Financial Commentator, Peter Switzer, said early this week when referring to the market shock of the past month, currently present are “three of the four legs” to provide a base to the markets moving forward.
“One leg is the supportive work of central banks, which are helping money market liquidity during this Coronavirus crisis.” “Next is the supply of stimulus packages and it’s why Wall Street has lapped up the US getting two trillion dollars.”
“The next leg sees much stronger banks than in the GFC helping stimulus measures from governments.” “In our own case, banks are shocking me with offers that will help business and household borrowers over the next six months or so.”
The final leg remains shaky and needs to be firmly screwed up tight before we can be totally clear that we have entered the second expansion phase. The phase that allowed me to buy thirteen properties in five years.
“The day the world is convinced that the worst of this damn virus is behind us — infection and death [rate] wise — the market will surge.”
The mid-cycle slowdown is the catalyst for moving the world into the second expansion phase which means good times are ahead for homeowners and property investors but that provides no comfort if your income has been impacted by the Coronavirus crisis.
To support customers through this time of uncertainty, Australian banks are stepping up with more clearly defined financial relief strategies. In an official Australian Banking Association (ABA) statement, CEO Anna Bligh said: “Banks stand ready to support customers and if anyone is in need of assistance, they shouldn’t wait but come forward as soon as possible.”
Banks are communicating these financial assistance packages independently, with many announcing changed circumstances for personal and business financial products. They include waiving fees on early term deposit withdrawals, interest rate freezes on loans, options to defer or restructure home loan repayments, and emergency credit card limit increases all without negatively impacting a persons credit rating.
Unsecured government-backed bank loans are also being offered to businesses impacted. If your ability to work or your business operations have been affected by the virus outbreak. We’ve found the best way to forward is to contact your bank and get the ball rolling before falling behind.
In terms, of government assistance for individuals and households, packages announced so far total one hundred and eighty-seven billion dollars. Some of this assistance includes income support for individuals and payments to support households. Early release of superannuation, reducing superannuation minimum drawdown rates and reducing social security deeming rates are also on offer.
To secure this assistance, you can use the MyGov website to find out how to get started.
For businesses, the government has launched initiatives to boost cash flow for employers, provide temporary relief for financially distressed businesses and supporting apprentices and trainees.
To get assistance, speak to your accountant or go to the ASIC website.
Finally, we are always here.
If you have any questions or concerns, you only need to reach out to your client manager or through any one of our social media channels.
I suggest from a financial perspective the order of concern should be:
1. Your Personal liquidity.
Will you have enough money to see you and your family through and will my business/job/career survive? And what immediate actions do you need to take and take now?
If you are concerned or simply uncertain, speak to us now.
Clarity and the array of options will give you confidence about the way forward especially while surrounded by so much fear and uncertainty.
2. Your Invested capital.
What I mean are your investments and superannuation.
Now is the right time to conduct an Annual Review of your current strategy to ensure these are invested in a historically appropriate portfolio designed with these events in mind.
If so, and you have no reason to sell for personal liquidity reasons, the action to take is to get your finances in order and get ready for the second expansion phase.
3. The wider economy and the Australian property market.
These usually react later than the stock market. It’s clear we are already in the mid-cycle slow down, even though it’s not ‘official’ yet. Its part of the cycle and painful for some but short-lived and nothing unexpected.
And as counterintuitive as it sounds, the correct cause of action for those able to enter the market?
I recommend taking full advantage of the current chaos, cheap credit, nervous vendors and beat the rush coming when certainty returns.
The most successful investor in history, Warren Buffet, said when others are greedy, be fearful. And when others are fearful, be greedy. Its what the big players do, its what I am doing and its what you should be doing as well.
Just this week, it was reported that one of the wealthiest land owners in Western Australia, Nigel Satterley, just completed the purchase of two hundred million dollars of land in Perth and Melbourne.
Of course, it must be a comprehensive plan, purchasing the right house in the right area with the right strategy including firewalls, buffers and safety nets so you speak to our team of specialists before doing anything.
As clients, the team are always available to you.