Thursday, August 24, 2023


Mackay and Whitsunday Life

Are you ready for a recession?

If Australia goes into a recession over the next twelve months, how prepared is your family?  How will it affect your job or business?  How will it affect your super or pension?

There is a very strong possibility that Australia will have a recession soon.  Like most of the world, the huge handbrake central banks have put on economies with much higher interest rates are starting to bight.  With monthly loan repayments rising by around 50% and those increases flowing on to rents as well, families have less to spend and are cutting things back in their budgets.  Less spending means less economic growth and if growth across Australia is negative for two consecutive quarters, that is deemed a recession.  Other than during Covid, we haven’t had a recession in Australia for decades.

It's time to think about how a recession will affect your business or the business you work for.  As we’ve seen several times in the last 5 years, the demographic mix of visitors to town could change, more young people and retirees who don’t have home loans and less middle-aged family people with home loans.  With our dollar quite low, more international travellers and probably the barbell effect of them being younger people before they have home loans or retirees with no home loans.  Less discretionary spending means businesses selling goods and services that could be deemed luxuries or toys will see less demand.  Can you pivot your marketing towards those consumers with little or no home loan who won’t be as badly affected?  Are you ready to be nimble with your staffing levels and expenses to trim them quickly if sales fall?

Sometimes recessions spill over into the share and property markets.  This doesn’t happen all the time so ‘selling out’ of growth assets like shares and property in your super isn’t sensible.  Major studies throughout history have shown that people who try to ‘time markets’ and buy low and sell high end up worse off than those who buy and hold.  If it was easy to time markets, we would all be rich.  No one’s crystal ball is reliable in the long run.  There are however ways to prepare your super or super pension.  Understand what you’re invested in and ensure your investments are weighted towards quality, reliable assets and not risky, ‘blue sky’ assets.  If you are drawing down on your super, make sure you have a strategy in place so you don’t have to sell growth assets when they have fallen in value to make pension payments.  Come in and we will review your existing investments and explain our 3 Bucket Protection Strategy for free.  Now is the time to ensure you have a steady hand on the tiller as the weather looks like turning nasty…

If you think you could benefit from a discussion with a Financial Planner, give us a call.  There’s no obligation, the first meeting is free, and all fees are spelled out clearly in advance.  If you’re not sure, try our Financial Fitness Survey on our website at as it’s a simple free tool to help assess your financial strength.

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