kristopher

The Benefits of Paying Your Mortgage Fortnightly

· ·

The Benefits of Paying Your Mortgage Fortnightly – How much can it save you?

When it comes to managing your mortgage, small changes can make a big difference. One strategy that has gained popularity among homeowners is paying their mortgage fortnightly, as opposed to the standard monthly payment. This approach can yield several benefits and save you money in interest repayments over the life of your loan.

  1. More Frequent Payments: Paying your mortgage fortnightly means you make payments every two weeks, resulting in 26 payments a year (equivalent to 13 monthly payments). This extra payment each year may seem modest, but it adds up over time, ultimately helping you pay down your principal faster.
  2. Reduced Interest Costs: By making more frequent payments, you reduce the outstanding balance on your loan more quickly. Since interest is calculated based on your remaining balance, the lower principal results in less interest accumulating over time. This can lead to significant savings in interest costs, which can help you pay off your loan faster.
  3. Accelerated Debt Reduction: Paying fortnightly also accelerates your journey toward debt-free homeownership. With the extra payments, you’ll build equity in your home at a faster rate, which can provide you with financial security and flexibility down the line.
  4. Improved Budgeting: Fortnightly payments align with many people’s pay schedules, making budgeting more straightforward. You can synchronize your mortgage payments with your income, ensuring that you always have enough funds available to make your payments on time.
  5. Extra Payments without Sacrifice: Since you’re making smaller payments more frequently, it’s easier to fit into your budget without feeling a significant financial burden. This can be especially helpful for first-time homebuyers or those who want to maintain a comfortable lifestyle while reducing their mortgage debt.
  6. Long-Term Savings: While the savings from fortnightly payments may not be immediately noticeable, the long-term benefits are substantial. Over the life of a 30-year mortgage, for example, you can potentially save thousands of dollars in interest and pay off your loan several years earlier.

In summary, choosing to pay your mortgage fortnightly is a smart financial move, and the benefits of paying your mortgage fortnightly can potentially be huge. It’s a simple and effective way to save money on interest repayments, reduce your debt faster, and achieve homeownership goals more efficiently. However, it’s crucial to check with your lender to ensure that they offer this payment option and to understand any terms or conditions that may apply.

What ChatGPT Thinks You Should Do With Your Money – Part 2

· ·

What ChatGPT Thinks You Should Do With Your Money – Part 2

AI is all over the news, our news feeds, and our conversations in general. Almost every industry is talking about AI and what it can do for us, so is the finance world any different?

There are millions of different opinions when it comes to how to manage your finances, so why not see what AI has to say?

As a test not only to see how our top tips stack up, but also as a fun way to see how AI works and to see how a robot can try to make personal finance fun, we’ve asked ChatGPT what it thinks are the 10 best personal finance tips for our readers.

The best bit is – it  gets most of the core philosophies spot on. Although it is very light on the details and hasn’t given much in the way of specifics. That being said, you should always seek professional advice before acting on information you read below.

From debt dominoes to “time in the market vs. timing the market”, ChatGPT had some amazingly similar core messages that are renown industry wide to be effective for your personal finances.

Whilst we obviously do not recommend taking financial advice from AI (haven’t replaced us yet anyway), we’ve found it a really interesting and eye-opening experiment, especially as we head into a new age of technology and use of artificial intelligence.

Check out what ChatGPT had to say here:

READ PART 1 HERE

  1. Personal Risk Insurance: Your Safety Net. We all know life can be as unpredictable as an alpaca doing ballet. Personal risk insurance, like a tutu-clad alpaca, is your graceful savior. It can protect you and your loved ones from the unexpected twists and turns of life’s dance.
  2. Estate Planning: Crafting Your Financial Legacy. Estate planning is your chance to leave a lasting impression, even when you’re sipping cocktails on a tropical beach in the afterlife. Plan for your loved ones, and ensure your hard-earned assets go to the right people. Because who doesn’t want to be remembered as the maestro of their own financial symphony?
  3. Retirement: The Golden Age of You. Ah, retirement! The golden age of “you” time when you can finally relax like a cat on a sunlit windowsill. Start planning early and let the magic of compound interest turn your savings into a cozy retirement blanket. Retirement isn’t a finish line; it’s a beginning to a new chapter!
  4. Financial Education: The Map to Treasure Island. Knowledge is power, and financial education is the treasure map to navigate the murky waters of money. Dive deep into financial literature, attend workshops, and devour podcasts like a chocolate fountain at a dessert buffet. The more you know, the better prepared you’ll be to handle your finances like a pro!
  5. Laughter: The Best Financial Medicine. Last but not least, laughter is the ultimate stress reliever, and in the world of finance, that’s golden advice. Sometimes, all you need is a good laugh to keep your spirits high and your financial journey on track. So, remember to chuckle, giggle, and guffaw all the way to the bank!

Conclusion

And there you have it—ChatGPT’s 10 Best Personal Finance Tips served with a side of humor and seasoned with wisdom. Embrace these tips, and you’ll be on your way to mastering the art of personal finance like a true financial guru. Remember, life’s too short not to enjoy the ride, so laugh a little, save a lot, and let’s steer this financial ship together towards brighter horizons! Bon voyage, dear readers!”

 

If you’ve had a laugh about this but want to chat about it further, or any aspect of your finances, you can get in touch with us or book a free 20 Minute Discovery Call here. 

 

Quarterly Compass: The End To Low Volatility.

· ·

Quarterly Compass: The End To Low Volatility

In the last 3 months a lot has happened. Our June Compass is always an interesting one because we get an opportunity to review the last financial year as a whole and the last financial year was a doozy, both good and bad.

Things at here at Wealtheon have been going well and Lauren and I are being kept busy working on investments and we are growing strongly.

Over at Huxter Estate, our harvest was disappointing, a lot of early rain meant we lost a huge amount of potential grapes. We only got 1t of grapes which is only a quarter of what we yielded last year. Whilst disappointing, we are resetting for this next growing season which means, it’s time to prune. Pruning is one of my favourite jobs but it means freezing our toes off in the vineyard from sunrise until 9am each morning and then again on weekends.

That’s all from us personally, I hope you have also had a ripper 3 months. Without further ado, let’s get stuck in.

What’s Happening In The Economy?

This is the big burning question on everyone’s lips. The only thing that I can say with certainty is that volatility is back in town and it is likely to stay. To clarify, in the years after the Global Financial Crisis, developed nations have seen an extended period of some of the lowest fluctuations in economic conditions in the last 120 years. This has meant that business, property and employment conditions have been some of the easiest during that period of time. This was supported by large amounts of government quantitative easing and low interest rates which has ended.

Further to this the reserve bank sees global growth forecasts to remain low for the next two years sighting inflation and monetary policy tightening. I believe that the economic conditions will remain tough over the next 6 – 12 months whilst people find their feet in a higher interest rate environment.

We are seeing a lot of builders going bust and we are seeing a lot more businesses entering into liquidation and administration and whilst we haven’t had the official numbers in yet, I think we the way people are spending and the general sentiment, it certainly feels like we are in recession.

The good news is that I think that we have avoided the worst case scenario and whilst, I empathise deeply with the people doing it tough right now, I think the recovery will be solid.

Australian Outlook:

The ASX has felt little of the pain that most households have been feeling over both the last 3 month and the last 12 months. With the ASX performing at just under 15% for the year which brings most portfolios back to where they were after a weak year previous. Australian companies have used inflation data to increase pricing across the board whilst also reducing their staff and limiting wages growth which has meant really strong earnings and dividends but it is only adding to the household pain that most of middle and lower income Australia is feeling.

The Aus property market is holding out well in really tough conditions which is a testament to the kind of asset but also has some hair raising red flags. Australian property is some of the most expensive in the world and yet through all of these interest rate rises, has only dropped around 3-4% across the country over the last 12 months. This is mainly due to supply problems. Put simply, there is not enough housing and Australians are being forced to pay more in high interest rate conditions just to get a roof over their head.

Overall, as the title of this compass suggests, My call over the next quarter (and also the next year) is to see some solid returns but large fluctuations.

International outlook:

It looks likely that a recession will rock a lot of the developed economies around the world over the next 12 months but it is important to note that recession does not mean that investment opportunities are gone. International markets remain a very attractive space to hold funds. Most global markets have grown by high single or double digits over the last 12 month. One of the standouts is the NASDAQ which has posted a solid 24% in the 12 months prior to writing this.

As the graph below shows, expectations on returns across the board are expected to be much greater than cash. It is important to note that during tough economic times, cash can be a safe option but a rush to cash can mean missing out on growth and opportunity.

What does all of this mean for you?

Simply put, we are going to see a lot tougher conditions at a household level in the near future but optimistically, we will likely see so great investment returns and solid results in the near future.

For a lot of our clients portfolios, we have been adding to the core investments over the last year and we are now going to be focussing on bolstering out the satellite investments and taking some concentrated positions in shares and funds to drive some out performance.

Sources

What ChatGPT Thinks You Should Do With Your Money – Part 1

· ·

What ChatGPT Thinks You Should Do With Your Money – Part 1

AI is all over the news, our news feeds, and our conversations in general. Almost every industry is talking about AI and what it can do for us, so is the finance world any different?

There are millions of different opinions when it comes to how to manage your finances, so why not see what AI has to say?

As a test not only to see how our top tips stack up, but also as a fun way to see how AI works and to see how a robot can try to make personal finance fun, we’ve asked ChatGPT what it thinks are the 10 best personal finance tips for our readers.

The best bit is – it  gets most of the core philosophies spot on. Although it is very light on the details and hasn’t given much in the way of specifics. That being said, you should always seek professional advice before acting on information you read below.

From debt dominoes to “time in the market vs. timing the market”, ChatGPT had some amazingly similar core messages that are renown industry wide to be effective for your personal finances.

Whilst we obviously do not recommend taking financial advice from AI (haven’t replaced us yet anyway), we’ve found it a really interesting and eye-opening experiment, especially as we head into a new age of technology and use of artificial intelligence.

Check out what ChatGPT had to say here:

“Welcome, dear readers, to the whimsical world of personal finance, where numbers, budgets, and savings become friends you can count on. Today, we embark on an adventure guided by none other than ChatGPT, your trusty financial companion. Buckle up and prepare to laugh and learn as we share ten humorous yet accurate personal finance tips to help you navigate the treacherous waters of money management.

  1. Budgeting: The Art of Balancing Wants and Needs. Budgeting doesn’t mean giving up on all life’s pleasures, like that extra scoop of ice cream or the latest gadget that’s calling your name. Instead, think of it as creating a “financial buffet.” Allocate most of your resources to the essentials, and save a portion for the fun stuff. The key is to be flexible, just like your stretchy pants on an all-you-can-eat day!
  2. Save like a Squirrel: Nuts for the Future. Picture yourself as a squirrel preparing for winter. Save those nuts, err, dollars for the rainy days ahead. Create an emergency fund to avoid running up a tree when unexpected expenses strike. Remember, acorns today can prevent you from feeling “nutty” tomorrow!
  3. Debt Management: A Strategic Game of Whack-a-Mole. Dealing with debt can feel like a never-ending game of Whack-a-Mole. Attack one debt at a time, starting with the peskiest one, while paying the minimum on others. Once you’ve dealt with one, move on to the next. Before you know it, you’ll be a whiz at knocking those debts right out of sight!
  4. Investing: The Money Rollercoaster. Investing can be a thrilling ride full of ups and downs, much like a rollercoaster. Buckle up and stay on the ride for the long haul, even when the markets toss you around like a popcorn kernel in a microwave. Remember, it’s not about timing the market; it’s about time in the market!
  5. Risk: The Art of Walking on a Tightrope. Life is full of risks, but avoiding them altogether is like trying to cross a tightrope without taking a step. Embrace smart risks, like investing in diverse assets, but always ensure you have a safety net (a financial trampoline, if you will) to catch you if you stumble.”

Tune in for part 2 of What ChatGPT Thinks You Should Do With Your Money soon!

If you’ve had a laugh about this but want to chat about it further, or any aspect of your finances, you can get in touch with us or book a free 20 Minute Discovery Call here. 

 

Reserve Bank Out Of Order?

· ·

Reserve Bank Out of Order?

What It Means for Your Interest Rates, Investments, and More | Wealtheon

It looks like the Reserve Bank is taking out a sledge hammer to battle inflation and economic growth, but unfortunately it’s hitting us all in the pocket. The recent increase in cash rates has been hard on businesses as well as households who are already struggling with the cost of living.

Why is it that every time we hear about inflation either holding steady or having the slightest increase, the .25% interest rate battle axe comes out swinging but when we hear about builders and other businesses going bust, it is still full steam ahead.

So is the Reserve Bank out of order?

The Reserve Bank might have the best of intentions but it’s clear that their strategy lacks a balanced approach. With investments affected by cash rates, households are feeling the pinch even more and in some cases, this can be devastating.

It’s time for the Reserve Bank to work with government to look at ways of controlling inflation without constantly raising interest rates. We need a better balance between economic growth and cost of living that takes into consideration all Australians. Unfortunately, I don’t think any reasonable action on this front will be taken. The political risk is too high right now for governments to meddle in this space.

The question is, how far is the RBA willing to go and what are they going to break in the quest to reduce inflation?

Investing or saving money is becoming increasingly difficult due to these changes – even if we look forward and try to think that these decisions are being made for our own best interests, they’re not making life easier! Not only do higher cash rates make borrowing more expensive but they can also have an effect on returns from savings accounts and investments such as stocks, shares and property.

High interest rates can reduce the bottom line for businesses and increase costs but what we are seeing at the moment is some businesses taking full advantage of the headlines and banking higher profit margins. An ABC article recently shone the spotlight into Coles and Woolworths who raised prices by 10.5% and 8.7% respectively…

So it looks like the Reserve Bank is intent on continuing to wield its sledge hammer in an attempt to control inflation and economic growth. But meanwhile, ordinary Australians are having to bear the brunt – struggling with day-to-day living costs and a shrinking ability to invest or save their hard earned money.

What can you do?

If you’re concerned about how rising interest rates could affect your finances, then you are probably feeling what most people are feeling right now. A lot of people I have spoken with feel like the game is rigged and there is no way for them to get ahead in an environment where there are low wages growth and high cost of living.

It’s time to take control of your financial situation and make sure that you are not affected by any further increases. This could mean looking into alternative investments, or simply being smarter with your budgeting so that you are able to handle any further rate rises. It could even mean the need to reduce your current debt arrangements by selling assets. No matter what option you choose, it’s important to have a plan in place and understand the decisions you’re making around your finances.

If you want to know more, you can check out our other blogs such as this one on negative gearing or are ready to take a step towards getting some professional financial help, you can book a free 20 Minute Discovery Session here.

Source

https://www.abc.net.au/news/2023-05-23/supermarket-prices-increase-coles-woolworths-inflation/102380456