February always signals the end of the summer holidays and the start of the normal business year. Obviously, when we start the New Year we like to set our goals for the year ahead to ensure that our financial situation and/or business are moving ahead with the current economic climate. These might include goals for your career, your family, your education or your financial security. When setting goals, it is important to ensure that they are SMART goals.
S – Specific

M – Measurable

A – Attainable

R – Relevant

T – Time-bound

It is also important that your goals are positive and constructive goals rather than negative. For example, rather than saying “no more debt”, you might have the goal “to pay down $1,000 of your non-deductible debt each month” or “to look at restructuring deductible debt to make it more manageable.”

Your goals also need to be harmonious. So having a goal to retire by age 60 may not be feasible if you have not set achievable goals to meet this target.

Finally, write down your goals and review them frequently.

I encourage you to get in contact with the WSC Group Team this month to discuss your goals so we can work with you to help you achieve them.

1. Low wage growth – This is always a concern for those who receive wage income. With inflation still below 2%, it does not look like this is going to change anytime soon. The Labor party, in response, is advocating a movement of the minimum wage from $695 per week to $852 per week, a jump of 23% - this would no doubt horrify some small business owners who are already struggling to make ends meet, but I am sure that workers would be happy with this should it make it through.

2. Interest rates – After a period of extremely low inflation, there is some evidence that inflation may rise from being under 2% to within the Reserve Bank of Australia (RBA) target range of 2-3%. The RBA’s obsession with this could mean that we may have an interest rate rise by the end of the year. Obviously, this is a concern for first homebuyers, homeowners and investors. Interestingly, if rates were to go from 4% to 6%, this represents a 60% increase in someone’s interest bill – which is a frightening thought for most of us! Perhaps the RBA should have an extended holiday, at our expense, and leave interest rates where they are for a number of years to create some certainty in the economy!

3. When is the next property bubble? – These grand predictions of property bubbles never seem to happen. However, we do have small corrections from time to time or in a given quarter. For example, Brisbane unit prices have slipped to their lowest level in four (4) years in this quarter and even Sydney unit prices slipped 0.4%. This, however, could be short lived

given Australia’s population growth in the next 32 years to the year 2050 where our population may reach 50 million.

4. Interstate migration – It was only a few short years ago when interstate migration out of NSW had been at its lowest level since 1983. With the recent property price boom, particularly in Sydney over the last 5-years, it seems that the out of Sydney move to other states is gaining momentum. For example, net migration out of NSW was 14,859 for the 2016/2017 year, even eclipsing WA, which also had net interstate migration away of 11,722. Where did all these people go? It seems that Tasmania and ACT picked up about 1,404 people but the great majority of these people moved to QLD (17,426) and VIC (17,182). If the past is any indication, particularly with a move of interstate migration to QLD, property prices are sure to grow in the next few years.

When you look at all these issues, what does it mean for clients of WSC Group?

1. Be prepared for some interest rate rises in the next year or two. If you feel that you are currently over extended, evaluate where debt could be decreased.

2. If you own a property in South-East QLD that has not grown in the last few years, the next few years might be where you will receive some growth.

3. If you are a business owner, you could only have 2-years at the current minimum wage so may have to factor into future budgets higher wages coming into the 2019/2020 financial year should a Labor Government be formed and pass its proposed reforms.

4. On the other hand, if you work for an employer, keep working to help them make their business successful as that is the best way to help your salary increase long-term. If you do not help that employer be successful, pay rises may only average about 2%.

Some other points I would like to mention:

1. Over the next couple of months, there will be some opportunities for you to join the WSC Group team for Roundtable discussions on topics relevant to your long-term financial goals.

2. We will kick off our monthly webinar program again in February. The first topic will cover the changes to the Notifiable Data Breach (NDB) Scheme, which commences 22 February 2018 and will affect all business owners.

3. Property Investors, if your wage has changed or you have purchased an additional property, now would be a great time to have a review of your tax variation. Contact your Client Manager to discuss further.

4. There is also now an opportunity to salary sacrifice some super for your children to assist them with their first property purchase. This has recently been gazetted in parliament and is designed to provide some savings for your children to reach a $30K deposit for their first home.

As mentioned, I encourage you to touch base with the WSC Group Team this month, particularly if you have a financial milestone coming up such as loans coming out of fixed rates, needing to purchase a new car, being offered a redundancy package by your employer or even if the shape of your family is changing.

As always, I am always available for any questions – 2018 is going to be a great year!