Every month we will be providing a summary of the biggest issues in personal finance. In February volatility returned to global markets in a big way, cryptocurrency continued to stay in the headlines and Warren Buffet offered us all some sage advice.
Why the drop!?
February was one of the most volatile months in global markets since the 2008 financial crisis. From the 1-8th of Feb the US market dropped by whopping 10% (the Australian market fared slightly better only dropping 5%) – days like these haven’t been seen much since the 2008 financial crisis. This article discusses the reasons for the drop and concludes that while the drop is scary, we are not in a “bear” market (a long term downward trend) but rather a far more palatable shorter-term correction.
A few words from the Oracle
In these volatile times we can’t think of anyone better to listen to than Warren Buffet. In his annual letter to shareholders, Buffet discussed how big drops are great opportunities for those who are not loaded with debt. He quotes a famous poem (Rudyard Kipling’s “if”) to prove his point:
“If you can keep your head when all about you are losing theirs …
If you can wait and not be tired by waiting …
If you can think – and not make thoughts your aim …
If you can trust yourself when all men doubt you …
Yours is the Earth and everything that’s in it.”
We have written a fair bit about cryptocurrencies recently; while we would never advise to invest we know not everyone listens to us and if you are going to play, play safe. On that note, this “Cryptocurrency Investing for Beginners” is a great article as a starting point if you are thinking of taking the plunge (or are in your early days).
While we are on the topic of cryptocurrencies – an application called Telegram has raised USD$850m (this could be ratcheted up to $1.6bn) through what is called an Initial Coin Offering (ICO). This is already 4x larger than the biggest ever ICO – read more about it here.
Australia has a BIG underinsurance problem
Rice Warner recently released an “Underinsurance in Australia 2017” report which, as discussed in this article, highlights that Australians families have, on average, only 25% of the insurance they should have (this varies quite a bit across age groups and types of insurance). Furthermore, insurance sold through superannuation makes up about 70% of all cover for Australians; this cover often doesn’t meet the needs of the insured.
It is highly likely that you are currently underinsured, part of Plenty’s advice involves getting you into the best insurance policy – both from a cost and level of cover perspective – find out more here.
The information contained on this page is of a general nature and may not be appropriate for your personal circumstances. You should obtain personal financial advice before acting on this information.