AND NOW THE SCAMS APPEAR

One good thing this credit crisis has done is flush out many of the scams as investors try to move funds out of these schemes only to be told that really there is no money there at all. Often investors are long term and have received excellent returns for many years, all funded by new investors who also want higher than normal returns. Whilst they will be horrified about their money, at least by finding out the truth earlier the damage will be limited. With the Madoff "Ponzi style scheme" in New York to cost investors in excess of $50 Billion, and many other scams and frauds in the UK, Australia and elsewhere, the overall figure will be much higher that people realise.
What can we learn from this experience? How many times have you heard the saying "If it sounds too good to be true, then it is too good to be true" There is no way that you can earn more than other investors without taking a higher risk, or worse still investing in something that later turns out to be illegal or a scam.

Scammers rely on one ingredient, and that is the greed of the investor will override his or her common sense. That coupled with some charm and an air of "trust me" and your hooked. Always remember that the return of your money is more important than the return on your money.

Sure everyone knows that these confidence fraudsters are bad people who should be jailed for their sins, but if I can just say something controversial here and suggest that most of those people who got hooked are victims of their own greed and stupidity, and in all probability they would have lost that money anyway because they were governed by the worst of all human investment traits, and that is greed. It is a characteristic that we all have, but we need to suppress it if we want to survive in a tough world. Greed pushes us to take risks which eventually start to resemble gambling more than rational investment strategies. If stupid greedy investors did not exist then nor would scammers profit from them.

Sit down now and look at your investments, savings, superannuation, properties owned, and any other form of investment that you may be involved in. Ask yourself why have I invested money in this, what are the risks, and what are the benefits. What would happen to me if this investment failed and I lost it all. Examine everything and if necessary make gradual changes to your investment strategy.

I hope this advice hasn't come too late.

CREDIT CRISIS

Yes we are in the throws of a credit crisis, but could this be the start of your wealth building in 2009.

All change brings opportunity, so if you have the determination and endeavour, you will place yourself in a position to take advantage of that opportunity and profit from it. Anyone who has secure employment or income will be in a position to buy at bargain prices whether that is a new plasma TV or a $1M commercial property, there will be bargains appearing over the course of 2009. You may not get a steal, but if you search hard enough for the right bargains then exceptional investments at the right price will appear in 2009.

Read our discussion on the "credit crisis" on www.rescueme.com.au/creditcrisis.html and then leave a comment on this blog. We want your feed back. If you are angry then tell us, if you have plans then tell us. Whatever you have to say then please say it so that all can share in your thoughts.

Spend, Spend, Spend

The words of advice from K.Rudd for pensioners and for anyone with children is spend, spend, spend. But before you do that, look at your credit card debt. You may be a lot better off paying it off your credit cards, and then burying the card in the backyard so that you leave it alone.

Australians have a lot of credit card debt, and it won't go away by itself. If you don't have any debt, and are in a great position financially then take the PM's advice, but for the rest of us perhaps we should be a little more prudent.

Merry Xmas.

Christmas Gift of 1% Interest Rate Reduction

INTEREST RATE REDUCTION OF 1% - 02/12/2008 - The RBA has today given the economy a full 1.00% reduction in the official interest rates. This will save a borrower with a $250,000 home loan $2500 per annum in interest which is over $200 per month extra cash they will have in their pocket. We are now getting to a point where potential new home buyers really should look at their options to purchase instead of renting. We have been predicting a surge in new home buyers coming onto the market ever since the two pronged stimulus of interest rate reductions and very generous first home buyers grant of up to $21,000

With variable rates at 6.00% and the likelihood of more rate reductions in February and March 2009 then I can't remember a better time to buy that first home. Don't forget that the First Home Buyers Grant will reduce back to $7000 on 30/06/09 and if it the government choose to maintain that grant, then it will give a stimulus to the market and increase home values across the board. Either way you really can't afford to miss out on that grant if you are eligible for it.

THE START OF A REAL RALLY???

DOW UP FOUR DAYS IN A ROW - IS THIS THE START OF A TURNAROUND? - 27/11/2008 - What a difference four days can make. Since Obama announced his team of economic advisors and administrators, and with the Citigroup bailout, the market has responded positively. Such is the perceived quality of the team that Obama has put in place. Unlike Paulson who has yoyo'd on key measures to the point that the market had all but lost faith in the Bush administrations ability to control the future of the US economy, the market can now see that a team with the right experience and skills has been assembled by Obama, and that team will take over the economy in January 2009. As long as the now discredited Bush team don't fumble too much between now and 20th January next year, things may just hold up ok.

We now need a reasonable Christmas sales period in the US especially for this Friday (called Black Friday because that is the day when most stores actually start making a profit and move from the red into the black). That will set the trend for the next 12 months, and will either signal a prolonged deep recession, or if sales are seen as good in this climate, then the stock market will move higher. You may ask what does this mean to an average Aussie paying off a home and working 40 hours a week. Well the stock market predicts the future, and will rise or fall on what is about to happen. So even if things are a bit tough on the ground, if the market is rising then better times are ahead. Conversely if the market is falling as it has for the last 14 months, then bad times are ahead. Our stock market runs parallel to Wall Street because we are just a minnow in the real world, and whatever happens in the US will happen to our market as well. Interest rates are predicted to decrease again in December, perhaps by 1% again, and further decreases will probably happen next year after January.
This will be a good time to either re-visit your home loan to see if a better deal can be arranged, and/or aggressively look to see what bargains are out there in both real estate and shares.

Those with courage and intelligence will make money in these situations.

If you would like advice on a refinance of your home loan visit www.rescueme.com.au/refinance.html You may be able to save a huge amount on your monthly repayments by an intelligent re-finance.

Financial Crisis Update

Overnight the US government has delivered a $20 Billion US dollar rescue package to keep Citigroup solvent. They have also guaranteed another $306 Billion in Collateralised Debt Obligations held on their books to keep this once mighty titan of the finance world solvent. Don't think that the US Government has paid $326 Billion to Citigroup, far from it, but without government support it may well have become insolvent.

This action coupled with the Obama rescue package expected in January 2009 has given much needed confidence to the global share market. It is confidence that the markets lack, without that no-one will buy shares or property, and in fact they will sell at any price to "cash up" for the possible bad times that may be upon us. However no-one really knows, and that is the real problem. The sooner that a market is created for the toxic CDO's the sooner we will have some idea of what the extent of the damage to the system really is.

This period is bringing serious change to the markets, and with change comes opportunity. For those with courage and a well thought out plan will prosper where others without either will run aground. That bargains abound on the share market is a given, although there will be a lot more pain for many companies that won't be able to weather the storm.

Many will see a safer option in property, especially commercial property, over the next 12 to 24 months as investors look to sell unwanted property. Take care with tenants though, as some tenants will collapse financially, and others will give up expensive leased premises that they can no longer afford. Imagine if you owned a childcare centre leased to ABC Learning. Only one year ago you would have considered that a safe tenant, but now you would be worried. Look for tenants who are recession proof. For example a food wholesaler selling to the lower end of the market has a better chance of hanging on than a wholesaler who sells Champagne and Caviar in a recession. Your tenants are your customers, and you always need to know your customers. Make sure that you hold a bond for up to 3 months to help if a tenant leaves you in the lurch. At least that gives you some time to find a new tenant without suffering financially.

Any questions, email me peter@rescueme.com.au or call at our website www.rescueme.com.au to see more helpful information

Don't Waste the Interest Rate Reductions

INTEREST RATES TO REDUCE AGAIN IN DECEMBER - 19/11/2008 Interest rates are expected to fall another 0.75% in early December . If you are a home loan borrower you need to make a strategy right now regarding the savings that are now coming by way of reduced homeloan payments and fuel costs. Don't foolishly spend this extra money, use this opportunity to make extra payments on your loan and get ahead. Remember both good and bad times don't last forever, and you need to provide for all occasions before they arise. Download our free calculator http://www.rescueme.com.au/calculators.html and see what a difference small extra payments will make over the term of your loan. You now have the ability to make quite large extra payments and save a huge amount of money, don't waste this opportunity.

Saved by the Financial Crisis

SAVED BY THE FINANCIAL CRISIS - 12/11/08 - One lesser talked about result of the financial crisis is that many home loan borrowers who until recently have been facing ever increasing mortgage payments, are now looking at substantially reduced home mortgage payments because of the lower interest rates that are now in effect. Those who have been struggling to hold onto their homes, may contact their lender to see if they can convert home loans to interest only for a year or two to reduce total commitments. Debt consolidation is increasing as borrowers look to place expensive credit card debts against their homes at much lower interest rates. We are getting reports of many borrowers looking to fix rates for terms from 1 year to 5 years at the lower rates now on offer. We suggest that borrowers take care as rates are expected to reduce further. Consult a quality broker to get some guidance on future rate movements. We can be reached on 1300 309 656 or enquiries@rescueme.com.au if you would like to discuss this in detail.
www.rescueme.com.au

Buy a House Now - Tomorrow could be too late

If you are a potential new home buyer who hasn't owned a home before in Australia, the you will be eligible for the $14,000 First Home Buyers Grant until 30/06/09. On new homes that increases to $21,000.

We are predicting a noticeable increase in real estate sales in the sub $400,000 range between now and Xmas, with sales levels building over time and reaching a peak in June 2009. Our rational for that is that many home buyers have been sitting on the fence until now wondering whether to buy or wait. The increased grant reduces to former levels on 30/06/019 so those who have procrastinated will surge into the market in June 2009 to make sure that they get the grant.

Now we have a situation where interest rate are coming down fast, supply is good so prices are not galloping upward, the government is giving you all the deposit that you need, and state governments have recently reduced their stamp duty costs in some cases to zero up to $500,000. All of that spells a powerful incentive to buy within the next 8 months. However those buyers who wait until 2009 will face a reduced supply, and you know what happens when supply is reduced whilst demand has increased. You guessed it, prices in the lower end will jump about $20,000 or more wiping out the value of the home buyers grant if you move too late.

But of course life is like that, those who act quickly prosper, and those who dither will pay for their indecision. Others who don't move at all will get left behind again.

Interest Rates

I write articles on Interest Rates futures, and how this will affect housing in Australia. This is a hot topic at the moment with such turbulence in the world equity markets, and major problems in housing in the USA and UK.

My articles are on web page www.rescueme.com.au/financenews.html

I would be interested in constructive comments from others who are interested in thsi subject either professionally or from an investors standpoint. Any comments or ideas that would make my work more suited to what the public are looking for would be of interest to me.

Peter Fraser