HIP POCKET Sink or swim time

The Sunday Mail (Queensland) - - NEWS -

I’VE just ar­rived home from a fam­ily hol­i­day. As I opened my front door, I quickly re­alised I’d brought home a sou­venir from Bali: bac­te­ria.

Yes, I’m typ­ing this bent over with a bad case of ‘Bali belly’. Yet noth­ing bad ever hap­pens to a colum­nist, so I’m us­ing my tummy trou­bles as an anal­ogy for how the world fi­nan­cial mar­kets are feel­ing right now:

Queasy. And wor­ried about what’s com­ing down the err ... pipes.

Case in point, here are the head­lines that greeted my ar­rival back into the coun­try: “House prices to fall 15 per cent: Mor­gan Stan­ley”; “ASX plunges: $50 bil­lion blood­bath.” Pass the bucket! How­ever, I view these head­lines as about as re­li­able as con­sult­ing Dr Google about my tummy trou­bles.

So what is re­ally go­ing on with in­vest­ment mar­kets, and, more im­por­tantly, what should you do about it?

Well, at long last the mar­kets have started pay­ing at­ten­tion to the fact that global in­ter­est rates are on the rise. Yet this shouldn’t come as a sur­prise to my reg­u­lar read­ers … I’ve been bang­ing on about it for years.

In fact, way back in 2015 I wrote an ar­ti­cle en­ti­tled “2018, The Year First Home Own­ers Get their Re­venge”, in which I urged young peo­ple to start ag­gres­sively sav­ing up for a 20 per cent de­posit so they’ll be pre­pared to take ad­van­tage of lower house prices.

And for peo­ple ap­proach­ing retirement I’ve long ad­vised to save up a buf­fer of two to three years of liv­ing ex­penses in cash (less any gov­ern­ment pen­sion pay­ments) in their su­per, so they aren’t forced to sell when the real crash comes.

For all the doom and gloom head­lines last week, global in­ter­est rates are still in­cred­i­bly low, and they’ve only just be­gun ris­ing. In my tummy anal­ogy, what we’re ex­pe­ri­enc­ing is merely an un­com­fort­able rum­bling.

Yet the truth is that we Aussies, by tak­ing on record house­hold debt at a time when in­ter­est rates are at record lows, have al­ready swal­lowed the bug. As a re­sult, plenty of over­stretched peo­ple may well find their fi­nan­cial lives will end up in the toi­let some­time in the next decade. Are you pre­pared? Trust your gut. Tread Your Own Path! BARE­FOOT REPLIES: If you’re look­ing for a way to get a huge re­ward with very lit­tle ef­fort, you’ve found it. You are chang­ing your fam­ily tree ev­ery Sun­day night, mate. That’s what it’s all about, right? Well done! I’VE PUT FI­NAN­CIAL FIRE OUT ME­LANIE WRITES: On Novem­ber 23 last year, I left a vi­o­lent re­la­tion­ship, then be­gan my “fi­nan­cial fire”. My ex im­me­di­ately did three things: clear out our bank accounts, re­draw on our mort­gage, and direct his salary solely to his ac­count. My baby girl was only 10 weeks old. I was on ma­ter­nity leave at half-pay and I was drown­ing in un­se­cured per­sonal debt.

Yes­ter­day, I set­tled on my new prop­erty. I am now a sole home­owner, and my girls (aged three and now one) and I have our very own home. This is all be­cause in De­cem­ber last year, I read The Bare­foot In­vestor. I set up my buck­ets, re­turned to work, and got my­self a damn good lawyer. Words can­not to ex­press my grat­i­tude! BARE­FOOT REPLIES: Each week a hand­ful of peo­ple write to me to say “stop pro­mot­ing your book!”. Luck­ily, I’ve long given up lis­ten­ing to them. Why? Be­cause I know there are women in do­mes­tic vi­o­lence re­la­tion­ships who are read­ing this right now, and they need to know there is hope. Me­lanie, thank you for be­ing a shin­ing light, to all women. You got this! The Bare­foot In­vestor for Fam­i­lies: The Only Kids’ Money Guide You’ll Ever Need (HarperCollins) RRP $29.99. On sale now from Dy­mock Dy­mocks and d all ll good book shops.

PROOF IN PUD­DING: Chil­dren play­ing a greater role in the kitchen and thou­sands in the bank. What a great re­sult.

T In F O (H R sa The Bare­foot In­vestor holds an Aus­tralian Fi­nan­cial Ser­vices Li­cence (302081). This is gen­eral ad­vice only. It should not re­place in­di­vid­ual, in­de­pen­dent, per­sonal fi­nan­cial ad­vice.

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