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Young man handling household expenses

A home loan is one of the biggest expenses most Aussies have, with estimates that the average household spends more than a quarter of their budget on their mortgage.

But the good news is big savings are possible by taking advantage of clever hacks most homeowners don’t know about. Here are four tips for saving on your home loan.

Have a wandering eye

When it comes to home loan savings, monogamy rarely delivers the best deals. There are thousands of offers on the market, so when you have a home loan it’s important to regularly check whether there is a better option available.

Uno Home Loans Broker Tian Liu says, “It may be tempting to put your feet up and relax after getting your loan, but getting the best deal over the life of the loan often requires refinancing multiple times.

“It’s important to keep shopping around because the market changes regularly with rate rises, new competitors, and fluctuating property prices.”

If you’re looking for an easy way to keep tabs on the market, uno Home Loans has just launched a free monitoring service called loanScore which alerts you every month as to how your home loan stacks up compared to thousands of live deals.

Uno LoneScore
Uno LoneScore

Be a bit of a pest

Want a better deal but don’t want to go through the process of refinancing? After all, break-ups are hard.

You can save on your loan with minimal hassle by asking your bank for a rate cut. A recent uno study* found that more than 80% of customers who asked their bank for a rate cut were successful. Talk about 10 minutes well spent.

Popular negotiation techniques included threatening to leave your bank, leveraging an offer from a competitor, and having your broker speak to your bank for you.

Timing is everything

Most homeowners don’t realise that you can save on your home loan simply by changing your repayment date.

Banks calculate the interest to your home loan daily, so you can cut your interest bill by paying off your loan weekly or fortnightly instead of monthly.

And, if you want to make bigger repayments, take a lesson from the one in ten mortgage holders* who say it’s easier to make extra repayments (and reduce interest) by organising their direct debit for their mortgage right after they get paid.

Look beyond the banks you know

When choosing a home loan, it can be easy to start the search with your current bank. But sticking to familiar options doesn’t always equal the best deal.

A study conducted by uno Home Loans* revealed that Aussies who have a home loan with their childhood bank or parents bank actually pay 20 basis points more in interest than those who shop around.

Smaller lenders you may not have even heard of such as credit unions or online lenders are worth taking a look at as they often offer sharp deals to win market share.

Plus these lenders typically have lower overheads than big banks and can pass these savings onto you through lower rates and cheaper fees. Win-win!

Try making these little changes to your home loan today to enjoy big savings in the future.

About the author

Jessica Uhlmann is the Public Relations Manager at uno Home Loans

Uno is an online mortgage broker which enables Australians to understand their loan, optimise, apply, and settle all in one place from a panel of 20+ lenders – including all four major banks. uno operates a ‘technology plus service’ model which combines a self-serve online mortgage platform with service from a team of brokers via phone, text, chat, video and email. Uno’s brokers provide advice and support in choosing a new loan and can help you optimise your loan with your current lender. Visit unohomeloans.com.au

*Study of 1,500 mortgage holders conducted by CoreData on behalf of uno Home Loans

Important Information

The information on this website is general advice only. This means it does not consider any person’s investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the Raiz product.

The information in this website is confidential. It must not be reproduced, distributed or disclosed to any other person. The information is based on assumptions or market conditions which change without notice. This will impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz.

Past return performance of the Raiz product should not be relied on for deciding to invest in Raiz and is not a good predictor of future performance.

Market Update

From Raiz CEO, George Lucas 

GDP slowdown boosts chances of RBA rate cut

This week’s release of gross domestic product (GDP) data for Australia reinforces the view that the Reserve Bank (RBA) will hold or may even be forced to cut rates before too long.

That’s because the GDP data, released on Wednesday, showed Australia’s economy grew at its slowest pace in two years in Q4. On an annual basis, GDP growth declined from 2.8 per cent year-on-year in Q3 to 2.3 per cent — well below the RBA’s forecasts and consensus.

What’s more, GDP growth may fall to 2.0 per cent in 2019, potentially prompting the RBA to cut rates twice in the next 12 months. This is now what many are expecting.

Australian dollar under pressure

Following the release of the GDP data, the Australian dollar fell to a two-month low of US$0.70 and the 10-year Australian government bond yield fell to 2.10 per cent.

Indeed, if it wasn’t for strength in commodity markets the Australian dollar may have depreciated more against the US dollar. That suggests that if we do see commodity prices turn lower, the Australian dollar will probably fall sharply against the US dollar this year.

The link between the Australian dollar as a proxy for Chinese growth is also weighing on the local currency, especially while we are seeing a waning appetite for risk.

Turning to stocks, we doubt that a weaker local currency will prevent equities in Australia from falling this year if, as we expect, the US stock market comes under pressure. In fact, we suspect that the ASX200 will do just as badly as the S&P 500. Currently, the ASX200 is being supported by stronger commodity prices and the upcoming dividend season for bank stocks.

On the upside, a weaker AUD will be good for Australian Airbnb hosts during the Ashes.

Economic jitters hit US

Overseas, the latest US employment report is further evidence that the US economy is starting to falter. And with growth elsewhere also likely to remain weak, I think that equities in the US will fall this year, dragging down most stock markets across the globe.

According to the jobs report, non-farm payrolls increased by only 20,000 in February, well below consensus expectations of a 180,000 gain. But the report was not all bad news as the unemployment rate fell, and annual wage growth ticked up.

ECB downgrades growth outlook

Several other developments this week suggest that investors may continue to be too optimistic, not just about the US, but about the rest of the world too.

For instance, The European Central Bank (ECB) sharply lowered its growth forecasts and now expects growth of 1.1 per cent this year, down from its earlier forecast for 1.7 per cent.

Purchasing Managers’ Indexes (PMIs) also remain weak in many countries.

Central banks to the rescue?

As a result, even before the disappointing payrolls arrived, the S&P 500 index had lost nearly 2 per cent since Friday last week, while the Japanese yen — largely considered to be a safe-haven — was up by nearly 1 per cent against the US dollar.

Admittedly, policymakers have started to respond. As the US Federal Reserve (the Fed) did in late January, the ECB struck a more dovish tone at its meeting on Thursday, while Chinese authorities have announced more fiscal stimulus.

Looking ahead, the Fed may cut rates three times by 75bp in total in the first half of 2020, but not even one 25bp cut is fully discounted in the markets next year. Optimism prevails.

Despite such an outlook for monetary policy, I still think that in the short-term global growth will continue to weaken, putting pressure on corporate earnings and triggering a flight to safety. As such, most stock markets will drop soon, but I have been saying this for a while.

Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

download-raiz-app
Click to download the Raiz app

Important Note: The information on this website is provided for the use of licensed financial advisers only. The information is general advice and does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this website.

Investors only: The information in this Document is confidential it must not be reproduced, distributed or disclosed to any other person unless it is part of their statement of advice. The information may be based on assumptions or market conditions and may change without notice. This may impact the accuracy of the information. In no circumstances is the information in this Document to be used by, or presented to, a person for the purposes of making a decision about a financial product or class of products.

General advice warning: The information contained in this Document is general information only. It has been prepared without taking account any potential investors’ financial situation, objectives or needs and the appropriateness of this information needs to be considered in that context. No responsibility or liability is accepted by Instreet or any third party who has contributed to this Document for any of the information contained herein or for any action taken by you or any of your officers, employees, agents or associates.

Spend in line with your salary

Everyone’s spending habits differ, just like everyone’s salary differs. Learning how to spend in line with your salary whilst battling a range of competing expenses and trying not to compromise on your savings can be a difficult skill to master.

The first step to keeping your spending under control is knowing your own spending patterns. If you are a Raiz user and have linked a spending account, then you can use the My Finance feature of the Raiz app to see how much you are spending each month, and in what categories. The app will also provide you with spending alerts to your mobile phone.

You can also ask our AI powered chatbot Ashlee questions such as “how much did I spend on food last month” (to access just go into your Facebook Messenger app and search for ‘Raiz Chatbot’).

How much spent on food
Use Ashlee to help track your spending

Alternatively, you can add up your expenses manually by going through and analysing last month’s bank statement (remember to include any regular debt repayments).

Once you know how much you are spending, you can then compare this amount to your after-tax income and adjust spend accordingly. Regardless if you’re spending above or below your income, we suggest a savings first mindset, that is, spend what is left after saving.

Transferring savings straight out of your pay and into an account like Raiz, where it is hard to touch the money, can be a useful strategy to regulate your spending.

The best method to calculate how much you should be spending and saving is to create a budget.

There are several types of budgeting plans out there that you can choose from. A simple budgeting strategy is the 50/30/20 budget, where you allocate 50% of income towards needs, 30% towards wants, and 20% savings. Remember the KISS principle (keep it simple stupid).

The 50/30/20 Budget Rule
The 50/30/20 Budgeting Rule

If you follow a budget like this the first thing you should do after being paid is to transfer the 20% into your special investing/savings account like Raiz. We wrote about this budgeting method in our last ‘How to’ series entry, which you can read here.

You will need to continue tracking your spending to make sure you’re on course and not spending too much to force a dip into your savings. Tracking also makes it easier to adjust your budget to fit changing circumstances.

Impulse Purchases

One factor that can hinder your ability to follow a budget and keep your spending in line with your salary are impulse purchases. An Impulse purchase is characterised as any purchase that is unplanned or spontaneous.

Ever found yourself waiting in the line to pay at the supermarket, and then picking up and buying that chocolate bar next to the register? That’s a common impulse purchase, and although fairly innocuous in this example, if done repetitiously overtime, and for more expensive products, can eat into your finances.

In general, people tend to overestimate their ability to control impulsive behaviour, a phenomenon known as restraint bias. This also applies to impulse purchases. Reading this now you might be thinking it wouldn’t be that hard to resist an impulse buy, but when exposed to stimuli in a shop, be it brick and mortar or online, your self-control probably isn’t as effective as you might think.

Some strategies to help control impulse buying include:

  • Sticking to a shopping list. If it’s not on your predetermined list, don’t buy it!
  • Give yourself a ‘cooling off period’ before making any unplanned purchases by waiting a day before buying. This effectively lessens the spontaneous nature of impulse purchases by separating yourself from the initial urge.
  • Be mindful of your emotions and keep your budget in mind. Realise that what you are feeling could be an impulse, and critically challenge your thoughts on whether you need to buy it. Think to yourself “do I really need this” and “can my budget afford this purchase.”
  • Use our chatbot Ashlee and ask her if you can afford what you are about to buy.

Previous entries in our ‘How to’ series:

How to: Budget in 2019

Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

download-raiz-app
Click to download the Raiz app

 

Important Information

The information on this website is general advice only. This means it does not consider any person’s investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the Raiz product.

The information in this website is confidential. It must not be reproduced, distributed or disclosed to any other person. The information is based on assumptions or market conditions which change without notice. This will impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz.

Past return performance of the Raiz product should not be relied on for deciding to invest in Raiz and is not a good predictor of future performance.

Double referrals in March

This month, we will be doing double referrals for all of March! For every active referral, that’s $5 for you and $5 for your mate.

How do I refer someone?

To get your referral code, tap on the button that reads ‘Share the Raiz story’, at the bottom of the menu screen within the Raiz app. From there you can share your code via Facebook and Twitter or copy and paste the link directly. When someone signs up using your code, you will both receive the $5 bonus after they make their first investment.

Just click this button (outlined in yellow) to get your referral code

There are no limits on how many people you can refer, so feel free to invite as many people as you’d like!

Since launch, 28,600 Australians have signed up to Raiz through our referral rewards. Your reviews – good and bad have continued to help us improve the Raiz product and features. Thanks for your support.

Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

download-raiz-app
Click to download the Raiz app

Important Information

The information on this website is general advice only. This means it does not consider any person’s investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the Raiz product.

The information in this website is confidential. It must not be reproduced, distributed or disclosed to any other person. The information is based on assumptions or market conditions which change without notice. This will impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz.

Past return performance of the Raiz product should not be relied on for deciding to invest in Raiz and is not a good predictor of future performance.

  1. An active Raiz Invest Account must be held (account balance greater than $5). Raiz account holders hold valid accounts as set out in the product disclosure statements found on the website: raizinvest.com.au.
  2. Entries open Thursday 28th February 2019 at 11am and entries close Sunday 31st March 2019 at midnight. To enter, one must shop through Raiz Rewards a minimum of three times during the competition period.
  3. Raiz Invest will select ten winners with a $50.00 credit investment in to their active Raiz Investment Account. These ten investments will be selected at Raiz’s discretion on Monday 1st April. We note that no individual prize exceeds $250 and total value of prizes do not exceed $50,000.
  4. These ten Raiz Account holders will be notified by email when the credit investment is deposited into their Raiz Investment account by Friday 5th April 2019.
  5. The permit number in the format NSW Permit No. LTPM/18/03853.
  6. This promotion is in no way sponsored, endorsed or administered by, or associated with any other third party.
  7. By entering this promotion, you agree that we may use entries for future marketing purposes in any media or branding.
  8. The competition is promoted by Raiz Invest Australia Limited, Level 11/2 Bulletin Place Sydney 2000 NSW, 1300 754 748. ABN 26 604 402 815, who is the Authorised Representative of AFSL 434776. The Raiz product is issued in Australia by Instreet Investment Limited (ACN 128 813 016 AFSL 434776) and promoted by Raiz Invest Australia Limited (ACN 604 402 815). A Product Disclosure Statement dated 10th April 2018 for this product is available on the Raiz website and App. A person should read and consider the Product Disclosure Statement in deciding whether or not to acquire and continue to hold interests in the product. The risks of investing in this product are fully set out in the Product Disclosure Statement and include the risks that would ordinarily apply to investing.

NSW Permit No. LTPM/18/03853

Market UpdateFrom Raiz CEO, George Lucas

Global stocks defy weak economic data

This week saw stock markets generally power ahead and defy the recent slew of weak economic data. Even so, I am sticking to my view that they will eventually succumb in March and we will see another sell-off, which should be the capitulation.

The US stock market rose at the end of last week despite news that domestic industrial production unexpectedly fell in January. It also hardly reacted to data released earlier in the week showing the largest monthly decline in US retail sales in a decade.

In China and the euro-zone, equities took their lead from the US and are now up by about 10 per cent so far in 2019 in spite of a raft of poor economic data. One partial explanation pointed to for this resilience is renewed optimism of a US-China trade truce.

However, given most of the economic slowdown has had little to do with the trade war, we doubt a permanent trade ceasefire would alter the outlook much. In my view, there is little governments can do to prevent further global weakness — not a recession but a slowdown.

Indeed, February’s composite PMI for the Eurozone provided some reassurance that the euro-zone economy is not on the brink of recession. The rise in the index left it consistent with quarterly GDP growth of about 0.2 per cent, the same as in Q3 and Q4 last year.

Central banks rethink interest rates

Meanwhile, developments in Japan, Europe, US and Australia showed how widespread a shift to looser monetary policy is likely to be. Expectations by the markets that this shift will support growth is probably the main driver for the rally in markets since the start of 2019.

In Australia, minutes of the RBA’s February policy meeting, released last Tuesday, confirmed the central bank’s change from a tightening bias to a neutral stance, especially amid continued weakness in wage growth and as employers like Raiz remain tight.

By contrast, Chinese premier Li Keqiang said last week that China would not change its prudent monetary policy stance and reiterated that officials would not resort to “flood-like” stimulus — so not all economies are lining up to loosen monetary policy further.

US and China sketch trade deal

Still on China, there are rumours it is currently working with the US on “memorandums of understanding” on issues including IP rights protection and forced technology transfers, which could serve as the framework for a future trade deal.  However President Trump squashed these rumours and insist they will go straight to an agreement.

While it is unlikely the US and China will be able to reach a full deal before the March 1 tariff deadline, US President Donald Trump has fortunately indicated he would be willing to delay the deadline if the talks, underway in Washington, were “going in the right direction”.

Elsewhere in Asia, the Bank Indonesia left its policy rate unchanged last week. Given the improved performance of the rupiah and the less hawkish tone of the central bank’s press conference, the expectations of further rate hikes this year are diminishing.

Trump and Kim Jong-un to meet in Vietnam

In addition to the China-US trade talks, all eyes this week will be on President Trump’s planned meeting with North Korea’s Kim Jong-un in Hanoi on Wednesday and Thursday.

Although little progress is likely to be made on the issue of denuclearisation, there is hope there could be some moves towards a peace deal between the two countries.

Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

download-raiz-app
Click to download the Raiz app

Important Note: The information on this website is provided for the use of licensed financial advisers only. The information is general advice and does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this website.

Investors only: The information in this Document is confidential it must not be reproduced, distributed or disclosed to any other person unless it is part of their statement of advice. The information may be based on assumptions or market conditions and may change without notice. This may impact the accuracy of the information. In no circumstances is the information in this Document to be used by, or presented to, a person for the purposes of making a decision about a financial product or class of products.

General advice warning: The information contained in this Document is general information only. It has been prepared without taking account any potential investors’ financial situation, objectives or needs and the appropriateness of this information needs to be considered in that context. No responsibility or liability is accepted by Instreet or any third party who has contributed to this Document for any of the information contained herein or for any action taken by you or any of your officers, employees, agents or associates.

Raiz Chatbot Ashlee

More and more Raiz users have been actively engaging with our Chatbot, Ashlee, in order to take control of and improve their financial situation. Because Ashlee is a personalised experience you can chat to her in a natural way – well nearly natural.

Ashlee – the intelligent chatbot is available through Facebook Messenger (search “Raiz Chatbot”), and can answer general questions about the market, specific questions related to your account, any support questions you have, your spending habits, and Raiz features, all without having to log into the app.

For a list of questions, check out ‘Ask Ashlee – Raiz Intelligent Chatbot Questions.

Here are 4 smart ways that others are currently using Ashlee:

  1. Track your Raiz balance.

Ashlee has got you all sorted if you ever find yourself wanting to know your balance, but don’t want to login to the app. This provides an easy way to see if your investment has landed in your account, if your withdrawal has processed successfully, or to keep track of you balance.

whats my balance
Check your balance
  1. Check your account performance.

You can ask Ashlee for accounts returns for the last day, month, or year. Some users prefer this way now as they can keep track of their past performance through the message history.

Check your account returns
  1. Learn about your spending habits.

Ashlee can offer tips and insights into your spending patterns based off your historic purchases and income. She can tell you how much you’re currently spending, and even project future cashflow to help you understand if you could save more or afford to eat out that night.

Some examples how users have done this include:

  • Checking your spending habits to see if how much you saved last month.
How much you saved last month
  • Find out how many days it will take before you save a specified amount of money.
How long until you save $5000
How long until you save $5000
  • Track individual categories to see where you spend your money. The categories we can track are shopping, food and dining, taxi/ride sharing, health and fitness, entertainment, insurance and many more.
How much spent on food
How much you spent on food
  1. Get answers to support questions about Raiz features

Ashlee can answer questions regarding Raiz features products and functions, making for a quick way to find answers to general customer support queries.

General customer support questions can range from learning more about specific features to word terms such as statements and dividends.

Ashlee’s purpose here isn’t to replace standard customer support channels, but rather add an extra layer on top, and allow users to quickly find answers to minor questions outside of traditional business hours.

Support questions

To use, just go into your Facebook Messenger app and search for ‘Raiz Chatbot’. Please note, you will need a Facebook Messenger account to access the Chatbot.

Ashlee can be accessed through Facebook Messenger

Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

download-raiz-app
Click to download the Raiz app

 

Important Information

The information on this website and through the Chatbot is general advice only. This means it does not consider any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the Raiz product.

The information in this website is confidential. It must not be reproduced, distributed or disclosed to any other person. The information is based on assumptions or market conditions which change without notice. This will impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz. Past return performance of the Raiz product should not be relied on for deciding to invest in Raiz and is not a good predictor of future performance.

  1. An active Raiz Invest Account must be held (account balance greater than $5). Raiz account holders hold valid accounts as set out in the product disclosure statements found on the website: raizinvest.com.au.
  2. Entries open Thursday 21st February 2019 at 4PM and entries close Friday 1st March 2019 at 5PM. To enter, one must comment on the Facebook post within the time frame stated above.
  3. Raiz Invest will select five winners with a $100.00 credit investment in to their active Raiz Investment Account. These five investments will be selected at Raiz’s discretion. We note that no individual prize exceeds $250 and total value of prizes do not exceed $50,000.
  4. These five Raiz Account holders will be requested to message us their email and will be notified by email when the credit investment is deposited into their Raiz Investment account by Friday 15th March 2019.
  5. The permit number in the format NSW Permit No. LTPM/18/03853.
  6. This promotion is in no way sponsored, endorsed or administered by, or associated with any other third party.
  7. By entering this promotion, you agree that we may contact entrants or use entries for future marketing purposes in any media or branding.
  8. The competition is promoted by Raiz Invest Australia Limited, Level 11/2 Bulletin Place Sydney 2000 NSW, 1300 754 748. ABN 26 604 402 815, who is the Authorised Representative of AFSL 434776. The Raiz product is issued in Australia by Instreet Investment Limited (ACN 128 813 016 AFSL 434776) and promoted by Raiz Invest Australia Limited (ACN 604 402 815). A Product Disclosure Statement dated 10th April 2018 for this product is available on the Raiz website and App. A person should read and consider the Product Disclosure Statement in deciding whether or not to acquire and continue to hold interests in the product. The risks of investing in this product are fully set out in the Product Disclosure Statement and include the risks that would ordinarily apply to investing.

NSW Permit No. LTPM/18/03853

Market Update

From Raiz CEO, George Lucas.

Central bankers pull back on rate rise plans

Monetary policy was a focus last week, with central bankers in Australia, India and the UK preparing to join a broader retreat from plans to hike interest rates. Even the US Federal Reserve (the Fed) is readying to slow down rate hikes, despite the US economy remaining robust.

There is a realisation that maybe policymakers became overly bullish last year and the Fed in particular overreached by signalling four rates rises for 2018, despite a fragile global economy. We’re now seeing a new-found caution providing “air cover” for other central banks to mark down their rate expectations.

The fourth quarter last year was the turning point. This was when markets began to wake up to a host of political hazards and deteriorating trade relations between the US and China. When markets fall they tighten financial conditions, similar to interest rate hikes, and this has given room for the central bankers to take their foot of the pedals.

US economy sturdy despite shaky global picture

The US economy continues performance robustly, with the 304,000 jobs created in January beating Wall Street expectations and significantly more than the 170,000 economists were expecting. Wage growth, meanwhile, is running comfortably above inflation.

However corporate giants in the S&P 500 index, which generate over a third of their earnings overseas, are sounding the alarm this reporting season about faltering overseas demand in global markets not only China.

Eurozone raises global growth fears

Some of the biggest questions hang over Europe. The European Commission (EC) last week slashed its growth forecast for this year to 1.3 per cent from 1.9 per cent, marking down outlooks for major economies including Germany and particularly Italy.

We do need to keep in mind that the EC is not forecasting recessions just a slowing in growth momentum. That means that Europe is still growing, just more slowly, but the situation could get worse if a solution to Brexit is not found soon.

RBA walks back growth outlook

A global slowdown will have an impact on Australia and the shift by the Reserve Bank of Australia (RBA) last week to a more cautious outlook was driven by concerns that steep falls in house prices and the slowdown in China could choke off domestic growth.

The same could happen in the US, with a slowdown in growth in China, India and Europe feeding through to the US economy. We are not surprised that analysts are now forecasting negative year-on-year growth in S&P 500 earnings per share (EPS) for the quarter we are in.

But we expect the growth rate will rebound later in 2019 as the effect of tax cuts last year washes out of the market. Currently the year-on-year growth rate of S&P 500 EPS is still healthy growing around 15 per cent based on current companies that have reported.

Continued US labour market strength

One indicator that a sustained downturn in the stock market is far from imminent is the prevailing strength of the US labour market as firms continue to hire at a blistering pace.

During the past six months, nonfarm payroll employment in the US has grown by an average of more than 230,000 per month and the six-month moving average has remained above 200,000 since last March. Such strength in the US labour market has rarely been accompanied by an enduring sell-off in the stock market.

Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

download-raiz-app
Click to download the Raiz app

Important Note: The information on this website is provided for the use of licensed financial advisers only. The information is general advice and does not take into account any person’s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this website.

Investors only: The information in this Document is confidential it must not be reproduced, distributed or disclosed to any other person unless it is part of their statement of advice. The information may be based on assumptions or market conditions and may change without notice. This may impact the accuracy of the information. In no circumstances is the information in this Document to be used by, or presented to, a person for the purposes of making a decision about a financial product or class of products.

General advice warning: The information contained in this Document is general information only. It has been prepared without taking account any potential investors’ financial situation, objectives or needs and the appropriateness of this information needs to be considered in that context. No responsibility or liability is accepted by Instreet or any third party who has contributed to this Document for any of the information contained herein or for any action taken by you or any of your officers, employees, agents or associates.

budget for the new year

Budgeting is often pushed as an essential ingredient needed to take control of your personal finance. Whilst the concept of a budget is straight forward, it is common for people to struggle with its execution. This is especially pertinent in today’s day and age, given changing economic conditions.

One of the most popular budgeting methods often talked about is the 50/30/20 budget. This budget stipulates that you should divide your after-tax income so that:

  • 50% is allocated towards your needs, such as fixed living expenses, bills and essentials (rent, groceries, utilities etc.).
  • 30% is allocated towards your wants – everything you spend money on that is non-essential. This includes things like eating out, going to movies, and streaming subscriptions – anything that you spend money on to make life more enjoyable and entertaining.
  • 20% is allocated towards savings and investments. This can also include making debt repayments and other financial goals.

It is important to note that these percentages are not necessarily fixed. The needs and wants percentages are the maximum amounts you should spend for those categories, leaving the 20% allocation for savings as a minimum requirement.

The 50/30/20 Budget Rule
The 50/30/20 Budgeting Rule

Over the last decade, the cost of housing/rent and utilities such as electricity have risen substantially. From September 2017 to September 2018, the Australian consumer price index (CPI), which measures the price levels of a common basket of consumer goods and services, rose by 1.9%, with the wage price index (WPI) only growing by 2.2%. Wage growth is only just keeping ahead of increased costs of living. This is also just an average, so for some parts of the population, the cost of living would have risen faster than their wage growth.

What this means is that sticking to budgets can become harder if wants and needs begin to take up larger proportions of your income. What if your needs start to take up more than 50% of your income? If that’s the case, then you may need to scrutinise your expenses and look at where you can save money. This could be hunting around for a cheaper phone plan or limiting usages of utilities like electricity and water to reduce bills.

If you can’t keep needs below 50%, there’s no need to panic. All budgets will be slightly different depending on the person, and the exact percentage breakdown can be altered to make it more optimised for you. Perhaps you could cut back wants to 25% and increase needs to 55%.

The bottom line is to manage your money by tracking your expenses, staying on top of and disciplined with your spending, and resolving to save/invest as much as you can afford (but remembering to leave yourself a little bit to spend on the nice things and enjoy life!).

The advantages of saving and investing your money cannot be overstated. Due to the power of compounding, if you were to invest $10,000 into an index fund every year, for 30 years, assuming average returns of 7% p.a. that investment will have grown to be worth $944,607. That’s a total return of $644,607.

Check out ASICS MoneySmart compound interest calculator see how much money you could have after saving different regular amounts.

Compound Returns Graph
*Most managed funds will charge fees for their service, but for the sake of simplicity this graph does not include nor reflect their affect on returns – see ASICS managed funds fee calculator to get an estimate on how fees and costs can affect your investment.

Apps like Raiz can be useful tools for helping to keep track of your spending and save money at the same time. Raiz’s ‘My Finance’ is a free feature within the app that provides you with personalised insights and notifications on how you are spending. It does this by tracking your purchases and breaking them down into categories (e.g. food and dining, bills & utilities etc.), allowing you to see how much you spend on a month to month basis.

Raiz can also automate your savings, allowing users to set automatic recurring deposits, or through the ‘Round-Ups’ feature that rounds up every purchase you make on a linked spending account and invests the spare change. On top of that, if you are signed up to Raiz Super then you’ll be able to easily see both your investment and Superannuation balance all in the one place within the app.

Don’t have the Raiz App?

Download it for free in the App store or the Webapp below:

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Click to download the Raiz app

 

Important Information

The information on this website is general advice only. This means it does not consider any person’s investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the Raiz product.

The information in this website is confidential. It must not be reproduced, distributed or disclosed to any other person. The information is based on assumptions or market conditions which change without notice. This will impact the accuracy of the information.

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz.

Past return performance of the Raiz product should not be relied on for deciding to invest in Raiz and is not a good predictor of future performance.

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