January 2010

The last half of 2009 was terrible for me at Moneyscience! It seemed that all year we experienced technical "issues". Now some of those troubles were my fault - I think I broke 3 phones; but the computer troubles were horrific. Towards the end of 2009, we were only receiving about every 2nd or 3rd email sent to us and of every email we were sending out only about 10% were actually being received. At one stage we sent 8 emails over 3 days with some mortgage documents & had to complete them in person as they just would not go through. It was a nightmare!! And was compounded by me trying to get work completed & at the same time trying to resolve the problems (which we could not locate!)

We have made considerable changes to our back office and have removed our server. We have outsourced our client management system (now web based) and have our email accounts and web hosting external as well.

I guess that means that it is all now external - so I can’t mess it up!! The past couple of weeks has been spent trying to find previous emails (both received and sent) so I may "catch up." This has been a very trying year (2009) and I for one am pleased to see the end of it. Our information is all completely intact, however we are progressively moving it all onto the new system. Over the next 12 months we intend completing a comprehensive review with each of our clients. I set out below our first newsletter for 2010.

Kind regards Peter Seers General Manager

Tax Reforms Likely

We are in a state of constant change (we cynics would say that it is a continual game of shifting the ball so we don’t know what the politicians are taking from us!). There can be no doubt that we will see some changes in the property investment area, however I don’t believe that the changes will be considerable to property investors who are investing carefully & who are minimising their investment risks.

The property investment market is an equilibrium, and if the taxes change then the market will find a new equilibrium - be that through increased rental income, reduced interest rates or other long term changes.

I will keep you informed of the changes when they happen through these newsletters.

Insurances

We still have our offer for 20% additional life insurance FREE for any moneyscience client! This "free offer is without obligation and is free for 2 years.

Don't put off your life insurance cover! Life insurance is affordable and with this offer of an additional 20% free, now is a fantastic time to do something about your insurance cover. You could take 20% less cover than you need, and get the balance for free!

Income protection or morgage repayment insurance is crucial in times like these. Please contact us to discuss your needs.

Investment Property Analysis

From time to time we have clients wishing to sell property which could be good for other clients. Therefore we will email properties from time to time to you for consideration.

We intend giving a considerable amount of detail on the property and outline why we feel it is a sound investment (if we feel that it is) and we will provide a basic form of a property analysis for it. We will state the type of buyer the property would suit and any information we know about it. Our purpose to do this is merely to kelp clients (both buyers and sellers) and we will NOT receive ANY remuneration from either buyer or seller for the property sale. We will consider a fair charge for the property analysis, but we will consider that after the first few properties.

We intend creating a comprehensive and personalised property analysis assessment calculator which we will offer to you when we are comfortable with it. We have seen many of these produced by others which are nowhere near accurate and are often failing due to their impersonal nature, or the way they are used. It is very dangerous relying on a property analysis tool which you do not understand.

Property Market

We are receiving contact from people who seem to be taking a very short term view of their investments and who seem to be making decisions now based on today’s market, without taking into account that we are in probably the worst part of the cycle for property investors. Those who didn’t sell two years ago should consider holding for the next two years. Those who did sell should consider reinvesting back into the market today or over the next year as we seem to be in a good stage for buyers - particularly those purchasing a home which they will occupy & with incomes where they can afford the repayments… This is probably the best time for them to be buying (The next year or so).

We have seen a wide variety of purchases over the past few months and there appear to have been some very wonderful buys… and some apparently terrible ones. Please contact us regarding any purchase you intend making so we may give you an unbiased assessment of it… you may be surprised!

For what it is worth i believe that we are in for a long, slow recovery, however, some areas will fare better than others.

Interest Rates

I feel that 2010 will be a year of rising interest rates. Make sure you lock in those interest rates as early as you can. Please consider medium term rates 18months to 3 years to give you some surety in your payments. Or maybe consider just floating if you can afford to pay more...(you may not have to).

The last interest rates to rise will be floating rates. Lenders do this so you chose to stay floating rather than locking in higher rates, then they increase the longer term rates so you miss them, then they will increase floating rates.

Let us know if you would like us to manage your interest rate refix?

Whilst I have made the comment that interest rates will probably rise this year, there are many things which will hold them back (or bring them back down again) over time. These include changes to the property tax laws; wider tax reforms; the economy (CPI decreases or low increases); etc. Conversely there are events which could raise our rates including Australia thriving; Australian rates increasing; property market recovery; money supply; etc.

Having said all that, I believe that rates may increase & then drop again in say 1 to 3 years as I believe that the banks believe that rates should be higher than are sustainable! (But then I am wrong about half the time with interest rates!!)