It’s been 5 years since the golden economic period ended in 2007, and we have survived, although not necessarily thrived, during this great global recession. To me it has been a little like watching and old WW11 movie, where after 5 of the 6 years at war the general feeling starts to come upon people who maybe the tough times are only going to last a little bit longer.
So you might be thinking, how much longer can we expect this to go on? My prediction is that in Europe this might be another 3 to 5 years, in the USA possibly 2 to 3 years and in Australia things are expected to improve a little sooner, possibly in 6 to 18 months. So what should we do now to take advantage of likely improvements in the economy in the near short-term?
Firstly we need to acknowledge that the situation often can get worse before it gets better. So it is expected that there will be short-term hiccups and dare I say it, we will need to be patient for a little longer. Now is the perfect time to look to undervalued investment opportunities which are likely to grow well when the economy picks up.
Shares are a precursor to the economic conditions in 6 to 9 months’ time. The worst of the Global Recession seems to have passed us so it could be argued that opportunity knocks now for the medium to long-term investor. Cash rates are likely to drop further in 2013 to stimulate the broader Australian economy and take pressure off the high $AUD. This should result in helping housing and construction to start up again. We also expect that this will contribute to growth and inflated residential property values resulting in the return of growing inflation over a 2 to 5 years a period.
Following this, we expect the cycle will start again, of rising interest rates on lending in 2 to 5 years’ time. So the logical thing to do now is to work out your individual goals and objectives, both short and long-term, understand your investment risk profile and adjust your investment and financial strategies for the next 5 to 10 years. The next step is to get some professional financial planning advice to ensure you minimize the risks and factor in exit strategies and flexibility for unforeseen circumstances, which can impact on your strategies adversely.
– Peter Stewart (CFP, AEPS, FAFA Dip FP Dip Li)
Peter Stewart the Principal of Benchmark Consultants is a Certified Financial Planner. Benchmark Consultants has been accredited as a Professional Practice of the Financial Planning Association (FPA). Benchmark Consultants is a corporate representative #289570 of Australian Financial Services Ltd AFSL#297239
Disclaimer: This information by no way constitutes financial advice. We encourage any reader to seek out professional advice specific to their circumstances from a qualified Financial Planner.
If you are seeking Financial Advice from an adviser who runs their own Financial Planning Practice then contact Benchmark Consultants on 92932922 for a complimentary initial meeting to discuss your needs.
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