Shake your partner vigorously by the shoulders and scream: “For Gordon Gekko’s sake, don’t panic!”
That’s step one to riding out the current global financial storm.
Here are a few more practical suggestions culled from what the experts are saying:
- Shares: OK, so on the bad days some of them seem to be worth less than the money on your Monopoly board. But think twice before selling. It might be better to sit it out or even look for good, solid companies to buy into at basement prices. There were bargains to be had after the Australian market shed $51 billion, or 4.3 per cent, on Tuesday. Lo and behold, a day later the market had recovered four per cent, or almost all of the losses that sparked those gloom-and-doom headlines.
- Retirement: It might be worthwhile staying in the workforce a little longer. Superannuation funds have taken a battering from the global stock market meltdown, so many Australians right now have less to retire on, at least on paper.
- Superannuation: Australians plunged an extra $15 billion into super between April and June last year to take advantage of the former Howard government’s tax concessions. Those who did have lost heavily on paper, as things stand now. Individuals were given incentives to contribute up to $1 million each, so a lot of people are hurting. But markets recover, just as sick people get better. Over time, super has a great track record.
- Interest rates: The good news is that the Reserve Bank is likely to cut official rates by up to half a percentage point at its monthly meeting on Tuesday. The bad news is that because of the higher costs of borrowing in the current crisis, the banks are unlikely to pass the full cut on to customers. The better news is that fixed rates are likely to be a good proposition, and one that will give certainty to borrowers in uncertain times.
- Home loans: They might become slightly cheaper, but they might also become a little harder to get. Which is probably a good thing for those who can’t really afford them. That’s what caused all the dominoes to start falling in the first place – US lenders shovelling money to people likely to have trouble repaying it, known as sub-prime loans.
- Debt: Cut it back, if you can, especially on credit cards which attract high interest rates.
- Savings: If you’ve got some cash tucked away, be thankful. It should be earning you a tidy interest rate, too.
- Jobs: Defer telling the boss what you think of him. Any economic downturn is going to have a dampening effect on the employment market. As a result, now may not be the best time to change jobs, unless you’re sure the new post is going to last.
- Travel: The Australian dollar slipped another couple of cents this week to around 80 US cents. But it’s a long way from the 90 cents-plus territory it occupied earlier this year. Which means overseas travellers are getting less value for their money.
- Australia: Is well-placed to take measures that will help ride out the storm. In the US, interest rates are already down at the nation’s ankles at two per cent, and Uncle Sam has been diving into deficit as if it were a bottomless pit. In Australia, rates are up at seven per cent and the government’s saddlebags are packed with surplus.