Another year has flown by, and looking back over 2013 there have been lots of opportunities to grow personal wealth.
One of the big pluses of the year has been historically low interest rates. Following two cuts in May and August, the official cash rate is down to 2.50% and that’s seen home loan rates drop to levels we could only dream about a few years ago. Remarkably, fixed rates are as low as 3.99% with the likes of IMB, or around 4.49% (variable) through providers like loans.com.au.
Even better, Australians are taking advantage of wafer thin rates to get ahead with their mortgage. Comparison site RateCity says as many as 84% of home owners are paying more off their loan, and it’s a smart strategy. Making extra repayments – no matter how small, will cut time and money from your mortgage.
It’s been a great year for our superannuation savings too. According to research group SuperRatings, ‘balanced’ super funds – the option chosen by the majority of workers, have delivered median returns of 16.9% over the 12 months to 31 October 2013.
It’s a tremendous result, and SuperRatings research shows that $100,000 invested in a balanced super fund in October 2003 would now be worth $195,265 based on investment earnings alone – that’s excluding any contributions. It goes to show that super really does shine as a long term investment.
Of course, there are areas where, as a nation, we could improve our financial wellbeing. Credit card debt remains high and card rates have barely budged despite falls in the official cash rate. Nonetheless there is a wide range of cards and balance transfer deals to choose from. For a small investment of time to track down a better rate, it’s possible to make significant savings on card interest charges and free up cash to pay off the debt sooner.
Sadly, we also continue to lose money to scams. Government figures show over 800,000 Australians fall victim to scams and fraud each year, with almost $1 billion being siphoned off by crooks.
The key message is that we can’t afford to be complacent- especially over the busy festive season. Don’t respond to unsolicited offers that are too good to be true. Keep your computer’s security systems up to date, and remember that your personal details can be as good as a blank cheque in the hands of crooks, so guard this information carefully.
More broadly though, I reckon the outlook for our financial wellbeing is pretty good. We continue to benefit from competition in the banking industry, and that means a better deal for consumers. Thanks to the internet it’s never been easier to shop around and compare prices. And increasing values in the sharemarket and property market have boosted the wealth of many ordinary Australians. Only time will tell, but I’m looking forward to a positive 2014.
As this is my final column for 2013 I’d like to wish all my readers a merry Christmas, a safe and happy holiday season and, of course, a prosperous New Year.