Fixed vs Floating: In a World of Unknowns and What Ifs

Okay, so what's up with interest rates? Where are they heading and how long should I fix for, if at all? Graham Goodisson gives his take on the current fixed vs floating debate

As always, it depends on your overall debt reduction strategy and where you are in that cycle. It also depends on what you are planning to do with your property in the next one-to-five years.

For example, if you’re planning to sell in the next two years then don’t fix for three! Also, if you think there might be a major restructure of your finances within that period, then plan accordingly.

Right. With the pre-amble done, what new stuff do I need to know? Three points …

1) Banks are not fighting for your business

Banks are trying to build profit on their existing clients, but they’re not chasing new ones. Currently, they are not really interested in beating the bank next door on interest rates in order to get your business. In fact, they are sneakily adding a 0.15% here and a 0.1% there when your back is turned. These tweaks don't make a massive difference to your repayments but they do add to their profits! Just remember that your point on this earth is to add to the profits of Australian-owned banks!

2) Banks are saving for the “what if”

The Reserve Bank is putting pressure on banks to keep enough funds set aside for “what if” scenarios—the “what if” being some sort of financial meltdown.  This means they need to hold more money, which costs them in terms of what they pay investors. You and I ultimately pay for this.

3) Uncertainty from over the pond

The once great U. S. of A. is part of the problem. No one really knows what is happening with interest rates there. Some think they are going up and others think down. 

So what would I do?

I think the two- and three-year rates are good value as five-year rates make me nervous. However, I have also continued to buy European cars that cost me a fortune to run, so can I really be trusted?

Remember that this is not specific advice to you and the best course of action is always to have a chat to your Velocity Financial adviser.

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

Why I Went to the Sevens, not Guns N’ Roses

Graham shifts the discussion away from interest rates and LVRs to something far more important: Would you rather win a free ticket to the Sevens or Guns N’ Roses?

So why did I go to the Sevens, not GNR? Because I am an idiot.  How could I get it so wrong?

I'm not actually a massive GNR fan. I think they are a bit wet but, at the same time, I have many good memories attached to the music. I also have good memories attached to the Sevens but, sadly, I hurt these memories badly by going to the recent event.

Both events made me think about life, Wellington and business.

1. Don't mess with a wining formula.

2. It’s difficult to fix it once you break it.

3. Always go to the big shows!

4. We only like the real thing! Sevens is not real rugby so why go and watch it whereas GNR are the real rock n’ roll deal.

5. Kind of ironic that it was beautiful for the Sevens and horrendous for GNR and the weather had no impact on either.

6. Hurtful that I got a free ticket to the Sevens and my son got a free ticket to GNR. I just don’t know what the universe is telling me!

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

Is it too Late for New Year’s Resolutions?

Even if you’ve already slipped up on your New Year’s resolutions, Graham argues that it’s never too late to look at your life as a whole, dream some goals and create new habits to achieve them.

I made my New Year’s resolutions way back in October so, I must say, I felt slightly righteous on the first of January.

However, I can’t take all the credit for getting a couple of months’ head start. My friend Mary Hancock from Genratec gave me some sage advice in terms of how to end the year well and move on to the New Year in style. Here are the steps she gave me that got me started back in October, and although it’s February it’s never too late for you to follow her steps as well.

1. Take stock of 2016. Remember the highs and the lows.

2. Reaffirm your vision and purpose.

3. Articulate your clear goals for 2017.

4. Write them down. 

5. Create practises that will feed the plan and reach those goals.

Here's to a life of purpose and intention for 2017.

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.