Money Magazine August 2015

LETTER OF THE MONTH Healthy approach As a recent subscriber to Money magazine, which I enjoy reading from cover to cover to gain valuable new tips, strategies and insights on wealth creation and wealth management, I notice one glaring omission from your articles. That is, no mention of the importance of one’s health and wellbeing to enjoy the fruits of wealth creation. As my dear deceased dad once said, “There are no rich people in the cemetery.” Maintaining a healthy lifestyle with a proper diet, nutrition, daily exercise, regular health checks and brain gym activities such as doing crosswords and word puzzles are paramount so that the fruits of wealth creation and wealth management can be fully utilised in all years of one's life. Simply put, what is the point…

While I applaud the federal opposition for calling a senate inquiry into the growing gap between credit card interest rates and the official cash rate, I must say it’s about time! Credit cards have always been a cash cow for banks. Using the excuse that they are unsecured credit, and not aligned to the cash rate, just doesn’t fly with consumers anymore. Not so long ago credit card interest rates did move up and down in line with the RBA rate and if you can pick up an unsecured personal loan from as low as 7.10% why can’t you get an unsecured credit card at the same rate? Wait – you can! Low-rate credit cards start from 7.99% (see page 89). The rort is clearly with reward cards, because there…

GREECE – ITS EXIT FROM THE euro or not – has dominated the media lately. Its importance to the solidarity of the European Union I do get but, from an economic point of view, I have been quite perplexed by comments talking about a “global contagion”, where an exit could somehow drag down the world economy. The Greek situation is a personal tragedy for Greek citizens, in particular those reliant on a government pension paid electronically into a bank account, and unemployment is high, particularly among the young. But global contagion is a pretty far-fetched idea. We will have all enjoyed the tale of Chicken Little at some stage in our lives. This tale has circulated around the planet in many forms from its early oral folk tradition origins in…

MYTH BUSTING ECONOMICS Stephen Koukoulas WILEY • RRP $29.95 Stephen Koukoulas should know a thing or two about his subject. He has 30 years’ experience as an economist, starting with the Treasury in Canberra, then working as chief economist for two major Australian banks, a global head of economic and market research in London and economic adviser to former prime minister Julia Gillard. This easy-to-read guide looks at how economic trends affect you; what small lifestyle choices can make a big impact on your finances; how overseas markets can influence the currency; and which uncertainties create either opportunities or pitfalls. Koukoulas looks at the big picture and discusses the impact government has on the economy and the role of the Reserve Bank. He also tackles family concerns such as the…

In 2009, the Rudd government raised the age at which Australians could access the age pension to 67, starting in 2023, and last year in its first budget the Abbott government announced that it wanted to increase this age limit to 70. So it was only a matter of time before government policymakers and think tanks such as the Productivity Commission came up with proposals that would also raise, albeit not until 2040, the age at which people could access their super and so stop them “double-dipping” and spending their super early (not that there’s much evidence of this, mind you). Unsurprisingly, both the government and the opposition ran a mile when they first heard the proposal, as did some – but not all – superannuation lobby groups. But don’t…

While Australians who participated in the first home saver account (FHSA) scheme will no longer have a government-subsidised savings account earning a superb interest rate, the good news is these savings can now be put to other uses to maximise wealth. For those who have saved up a 20% deposit for a property, this could be a good time to buy. However, the average FHSA balance is just $12,800, so most participants will need to keep saving. For anyone within a few years of getting a deposit, a high-interest account is the lowest-risk option to grow your savings. But with property prices up 24% in the past three years, bank interest of 2%-4%pa means that it may take longer than expected to reach your goal. For those who are still…