MTO News April 2009

The RBA has dropped interest rates to 3%. 

For borrowers this will be another blessing, however for anyone relying on cash investments this hurts.  The question on people's mind is what should they do.  We answer some of your questions below:-

1. For investors and retirees with significant cash holdings, now is the time to move some of your cash to growth investments.  With cash rates now so low it is almost certain you will get a greater income from growth investments.  For example some quality property funds are paying 7% income at present.  Similarly bank shares are paying over 6% dividends.
2. For people who are building their wealth and who have a secure job, you could consider taking advantage of the low interest rates and gearing into the market.  If you can borrow at 5.5% and this is tax deductible then effectively you are only paying 3.8%.  If your investment returns anything above 5% then you are actually in front. 
3. For home owners we believe this is an excellent opportunity to review your payments and repay your loan a little faster.  Ultimately building investments and using the income from the investments to repay your home loan is the best way to repay your home loan, because it both builds your wealth and reduces your home loan.
4. Anyone interested in rental properties should consider whether they can afford a property at present.  House prices have dropped a little and with interest rates decreasing we anticipate the investment property market will soon become very competitive.

Whatever your situation the current market presents some wonderful opportunities for people to take advantage of.

Insurance only shows its value when something goes wrong and you need to claim.  You need to know that you are covered.  To help everyone understand more about what is covered we asked one of our insurance companies to tell us about their recent claim history for Trauma Insurance.  This insurance pays a lump sum when you are diagnosed with a critical illness or Trauma. 

The majority of these claims would not be covered by the traditional Life or TPD insurance that most people have. 

The important thing about insurance is to cover your most important assets and your assets that are likley to have a claim.  Hence most people insure their car.  It costs a lot and is likely to have a claim.  Similarly most people should have trauma insurance.  Think about how many people you know who have had cancer or a heart problem.  You are your most important asset!

If you would like further information on insurance and protecting the people you care about please contact our office.

For those Clients interested or thinking about fixed rates, we believe now is the time to start looking at possibly fixing a portion of your loan. Although there is still a very good chance that the variable rate may fall a little further all indicators from the Banks are that long term fixed rates are about to increase in the near future.

This is especially important to those clients who would find it difficult to repay at a higher interest rates. Most facilities are able to be split into part fixed and variable thereby hedging your bets on interest rate movements.

If you are in any doubt please do not hesitate to contact Made To Order lending staff to discuss you personal requirements

The information contained in this newsletter is current as at 9th April 2009. It should be regarded as general information only, rather than advice. It has been prepared without taking account of any person’s objectives, financial situation or needs. Because of that, each person should, before acting on any such information, consider its appropriateness, having regard to their objectives, financial situation an needs. Investors should note past performance is not a reliable indicator of future performance.

Any opinions expressed in this newsletter, including as to future matters, may be subject to change. Opinions as to future matters are predictive in nature and may be affected by inaccurate assumptions or by known or unknown risks and uncertainties and may differ materially from results ultimately achieved.