Brexit and Donald Trump have schooled me good this year – The mainstream media isn’t a good gauge of what the majority actually thinks. Often ‘the people’ may choose something that the status quo doesn’t really like – it’s like offering your 5 yr old the choice of doing anything they want for the day. Good ol’ democracy – not always compliant. The systems of control that are designed to manufacture consent among a largely ignorant public, don’t always work the way they should!
In 2017 we’re going to see the fruits of Brexit, Trump, a new prime minister, increasing regulation in the property market, and record immigration. It can be summed up easily – 2017 is going to be uncertain. Actually, 2017 is going to be volatile.
Most of you know that with high volatility comes a higher chance, especially in the short term, of abnormal changes in asset values. Higher interest rates also are highly correlated to increased uncertainty. Two things we can see are highly likely to occur next year: Firstly, an abnormal change in prope2017rty and share prices and secondly, higher fixed mortgage rates.
Since the 2007 GFC I’ve learnt that events aren’t the sole catalyst for change, instead it’s the pattern itself, that can be a catalyst for change. 2017 is a year that is significant in its own right on that basis. It’s not a very reputable economic paradigm I know but almost every 10 yrs in New Zealand since the 1967 ‘Wool crisis’, there has been some sort of change in direction of economic sentiment (’77 oil shock, ’87 share market crash, ’97 ‘Asian crisis’ and 2007 the GFC). So what could tip us over the edge (think regulation, rising international interest rates, risk of war, too much immigration – infrastructure issues)?
So what do you do? Buy baked beans, build a Faraday cage under your house and ‘bug-out’ until the storm passes?
Here’s what you do in times of uncertainty.
– Keep calm and carry on. Even if property or share markets crash – this is cyclical and as you’re in it for the long term result, what happens in the short term is not as critical.
– Insure everything that’s important to you. You may not be able to control the external effects of uncertainty but you can control your own personal risk.
– Fix your interest bill. For most of us the mortgage is the biggest expense. If you can afford to do it and if your circumstances line up with it, fix for as long as you can. Get some personalised advice before doing anything here of course.
– Set some long term goals. If you’re looking at the destination, even if things get out of control you’re more likely to hit your target. Where do you want to live, and how much do you need in the bank at your retirement?
– Expand, don’t contract. Put another way, do whatever anyone else isn’t doing. Buy the bigger home, take the risk and go self-employed, focus on increasing the income and not decreasing the expenses.
To quote the man in orange, 2017 is going to be ‘YUGE!’