Our government is proceeding slowly and with an abundance of caution. It does seem though that many restrictions, starting with intra state travel and then interstate travel may be removed over the next few months or even perhaps weeks.
The speed of the restriction removal seems to be related to things like the take-up of the COVID Safe app (for tracking possible future outbreaks), widespread testing and plentiful Personal Protective Equipment (’PPE’). We have downloaded the app and encourage everyone we know to do the same. I recently was able to convince a friend of mine to download the app once he understood the link between take up of the app and the release of restrictions.
New Possible Income Stream Payments
If you have an income stream (it may be called a pension – not the Age Pension), you now have the option of receiving even lower payments. This may be suitable if you have other cash reserves and are able to let your capital recover rather than take more out of the pension.
Please note if you do this now, you will probably not receive any more payments this financial year. If you are a client and we have not discussed this yet please let us know if you would like to take advantage of this option.
A Strong Property Market?
There has been some speculation about property markets falling due to the coronavirus. The data that we have available suggests no real falls so far. The possibility of releases of restrictions in Australia, and some buyers moving away from the stockmarket suggest to me that prices may well hold up generally. I could be wrong of course!
Recovering Share Markets?
Share markets have been recovering from their lows, led as usual by the US market. Indeed the US market has performed better than other markets such as our own, possibly because of the reluctance to fully close down their own economy. The difference between the US Federal system and our own could not be clearer. In Australia we have developed almost overnight a new institution called National Cabinet, where the State and Territory leaders meet regularly with our Prime Minister.
By contrast in the US States have been taking very different measures and the Federal government is allowing the States to act more as they wish, which is consistent with their Federal system.
I have had several calls from people wanting to buy stocks, thinking that the market is now ‘cheap’. That moment appears to have passed. The increases since the fall mean that the stockmarket is not particularly inexpensive now. So as always when buying growth assets, you should have a long-term perspective.
Putting Your House Deposit into the Share Market
Furthermore, I have come across several people who are saving for a home express an interest investing their savings into the share market, hoping to get big increases. The problem with this approach is that the share market may well fall in value in the period you are saving for (often less than two years). So, although cash is paying very poorly (use a proper bank please) interest rate wise, at least you know it will be there when the time comes to purchase your home or investment property.