March 2020 will go down for the majority of us as the most tumultuous month to date, and potentially in our lifetime. With COVID-19 cases surpassing half a million, a share market dropping 30-40% and every government taking extreme measures around the world, it’s a state of emergency everywhere.
There are many parts of the stimulus announcements such as tax relief and accessing your super that are best placed with a qualified financial planner and certified practicing accountant. Our objective is to help protect you from a financial and property standpoint, but also to call out opportunities that may present themselves so you, our herd, are fully aware of what’s available to you.
From a financial landscape, I have never seen a more supportive yet cautious banking sector. If I look back at the crises I have lived through, or my parents told me, we had the 1987 crash, 2000 dot-com crash, the Sep 11 attacks, the GFC and what’s happening right now in the last 40 years. During these instances, we’ve existed in a state of either industrial or financially driven downturn, with the exceptions of Sept 11 and now. The banks approach in the latter two is to be a pillar of strength, to keep money flowing to where it can be best served. This provides me with great comfort knowing that all major institutions and governments are working together, and I hope it can do the same for you.
Here is a summary of the current financial situation we find ourselves in, from two lenses – protecting cash flow and deploying cash flow:
Protecting cash flow
- Hardship claims to help when income is deteriorating is available through all major institutions. Lenders have a various number of options including deferring payments, capitalising interest and extending loan terms.
- Competition is still strong and we can refinance for a better rate.
- Our advice is to review your current structure with items like fixed and interest only loans, which can help with uncertain times ahead, allowing you to build up your savings faster.
Deploying cash flow
- It may seem opportunistic to think this way, however during all those crises the global economy did recover. It just took time. It also takes courage to think about the long term and investing in a downturn.
- Banks are still open for business, lending at this stage is still flowing with interest rates at an all-time low. Houses are being sold and purchased – it’s just not up in lights, it’s behind the scenes.
- Property opportunities will present themselves and as such we are seeing a huge spike in pre-approvals. Being prepared is the key. If you are making offers on properties we strongly suggest a subject to finance clause and also subject to valuation. Speak to your conveyancer or solicitor for these key items.
- Finally, with advice from financial planners, we are seeing clients release equity to invest in the share market. If this is something you’re looking to do, speak to your planner or ask us for a referral. The more quality advisors you surround yourself with in a time like this, the better.