Lower Earnings + High Inflation = Cost of Living Pressure
Updated: Jun 21
We’re in a low earning rate environment, whether it be wages or investment returns, combined that with inflation at over 5% as reported by the RBA, we now have real cost-of-living pressures.
Economist are predicting inflation to peak at 6% in December^, mainly driven by a tighter jobs market and unemployment expected to drop to 3.5%^. However, real wages growth is yet to materialise.
^ Source: RBA statement 3/5/22
Meanwhile, investment markets are suffering with greater uncertainty and the rising cost of money.
So what does this mean for our clients? For working clients we recommend reviewing their budget and home loan. Some difficult choices may need to be made on discretionary spending.
For retirees, their super has taken a hit and they will need to monitor their draw down rates more closely. Retirees will need to hang on as investment markets reset to a higher interest rate environment.
Over the long term, being invested is crucial. Cash is not a viable long-run alternative. By contrast, we expect a diversified portfolio to continue being the answer to achieving your long-term objectives.
Important information - This information may contain general advice. It does not take account of your objectives, financial situation or needs. You should talk to a financial adviser before making a financial decision.