What the election means for your money

During the federal election campaign we were bombarded with promises from politicians who are desperate to be elected.

Both parties have proved to be pretty good economic managers in the past and tend not to do anything stupid to put our financial prosperity in jeopardy. But that doesn’t stop them saying silly things such as ‘A vote for me will bring down interest rates’.

Nonsense. Yes, a government has a duty to manage a solid economy, but the Reserve Bank decides on interest levels. Rates have risen recently because the Aussie economy is performing so well and the RBA doesn’t want it to overheat. It’ll cut rates if it thinks the economy needs a kick.

Property boom
I thought the boom in residential property values would soften this year on a combination of higher interest rates and more stock coming on the market, but
values would still be underpinned by a property shortage and immigration. I’m happy with the outlook but still worry about the severity of the next downward leg in the cycle in three to four years’ time. So work towards at least a 30 per cent equity in your house.

GFC recovery
‘Government debt is rising at $100 million a day.’ It’s a scary figure, but keep it in perspective. Our economy is big – $100 million a day is like you or me getting into debt at 50 cents a day.

The biggest threat to our economic health comes from overseas rather than who’s elected. There are signs the US recovery is stalling, particularly in job creation. If they don’t have jobs, then the US economy could get stuck in a rut.

This global financial crisis may take another nasty twist. Thankfully Australia is still in good economic shape by comparison – we’ll need to be.