on interest rates last year, the RBA (and the US Federal Reserve) may end up slamming them this year.
You see, the latest trading of bank bill futures suggests the RBA cash rate could be 4% by early 2023 due to inflation. It’s currently 0.35%.
If that happens, mortgage rates will go to 6%.
Do I think this will happen?
I hope not!
It will hand break the property market, spike mortgage defaults, and hike us straight into a recession.
But I can tell you this much…
For the past eighteen months, I’ve been watching the bond market as closely as I’ve been watching the stock market and if my read on both is correct, what’s coming is not nice.
That’s how much things changed this week.
And that’s something I don’t like to admit.
Happy Mother’s Day!
Adam
It’s a Tuesday morning in March 2020. You check your super balance before breakfast. It’s down $80,000 from last week. You’re supposed to retire in four months. Your coffee goes cold on the bench. This is the scenario that terrifies every pre-retiree in Balmain. Not the abstract idea of a market crash – but the …
Continue reading “What Happens to Your Income When the Stock Market Crashes?”
You’re 52. You check your super balance: $380,000. Your stomach drops. “That’s all? After 30 years of working?” Then you remember that article you read: “You need $1 million to retire.” Quick math: You need to more than double your super in 13 years. That seems… impossible. So you do what many Australians in their …
Continue reading “Building Your Financial Herd: Investment Strategy in Your 50s”
Imagine you inherit a dairy farm with 50 healthy cows. Each cow produces milk that you can sell for income. Together, they generate enough money to live on comfortably. Now imagine someone suggests: “Why don’t you sell five cows this year to buy a new truck?” Sure, you’d get the truck. But now you only …
Continue reading “Why Your Investment ‘Cows’ Should Never Be Sold in Retirement”
Information provided by Suncow Wealth is general in nature and does not take into consideration your personal financial situation. It is for educational purposes only and does not constitute formal financial advice. Remember, the value of any investment can go down as well as up. Before acting, you should consider seeking independent personal financial advice that is tailored to your needs. Suncow Wealth Pty Ltd is a Corporate Representative No.441116 of AFSL 342766.