The previous Governor of our Reserve Bank, Ian Macfarlane, has just published an article pointing out the extraordinary amount of financial news Australians receive in comparison to other nations (four times more than Americans). He suggests this actually contributes to our poor investment decisions as the media tactic of sensationalism can divert people from the true picture. The agenda they create is that we should be positioning ourselves to make the right call, right now.
This is evident lately when we talk of 2011 interest rate increases. This is regularly plastered on front pages. The news coverage suggests people are avoiding entering into major investment decisions (property being the perennial favourite but also things like starting a business) with this dark cloud of a rate hike possible. My response is:
We are now close to the peak in our rates for this cycle. We do not face the prospect of another six hikes in rates so I’d suggest we have a lot more certainty than we did 2 years ago – a good thing when considering investment.
Buying when others are not leads to a favourable purchase price, which is just about more important than almost anything when investing. The financial shock the world received created a large “Wall of Worry” to climb over and it will take some time to forget the pain we all felt - so nobody is promising you smooth sailing. But, don’t let the media distract you from a long term plan that is right for you and your family.