Moira Geddes from News Corp chats with independent financial planner Claire Mackay about getting the right financial advice.
Transcript of interview
Moira Geddes: The end of the financial year is the perfect time to re-assess how you manage your money. From the simple stuff like household budgets and paying off your credit cards to more complex investment strategies, the reality is most people won’t achieve their goals. But there is a way around that and it all has to do with getting the right advice. Financial planner of the year Claire Mackay, knows too well the traps people can get into and she joins me now in the studio. Claire, a warm welcome to you. What should be on the top of everybody’s financial year goals this year?
Independent financial planner Claire Mackay: Well, I would say, “Get organised.” Start with getting your paper work sorted and writing down some key goals for the year. Because if you don’t write it down, you’re never gonna put a plan around them, and you’re never gonna achieve them.
Moira Geddes: Do you think the people really stick with their goals, if they wanna say, “I wanna become a millionaire this year”, or “I want to save $10,000”. You’ve gotta look at the numbers, the numbers don’t lie.
Independent financial planner Claire Mackay: Well, I’m all for stretched goals but some realism also helps, because the other thing is that we want to know that we can achieve them. There’s no point putting up a goal that you never gonna get close to, because it’s just demoralising. So, set goals that… Stretching yourself but you know that you can monitor it and you can see that you’re getting closer and closer to it. That’s the exciting thing.
Moira Geddes: Even little things like saving $20 a week here, or maybe not taking your lunch or buying your lunch when you’re at work. Or paying off that credit card within a month earlier than you had planned to.
Independent financial planner Claire Mackay: Exactly. I cut out a coffee a day. Now I have a lot of coffees so one coffee is a huge, huge impact. And it sounds like little but it all adds up. And it’s about weaning yourself and developing goals, and when you say, “Oh, that’s an easy one”, then moving onto the next one.
Moira Geddes: So, if you’re at that stage where you can start saving say $100 a week, $5,000 a year, for some people it’s not a lot of money, for other people it’s a huge amount of money, where’s the best place to invest them, that money right now?
Independent financial planner Claire Mackay: Well, it depends on what you’re saving it for. So, if you know that you’re saving it for a fabulous holiday then put it into a high yield cash account and start thinking about how you gonna budget for that holiday. If it’s a longer term, so the beginning of a deposit for a home, then again putting so it’s safe and secure. If it’s a much longer term plan, and so therefore you’ve got time on your side, then you potentially can look at taking some risk. But again it depends on your overall situation. For some people paying down the debt quickly, like your mortgage, is absolutely a great way of using that money.
Moira Geddes: Property is a huge contender right now when it comes to long-term investment, should everybody be jumping into the property market given low interest rates, negative gearing the pluses their plus, I guess that market that is really surging in and giving great return.
Independent financial planner Claire Mackay: Well, there are property markets and they go up and they go down and the key thing is right in your circumstance. So, the problem is at the moment that with low interest rates people are over-extending themselves. So, if you are gonna go into the property market, don’t budget on having low interest rates forever, look at what are the interest rates on a long term average, and pretend is if they’re already there now, and can you still afford that property.
Moira Geddes: Post-GFC a lot of people got scared off from the stock market with what’s happening in Greece at the moment, our market’s taken a little bit of a heat, should people put a little bit more trust back into the corporates?
Independent financial planner Claire Mackay: Well, it’s all about understanding what you’re doing with your money and what its purpose is. If you’d need it in a six to 12, 18 months time then you don’t want it at risk at all. If it’s a longer term play then we know that on long-term averages if you’re not looking it at everyday, then your money will grow. But you need to look at it in the context of your overall financial situation.
Moira Geddes: I see a lot of adds on daytime television, when I’m resting up,