melissamontang, Author at Apex Advice

Apex Advice looks at likelihood interest rates could fall as early as 2023

[Edited transcript below]

We know interest rates are a hot topic on the back of the RBA increased interest rates for the fifth consecutive month in a row, each of which have been the worst kept secret in the world. There was a good analysis on this from BT, which is part of Westpac.

I want to share a couple things with you, when we’re talking about interest rates. Essentially, it’s all about inflation at the moment and where they’re trying to tame inflation.

And what we can see here on this top graph is a prediction on where the RBA thinks inflation is heading. Now, the blue line is what we’ve already seen, a really huge spike, and that’s why we’re in this sort of a situation right now where we’re having to continuously hike interest rates. The red line is their prediction – what they’re predicting is that inflation will get a little bit higher, but then collapse right back down to sort of a reasonable range, somewhere in 2023-2023.

What’s interesting about all this is that, or I guess the best way to think about it is that this indicates that the RBI thinks this inflation issue is a short term issue. They’re going to have to hike rates very aggressively to try and tame it, but once inflation comes back down again, they’re predicting the rates will fall quite rapidly.

Above is the cash rate actuals and expectations chart. Blue is the current and what we’ve seen, and then the red is the predictions moving into next year. With these rates going up really quickly, we’re going to see some economic carnage and damage, but there’s a strong chance according to this that the RBA will be cutting rates again, as soon as next year. Like I mentioned, this report from BT includes some in-depth analysis to say, based on last week’s RBA decision, they’ve hiked cash rates to 1.85%, and they’ve forecasted they’ll continue hiking rates up to 3.1% which says to me that mortgage rates will be sitting at 5-6% at that point.

But then they’re saying, we see the peak in the cash rate occurring in early 2023 and thereafter the RBA will turn to cutting rates.

So we hope that helps and gives you peace of mind that this is anticipated to be more of a short-term problem than a long-term problem. Again, if you’ve got any questions, give us an email and we can discuss the four or five tips to try and manage your position.

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Apex Advice’s money management philosophy to help you save money more rapidly

[Edited transcript below]

So today we’re going to show you how our Apex Advice money management philosophy can help you to implement an automated savings system that will help you save more faster. Essentially, when it comes to saving money or using cash, you have two options. You can allocate it to today, or you can allocate it to the future.

Now this can essentially be money or savings that you have sitting in the bank, and it could also be surplus income. And with the future spending, essentially you’re putting money away to compound it and grow it over the long-term. This can be done by shares, managed funds or ETFs. It can be done through property, crypto, or even superannuation (a.k.a. retirement).

The key to getting good, consistent results when investing is to make sure that you never send it to future, and then have to bring it back to today. Basically you want to just consistently add money and invest money for future, so that you can compound and grow it over time. So to make sure that what you carve off for the future can stay there, you need to ensure you have all the things in the today side of the ledger accounted for. So that’s things like your fixed costs, it’s your spending for day to day, it’s debt – repaying money, it’s your lifestyle. So again fixed costs are essentially rent, bills, all the boring stuff, and spending is clothes, smashed avo, and goats cheese, shoes, beer money, coffee, whatever. Debt, that’s everyone’s least favourite category, that’s essentially paying money back, generally to the bank. And lifestyle, that might be saving for a holiday or travel, and also doubles as an emergency pot.

The B word [budget]

Now, a plan around spending, and I’m not a big advocate of the B word, but essentially when we allocate funds between these four different categories, we can determine how much is left over for future investing. And that’s essentially what our budget is all about. You need to find balance between the left and the right side. Often savings is considered to be the most important thing, but often comes last. If you do this process well, you can even determine different savings rates using a good compounding tool or something like that, how much progress or success you can make to get ahead, and then if you get it, do it really well, you can, with great accuracy, plan out your spending, savings and investing into the future. Now it’s all well and good to have great ideas and people often do, but we often fall down in terms of the execution and actually getting traction and success. So a clear banking structure that supports good spending and savings habits is the key, and how we do this is we have our income. This is it in practice, and we have that flow into a central cash hub. Then, from that central cash hub, we can then filter money into all these categories as we see fit. And what you end up with is an automated, disciplined, structure or framework, that helps you accelerate your savings and investing, but also plan out your spending with great confidence. When I set these filters up into the categories, I like to do it weekly because I live weekly. And so the key benefits, are that you can hack your behaviours and psychology, and therefore, you know, often I’ve thought since I’ve been doing this, that I just knew it works, but the more research you do around behavioural finance, you’ll note that having isolated accounts for isolated purposes and then automating the flow of money really helps hack a lot of those behaviours instead of trying to spend money, then save it later. It also helps with automation and is very easy to implement and review. And then more importantly, it helps with time. So it’ll save you a lot of time, once it’s all set up and it helps you make rock solid decisions. So that again, you can plan out your spending, savings and investing with ultra confidence. You know exactly where your money’s gone and helped you plan for less certain periods, even with income. Hope that helps, any questions sing out. We’re here to help. Thank you.

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