Episode 40 -  The only way is up

Tim Farrelly is the founder and Principal of Farrelly’s Investment Strategy, an independent investment advisory firm based in Sydney, Australia. Since 2003, his company has helped countless investors create dynamic investment portfolios through their subscription and consultation services.

Tim joins me today to discuss why the only way is up regarding interest rates and the potential impact it can have on borrowers and investors. He explains why banks are raising interest rates on interest-only loans, how the “wage-price spiral” impacts the economy, and how borrowers and investors can prepare for interest rate hikes. He also shares how the population’s overall debt impacts the economy’s vulnerability and the impact that very low interest rates can have on investment markets.

Don’t miss this week’s segment of Reuben’s Rants where I share my thoughts on the recent news of two of Australia’s largest banks, Commonwealth Bank and Westpac Bank, cutting 0.3 percent of interest rates on their online saver accounts, dropping rates down to a whopping 0.5 percent.

And stay tuned to the end of the episode for my Propellerhead of the Week segment to learn strategies to maximize your deductions on your tax returns.

“Interest rates will probably go up, but not very much. We may even see one more rate cut before they go back up.” - Tim Farrelly

This week on The Finance Hour Podcast

• Why Tim believes interest rates will eventually go up - but not very much.
• Why the cost of banks funding themselves have gone up and how it is impacting interest rates.
• Why banks are raising interest rates on interest-only loans.
• What are prudential requirements?
• What the “wage-price spiral” is and how it impacts the economy, inflation, and interest rates.
• How to prepare for the increase in interest rates.
• The pros and cons of offset accounts.
• How the level of debt people have impacts the economy’s overall vulnerability.
• The impact of very low interest rates on various investment markets.

Tim Farrelly’s Top Tips for Preparing for Interest Rate Hikes:

1. For borrowers: Prepare yourself for an increase in interest rates of up to 2 percent.
2. For investors: In the secure part of your portfolio, work out how much you need now and how much can be put away for a little bit. Look for the best opportunities that are completely secure and will give you a much better return.

Resources Mentioned:

• Reserve Bank of Australia - 2018 Interest Rate Decisions

Connect with Tim Farrelly:

• Tim Farrelly on LinkedIn

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