Passive income is the income generated by our investments. Because it is not linked to our time or (necessarily) our skill, passive income is not limited in the way that active income is. Indeed, it is possible to earn passive income even while we sleep.
Earlier this month, Australia’s Reserve Bank dropped their target for interest rates to its lowest rate ever. This has dampened interest rates across the economy – as you will have noticed if you are a borrower or a saver. Rates will stay low for at least three years, so now is a great time to review your financial plan to make best use of these low rates.
Next week brings the first day of Spring – an arrival that can’t come soon enough in this most strange year! To mark the changing of the seasons, this week we take a lighthearted look at the relationship between money management and the weather. You might be surprised to know that serious researchers have looked at this question. So, for investors, could it really be a case of “Hello Sunshine?”
They say the secret to successful comedy is all in the timing. Funnily enough, the same goes for investment or debt management. But unlike with comedy, when it comes to money it is usually best to get in early. That’s because anything that earns interest is worth acquiring earlier - and anything that charges interest is worth paying off as soon as possible.
The ‘mental side’ of money management is always important. Given the events of 2020, how we think about money has become even more vital. While no one really knows what the lasting economic impact of the Coronavirus will be, the one thing that we can be certain about is that many of our working assumptions will need to be changed. The new world will not be like the old world. We will all need to think differently when it comes to our finances.
Covid 19 means that many household budgets are under pressure. Many of our clients are looking closely at all of their spending. For some people, this review includes thinking about their life insurances. As we will discuss below, any decision to discontinue or reduce life insurance should only be made after very careful consideration. Restorations may not turn out the way you think they will.
The ability to turn a complex idea into a simple set of habits is usually the secret to success. This week, we thought we would ‘boil’ financial management down to a simple mathematical formula which many successful people have applied in their own lives. We call it the ‘wealth equation.’