When people are constantly bombarded with doom and gloom regarding the financial news, this leads to doubt and worry, this in turn can lead to poor financial decisions.
When you turn on your TV you are hit with a flood of information, via different TV shows purporting to be NEWS and informative; be very wary.
Always be aware that any finance and brokering companies, within these shows have a vested interest & are more than likely to have paid the show to be there in the first place, they create a hype headline story to give you reason to listen.
To be completely in tune with the true facts, it’s imperative you do your own research and never rely on media hype, created by companies to suite their own goals.
Always keep control. There are many things financially we cannot control, for example, the Chinese economy and how Australia responds, but you can control how you respond.
I call this, ‘Closing Gates’!!!
Some examples are:
Fees - are you paying too much?
Super - Is your super fund charging you 1.3% per cent on your current balance, and another companies charge 0.9% per cent?
That’s 1.2% per cent difference you could be saving. When this is compounded over your working life, this is a considerable difference.
You need to take control and shop around. This is compounding money that should be in your account, not the super funds account.
Here’s an exercise for you. Ring 4 different super companies and find out what their fees are.
What % returns do they offer regarding the safety of the investments they make with your money?
Ask about their guarantees in regards to your hard earned money and always read the fine print.
As Australia is ever changing in regards to investment, it’s important to be in a good position when policy changes take place.
‘Close the Gates’
Investment properties -
If you are buying or own an investment property, is it negative or positively geared?
Does this property generate enough income to offset all costs?
Are you paying the short fall each week?
With the current political climate this may be an area you need to look at!
What if you:
· Got sick
· Lost your job
· Are Self-employed and business is slow
· If the Government rules changed and took away negative gearing, do you have anything in place to protect you?
What is your strategy?
How will you cope if a tenant vacated and it takes weeks to find a new tenant?
What’s your buffer?
Are you a real investor or do you just own an investment property?
Are you paying the best possible interest rate?
Have you got the most suitable product for your needs?
Are you paying for bank services you don’t need or want?
Do you go to the bank yourself or do you use a person that is experienced in their field to help you?
Do you have a good Finance broker?
Banks will offer headline rates in the windows to entice you in the door, however it’s ‘Buyer Beware.’ All that glitters is not gold.
For example, Do you know about:
· Honeymoon rates
· Revert rates
· Fixed rates
· P/I verses I/O
· Lines of credits
· Offsets both partial and 100%
· Construction loans
· Break costs
· Exit fees
Do you know everything about these products, plus many more as well as bank policies?
Are you truly an expert or are you a customer of the bank?
Do you know if you’re the type of client they want?
Not all banks want you, but others would love you.
Each bank has different policies and these are ever-changing.
Are you 100% sure the bank, that you deposit your money into each week, has your best interest at heart?
Remember, each bank will only sell you their product and not recommend a different bank that has better rates and fees.
If you’re not an expert, find someone who is. It’s very confusing out there.
I saw a story recently, regarding people who have been embezzled by a builder and are now stuck with mortgages on unfinished houses. This is obviously not the full story, there’s a lot more to this story however, if the full story was told it wouldn’t be as sensational.
‘Close the Gates’
When building, you have construction loans in place; the banks pay these in instalments to protect the client and themselves.
The contacts should be fixed price (contracts or You should have a good solicitor that is independent, who is familiar with construction and building contracts.
Different solicitors specialise in different fields, much like surgeons.
Insurances should be in place to protect you.
Builder’s contracts should have a finish date clause, with penalties per day over the date of completion. They should include a clause making allowances for inclement weather; this period is usually two weeks.
Ensure the builder is fully registered and you have copies of their up-to-date Insurance Certificates.
Check that the builder doesn’t create a company, take your money, close the company then start a new one. As we have heard over and over, some developer’s do this quite frequently. Also, this way, there is no comeback with building faults, once you move in.
It’s all about having the right people behind you every step of the way.
Good Solicitors, Accountants and good Finance Brokers. Make sure the solicitors do all the right searches for you
My last word of advice is………..
Always remember to ‘Close your Gates’