A falling dollar is not all bad

It’s time to rethink your spending as there are bargains to be had

FIVE years of living with a “teflon” dollar has given us high expectations. We expect to be able to pick up goods online for next to nothing and head overseas for holidays because it’s so much cheaper.

But with the Aussie dollar finally doing what the Reserve Bank has wanted it to do for some time now – falling – these luxuries are quickly becoming a thing of the past.

Last week the Aussie dollar dropped to its lowest level against the US dollar in six years, after a shock “no” vote in the Greek referendum. And, instead of bouncing back like it has recently, the general consensus within the financial community is this time it’s going to stay down.

While Greece is getting the headlines, the slide in commodity prices is attracting the focus of currency traders.

The drop in the Aussie means a new way of thinking. In other words, it’s time to make the falling Aussie dollar work for you. Here’s how. SEE MORE OF AUSTRALIA A high currency dealt a double blow to the Australian tourism industry.

Not only did it make overseas destinations more attractive (especially the already cheap South-East Asian spots on our doorstep), it also put off foreign tourists from visiting here. But with the dollar diving, it’s time to set aside the notion you have to go overseas to have a good time.

We have an amazing country to explore. Whether you like tropical beaches, snow-capped mountains, urban cafe culture or bushland escapes, there’s something here for everyone. So get out there and explore. BUY LOCALLY In the past few years, online shopping has exploded as people realised they could make incredible savings buying from international sellers.

While this has been great for consumers, it wasn’t always great for the economy. Local sellers missed out on purchases and the government missed out on tax revenue.

But now, a diving dollar means international deals will dry up. Local goods will become cheaper relative to international goods, which means we will once again turn our attention to local retailers.

Fortunately, since the threat of online shopping began, retailers have picked up their game and are much more competitive on price and services. That means there’s really no excuse not to buy local any more and the plus side is it’s good for our economy. REVIEW YOUR SHARE PORTFOLIO It’s important to think about how your investments will be affected by a weaker currency, and position your portfolio accordingly.

Remember, a lower dollar is actually good news for many businesses. Domestic exporters will become more competitive and industries with international demand – such as tourism, education and healthcare – will get a boost.

Australian companies with international earnings will also benefit, as the profits they make in other parts of the world will be worth more back home. On the other hand, importers will suffer, as will companies that make significant purchases in foreign currency.

International investments will become more expensive, however, if the investment is unhedged (not protected against currency movements), then any future income returns or capital gains will be worth more if the dollar keeps falling. REVIEW PROPERTY INVESTMENTS Australian property will become more attractive to foreign investors as the dollar falls, which could push property prices up further.

Many people blame foreign demand for meteoric price rises in Sydney and Melbourne in the past 12 months . . . although we don’t believe that’s the whole story.

Still, the government has taken steps to crack down on foreign investors that breach our strict laws, and of course all applications by foreign citizens must be put to the Foreign Investment Review Board.

This should keep undue influences under control, but foreign demand could still serve as a floor under property prices as the dollar falls.

Finally, while the Aussie dollar has hit the skids against the greenback, it is still holding up against the euro. So while a trip to America is more expensive, it’s still cheap by comparison to go to Europe.