2009 was an extraordinary year. Australia, luckily, was one of the few developed nations to avoid a recession as a result of the Global Financial Crisis (GFC). Will 2010 be as taxing on our nerves?

No matter how bad it may have been here, the GFC was significantly more severe in the US, UK and Europe. Certainly, some of our international counterparts continue to suffer weakness in their economies and very high unemployment.

However, it looks like the worst is now behind us, with most economists predicting growth (albeit not strong growth) and falling unemployment during 2010.

For Australia in particular, the future looks fairly rosy. China’s continuing growth should ensure demand for our commodity exports. For us, there are likely to be a few bumps in the road, but the ride should continue to be quite comfortable.

Because our economy is growing, there will probably be further interest rate rises during 2010, predicted by most economists to be around 4.5% by the end of the year.

Company earnings will be critical to stock market performance, and most commentators agree that there may be some pressure brought to bear by the withdrawal of stimulus payments. Returns are likely to be significantly lower than last year, but still strong in a long-term context. Experts are tipping a range of around 5300–5600 by year end for the All Ordinaries Index.

Residential property, buoyed by strong demand and weak supply, is also likely to perform quite well. As interest rates increase, so will returns on cash accounts and term deposits.

Globally, the economic scene may not be quite as bright. There’s no doubt that international share market returns will be more volatile than we have seen in the recent past, but the consensus is that returns will be positive.

We are not completely out of the woods. Problems and imbalances remain in the global economy, particularly around the large level of debt that most developed countries now hold and the withdrawal of very significant economic stimuli. The recent issue in Greece, where government debt has spiralled to the point where there is some doubt as to whether it can be paid back, exemplify the problem well. Any situation of this nature has the potential to affect confidence and sentiment, and cause volatility in markets everywhere.

Nonetheless, we begin 2010 with the expectation that the extreme market tremors of a year ago are now over.

IT TAKES DISCIPLINE- BY JUSTIN LANGER

It takes discipline and courage to look a man in the eyes rather than at his feet.

It takes discipline and courage to train when it is wet and cold.

It takes discipline and courage to tell the truth rather than lie.

It takes discipline and courage to keep focused on your dreams.

It takes discipline and courage to master the basics.

It takes discipline and courage to practice under pressure.

It takes discipline and courage to get out of bed early.

It takes discipline and courage to keep running when you are spent.

It takes discipline and courage to do the little things.

It takes discipline and courage to watch your manners.

It takes discipline and courage to do an extra lap.

It takes discipline and courage to trust yourself.

It takes discipline and courage to guard against complacency.

It takes discipline and courage to be honest with yourself.

It takes discipline and courage to be the first on the training track.

It takes discipline and courage to choose over right over wrong.

It takes discipline and courage to be on time.

It takes discipline and courage to fight back rather than quit.

It takes discipline and courage to stick to your game plan.

It takes discipline and courage to lead by example.

It takes discipline and courage to listen and learn.

It takes discipline and courage to say no.

It takes discipline and courage to make it to the top.

The pain intensifies.

Hopefully this will never happen to you, but what if it did? Take a moment to think about how your family’s living expenses would be met if your income stopped tomorrow.

The average Australian household spends up to one-third of its gross income on mortgage repayments. Most of us would rely on our regular income continuing indefinitely in order to meet such an expense. And at this point we haven’t even got to putting food on the table.

Income protection (or “salary continuance”) insurance policies usually provide up to 75% of your salary or business income in the event that you cannot work due to illness or injury. Of course, you might have sick leave, other compensation arrangements or perhaps a cash reserve to rely on for a while, but what happens when these run out?

TRANSFER THE RISK
Just like any other insurance, protecting your income is about transferring risk to someone else. By paying a premium each month, you have the security of knowing that should anything happen - your car is stolen, your home damaged by fire or you suffer a serious illness or accident - your financial loss will be minimised.

Interestingly, almost 90% of Australians consider the cost of car insurance worth having, yet only 6% of us insure our income.

And what about the apparent contradiction that when you buy insurance you hope you never actually have to use it? Does this mean it is a waste of money?

Why take that risk when having peace of mind is worth far more than dollars? Once you have insurance in place, you can get on with enjoying life, and if you do get sick or badly injured, money will be one less thing to worry about.

Make sure that you have the right recipe when it comes to your Christmas Finance!

Ingredients

Good dash of savings or cash, combined with a sprinkling of credit card – not too much or you will ruin the flavour of the Christmas cheer!

Keep within your budget, remember it’s about the thought not the size or value of your gift.

If you feel you can’t stick to this recipe, give Mcorp Money a call and we’ll see what Santa can do for you to make your Christmas more enjoyable to ensure you are left with a great taste in your mouth and not the ugly sour taste of debt.

Now, if you have been good, try the following recipe and enjoy!

Ingredients (serves 12)

1 x 375g pkt raisins, coarsely chopped
1 x 300g pkt currants
150g sultanas
1 x 170g pkt craisins (dried cranberries)
250ml (1 cup) rum
Melted butter, to grease
250g butter, at room temperature
200g (1 cup) firmly-packed brown sugar
4 eggs
175g (2 1/2 cups) fresh breadcrumbs
75g (1/2 cup) self-raising flour
75g (1/2 cup) plain flour
1 tsp mixed spice
1 tsp ground cinnamon
Warmed custard, to serve

Method

Combine raisins, currants, sultanas, craisins and rum in a bowl. Set aside for 6 hours to macerate (almost sounds like a swear word!).

Brush a 2L (8-cup) capacity pudding basin with melted butter to grease. Line the base with non-stick baking paper.

Use an electric beater to beat the butter and sugar in a bowl until pale and creamy. Add eggs, 1 at a time, beating well after each addition (mixture may appear curdled). Stir in breadcrumbs, combined flours, mixed spice and cinnamon. Add the raisin mixture and stir until combined. Spoon into basin.

Place an upturned heatproof saucer in the base of a saucepan. Fill one-third of the saucepan with boiling water and bring to a simmer over low heat.

Cut a 30cm-square piece of non-stick baking paper and a 30cm-square piece of foil. Place paper on foil and fold to make a pleat in the centre. Place over basin, foil-side up. Tie a double piece of kitchen string around basin to secure. To make a handle, tie a double piece of string loosely over the top of the basin (You will need to possibly consult an engineer for this!).

Lower the basin onto the saucer in saucepan. Add enough boiling water to reach two-thirds of the way up the basin. Simmer, covered, over low heat, adding boiling water when necessary, for 4 hours or until a skewer inserted in the centre of the pudding comes out clean.

Remove basin from pan. Set aside for 5 minutes. Pour over custard to serve.

Notes & tips

Prep: 20 mins (+ 6 hours macerating & 5 mins standing time)

You can make this recipe up to 2 months ahead (Well, I guess I should have given you this recipe a few months ago!). Cover the pudding in the basin with plastic wrap and foil. Store in fridge.
To reheat the pudding: Remove the plastic wrap and foil from the pudding. Repeat step 5. Place an upturned heatproof saucer in the base of a large saucepan. Fill one-third of the saucepan with water and bring to a simmer over low heat. Lower the pudding basin into the saucepan. Simmer, covered, over medium-low heat for 1 hour or until the pudding is heated through. Remove basin from the pan and serve.

MERRY CHRISTMAS!!

This year only 124 properties or 1% have been sold after auction.

If a home is passed in at auction the regulations from the Sale of Land Act states that “the vendor will first negotiate with the highest bidder for the purchase of the property”. This process can take a while, because the vendors will be working out what price they can justify to sell the property for and the interested buyer needs to work out what price they can offer the vendor and if it will be accepted. (The higher the offer the better).

An example of this was at the auction of 1/24 Narong Road, Caulfield North, where there were around 15 groups who attended; the sales agents knew that there has been interest during the campaign. As the auction begun no bids were forthcoming, and this continued until the auction was passed in.

As soon as the auction finished we had at least 4 parties remain who expressed interest. They were all very keen on the property and we put them in separate rooms to negotiate, bidding started and eventually we had 2 parties who wanted to buy the property.  One party offered the highest purchase price at which the vendors were happy to sell at.

Always remember that come auction day the real estate agent will deal with the highest bidder if passed in and negotiate, don’t be scared and bid at auction.

Under the national building stimulus package, the Government will provide up to $1,200 to cover the cost of installing roof insulation.  This means as a M Estate Agent landlord that you won’t have to pay a cent towards improving your property(s) through this program.

Not only will you improve your property(s), you’ll also be doing the right thing by the environment as insulating your roof can lower heating and cooling costs by up to 40%.

Why is the Government providing this assistance?

• Improve energy efficiency of Australian homes
• Save on energy bills
• Reduce Australia’s carbon footprint; and
• Cut energy waste

Mcorp has partnered with the Lexon Group to install the insulation under the Government program.  Lexon Group is a registered government installer and offers a fast, efficient and professional installation service using the highest quality insulation products made from environmentally friendly material.

We have heard whispers that in the next few years that property owners may need to produce a “green certificate” when selling a property.  This process exists in some parts of Europe and having insulation will be one factor to ensure a property is compliant.  We believe that with these potential changes in the winds, that now is the best time to get your property(s) insulated at no cost to you.

What do you need to do?

Complete the form which authorises for Mcorp to coordinate the necessary paperwork on your behalf.

You will need to complete a separate form for each property you own.

When completing the form:

• Insert the property address at the top
• Estimate the size of the property
• Complete the checklist (9 questions)
• Sign at the bottom of the page

Email the completed form to chrisq@mcorp.com

Please be aware that the Government will be introducing changes to the stimulus program from 1st December 2009.  Accordingly we encourage you to return the form in the next week. Contact Chris on 03 9296 2008 should you have any questions.

If tenants fail to keep the premises clean, cause damage to the property, or don’t pay rent, the Landlord or Agent can claim some or all of the bond at the end of the tenancy.

The Landlord can also claim compensation from a tenant if the bond does not cover all the monetary losses incurred by the Landlord.

If the rent is $350 or less per week the bond will be the total of four weeks rent, if the rent is more than $350 per week the Landlord or Agent can request for the bond to be the amount of six weeks rent.

Another circumstance where the Landlord can take more than one month’s rent is when the ‘Residential Tenancy Agreement’ states that the premises are the Landlords usual place of residence and the tenant is renting it until the Landlord wishes to resume living in it.

The bond cannot be increased during the tenancy.

All bonds are held at the Residential Tenancy Bond Authority (RTBA) during the full tenancy.

Before moving into the rental property a bond lodgement form must be completed and signed by the tenant/s and then sent to the Residential Tenancy Bond Authority along with the cheque or money order made out to the ‘RTBA’ where it is then held until the end of the tenancy.

It’s not what you earn but what you do with it that matters.

Many of Australia’s wealthiest people started out with nothing more than a will to succeed.  Despite humble beginnings they used their limited financial resources to great effect and built empires.  Yet there are many people on high salaries that have little to show for it after a lifetime of work.

With higher house prices, bigger mortgages and more people using their mortgage as a line of credit to fund lifestyle, more people need help managing debt.

There is no problem with debt over an investment unit as long as we are convinced that the property is going to go up in value and there is an exit plan or at least positively geared.

We all should have planned well before retirement not to have personal debt, it is therefore advised that we all should save more and reduce personal debt, a Financial Planner can usually assist in focusing on areas to assist in improved cashflow for debt repayment.

Another area of increasing complexity, where a planner can really help is estate planning.  With more marriages ending in divorce and more blended families, planners are spending a lot more time with clients on estate planning.

Good financial planning helps people plan and manage their financial situation, helping to build wealth and achieve financial security. Purchasing investments is only a small proportion of the advice a planner can use to guide a client in their lifestyle journey.

A financial planner can work with people to review their financial situation and help them set short and long-term financial goals.  And superannuation is at the top of the list for planner. More flexibility is now available to purchase investment property via gearing in super.

Studies have shown that over a working life of 40 years, the 9 per cent compulsory superannuation is not enough to fund a comfortable retirement; it should be more like 15%. So the current super retirement income stream needs top be topped up by other investments.

Most people seek advice because of a trigger point, changing jobs, redundancy, an inheritance or planning for retirement.  A good planner should be able to add some focus for the client, establish realistic expectations and take a disciplined approach.  But the plan will most likely have to change as life’s circumstances change.

Clients who seek advice need to have a commitment to the process and therefore do their own homework by drawing up a detailed balance sheet of all assets and liabilities. They should feel comfortable with the advice received from the planner and that the planner understands their needs and not just selling a product. Therefore empathy between planner and client is essential.

A good adviser will make recommendations based on the person’s individual circumstances taking into account that person’s appetite for risk and what they want to achieve. The advice once agreed upon forms a person’s personal plan and is the foundation for an ongoing relationship. It determines what they have, where they are now and where they want to be in the future.

It is then a matter of putting the plan into action and reviewing it on a regular basis, making changes as circumstances or markets change. It is therefore a structured approach. So even if it is just getting a handle on how you spend your money it will make a big difference to a person finances.

With overseas buyers mainly Chinese and Indian, buyers’ advocates having a long list of clients, first home buyers and Melbourne being the third most livable city in 2009 and second in 2008, Melbourne is booming.

So as a sales manager in this company I again urge buyers to not buy until early 2010.

With the grant finishing, people away on Christmas and holidays and interest rates climbing it will be again the time to buy – ride the wave and go on the right one in January and February 2010. If you have any concerns please do not hesitate to call me on 0404 073 365.

Are you looking to buy a new home and you find your dream home?

Would you buy before you sell?

Would you risk losing the home of your dreams if the timing was not right?

Some tips for the un- seasoned!

A brief history, I have worked in the property market for 10 years. I work with investment property every day.

When it comes to your own home everything changes, all bets are off, emotion takes over.

I know all the rules, position, position, position….

We recently bought a house in the outer suburbs with lots of trees. I think we have made a tree change that was un-planned. We had been looking for months in the inner areas that we know well but our budget of $600,000 was not going to get us in to the next step up. Every property that was in our quoting range would sell for $800,000 +… We spent a lot of Saturdays at auctions and were very disheartened.

Anyway, just by chance we saw an ad in the property section of the Herald Sun as we were waiting for our takeaway lattes on our regular Saturday property search of the Uber cool inner suburbs. So much for all the internet searches! Here it was a photo of a 1970’s long low house in the hills of the Dandenongs. We immediately set off in the general direction to an area of Melbourne we both had never been and never heard of. Well it was love a first sight. Do not worry about the big trees… very big trees! The one & quarter acres of land on steep slope, next to a state forest!  Do not worry about the high fire danger. This was home and nothing could have changed our mind.

In retrospect this was the easy bit. We had 90 days to sell the Uber cool inner city one bedroom apartment. This was where the real stress started because we thought our apartment was worth more but the banks did not. So we could not increase our line of credit enough to keep both.

So five weeks of an Auction campaign, two inspections a week, as well as the one or two private inspections. It takes a huge amount of energy to maintain a display home 24/7. Well all the flowers paid off. It sold for $90,000 more than the bank valuation and $70,000 more than our reserve.

We are still yet to understand travelling time as the move will be happening at the posting of this blog, so I will keep you posted on the tree change and whether the inner city life was all we thought it was cracked up to be.

Would I buy before I sell ever again? I think you have to weigh up a lot of information. The final acceptance was that we could have been penalized with mortgage insurance; this is very expensive and could have been around $20,000.