Written by Hudson Adviser Phillip McGann
- The number of openings hit the highest level on record. The US now has 11 job openings per 10 unemployed persons.
Wall Street Journal Sept 12 2018
This is an mazing statistic for an economy as large as the US. It shows that the depths of the GFC are way behind for the current crop of working Americans and it is all speed ahead for a growing economy
But wait. What does this mean for the economy as a whole?
Sure higher employment is a great thing but if the economy is growing too fast and companies run out of potential employees than this will likely lead to stronger wages growth and hence a rise in inflation.
This is an issue for the Federal Reserve as it looks to normalize interest rate settings and already US longer term rates are heading higher with a further increase in the official rate just this week.
So where are all these newly employed people actually working ?
Well a fair portion are in the GIG economy according to this second graph and so they may well be employed in heavily casual positons which blunt their ability to demand higher wages - which partly explains (some of) the lack of inflation in the US.
- 36% of US workers are involved in the gig economy.
Wall Street Journal Sept 5 2018
Finally a big part of any successful economy is the energy mix, how it is generated and at what cost.
Thanks mostly to fracking and horizontal drilling expertise the US has now become the largest oil producer world. Yes larger than Saudi Arabia. This gives it the ability to produce cheap energy and has the added longer term benefit of allowing it to be less reliant on the fractious Middle East.
Wall Street Journal Set 13 2018
So the US is economy is growing strongly on the back of cheaper energy and technology prowess and this is leading to lower unemployment, albeit in less secure jobs for many. But if the economy grows too fast this will lead to higher inflation and hence higher interest rates which may put a hand brake on the whole economy.
The share market is the best leading indicator of future mayhem and so far it is holding up well but time will tell as this all works its way through the real economy and the financial markets.
Written by Hudson Adviser Michal Park
Like margin loans, reverse mortgages tend to get more than their fair share of negative press with the latter market having shrunk significantly since the GFC - and yet I see a place for both depending upon the extenuating circumstances of the individual concerned.
For those unaware, a reverse mortgage essentially allows older Australians to access equity in their homes. It is a type of loan that allows individuals to borrow money using equity in their home as security, but no repayments are required meaning interest is capitalised to the loan amount.
The loan must be repaid in full when you either sell or move out of your home, or die.
The amount you can borrow is capped, so that, due to statutory negative equity protection introduced by the government in 2012, you can never end up owing the lender more than your home is worth.
So the greatest advantage of a reverse mortgage is that they can unlock equity for retirees, giving them the opportunity to have a lifestyle if they are asset rich but cash poor.
But there’s always a downside.
The greatest downside is that the interest costs compound over time due to the fact that there is no requirement to make any repayments. Interest rates and ongoing fees are also generally higher than average home loans.
An ASIC review into the market released last month suggests that borrowers generally have a “poor understanding of the risks and future costs” of the loans – meaning that whilst taking out these reverse mortgages can meet short term requirements, there is little regard for how longer term requirements may be impacted (eg aged care funding requirements).
Another similar opportunity available is the little known Pension Loans Scheme, which is essentially a voluntary reverse mortgage provided by Centrelink. This scheme is back in the spotlight after a proposal in the 2018 budget making it more accessible. Previously only available to part pensioners and self-funded retirees (of age pension age) at a cap of 100% of the pension, from July 2019 the government will expand the Scheme by making it available to full pensioners with a cap of 150% of the age pension (reduced by pension payments received). The maximum ‘top up’ rates are $11,799 for singles and $17,787 for couples per annum.
Like a reverse mortgage, the pension loans scheme ‘top up’ payments are secured to your home which must be repaid when the property is sold or you die.
It is clear that the greatest downside to this Scheme is the limitation on what can be borrowed. Another disadvantage is that it can’t be drawn down as a lump sum payment.
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Written by Hudson Adviser Kris Wrenn
How best to invest $10,000 over 10 years.
Strategy 1 - Paying off high-interest debt
Strategy 2 - Paying extra to the mortgage
Strategy 3 – contribute more to Super
Strategy 4 – Invest outside of Super
Let’s take the example of someone on the average tax rate (32.5 % excluding Medicare) who has $10,000 of savings to invest over 10 years.
High Interest Debt
For those with high-interest debt (credit cards or personal loans), the argument to pay down the debt with the $10,000 is almost impossible to deny. Assuming an interest rate of 17.5 per cent, $10,000 would incur interest costs each year of $1,750. The total interest saved over 10 years would amount to $17,500 – an impressive effective return.
Paying down the home loan on the other hand is not as clear cut.
Making Extra Home Loan Repayments
Paying off the family home has long been argued to be the best course of action for most people. However current low interest rates muddies the water somewhat. An extra $10,000 paid to a mortgage with an interest rate of 4 per cent per annum leads to a saving of interest over 10 years of $4,802. It is a conservative and risk free approach and certainly superior to a savings a/c or term deposit.
It protects somewhat against the risk of rising interest rates. But it isn’t necessarily a no-brainer, depending on your situation.
An Investment Outside of Superannuation
There are of course many means in which you can invest, so we need some form of benchmark for this one. Taking a 20 year return of the domestic sharemarket, encompassing the GFC, means an average annual return of 7.7% p/a. If a $10,000 investment were to receive an after-tax return of 7.7 per cent per year for the next 10 years it would compound to $20,997, an investment return of $10,997 when you take out the original $10,000.
Obviously this is far in excess of the return on the homeloan, but it encompasses risk that the homeloan does not.
Adding to Super
The change to superannuation rules now allow most people to claim a tax deduction from making a personal contribution of $10,000 to superannuation. For a person on the average tax rate (32.5 per cent), a $10,000 tax deduction leads to a reduction in income tax of $3250. We will assume that the person chooses to make a superannuation contribution of $13,250 (being the $10,000 and the $3250 income tax saved), which becomes $11,262 after the 15 per cent superannuation contributions tax. Assuming a similar return as per the last strategy, over 10 years this would have resulted in the original $10,000 saved turning into $23,735, or an investment (and tax) return of $13,735.
This would appear to be significantly more attractive than making additional mortgage repayments or investing in shares outside of superannuation – however it is worth remembering that superannuation has restrictions around access, and these investment returns are also ‘risky’.
The obvious strategy is to focus on high interest rate debt if you have it. After this, your age becomes a key factor. If you have a short to medium term timeframe before potentially retiring or being able to access Super, the benefits of an instant return on your money in the form of a tax concession is very attractive. If you have many years until retirement, then additional homeloan repayments can save you tens of thousands of dollars in avoided interest. For those that lie between these two extremes, a combination of these two strategies may be a suitable option.
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And I mean let’s talk; over the Phone, Facebook, Text and Wi-Fi and a multitude of other methods available to us to engage with others not sitting next to us (although in a teenager’s world that still requires a phone!) 😉
The outcome of my four-day fight with Telstra will benefit us all when it comes to our choice of communication requirements whilst travelling, including Wi-Fi in your RV. It will surprise you!
In case you have not been privy to my previous discussions on ‘keeping connected whilst in the bush’ I’ll briefly summarise what works best and does not cost the earth.
As we all know as soon as we leave town, big or small, we also leave our means to communicate via the phone and tablet.
Due mainly to the lack of mobile coverage in rural areas, although Telstra is putting up more towers as we speak, focusing on high traffic areas, such as major highways, so we can at least contact someone should we get into difficulties whilst driving on major outback tourist routes.
But what happens when you free camp some distance from a tower?
If, like me, you still need to be able to access emails, and text to keep a business running or be in touch with loved ones back home, then you need more than just a ‘blue tick’ phone.
Until now the only option available was to own a phone (and a modem) that had an external antenna port which we could plug the antenna directly into and watch with glee as the signal strength bars grew instantly.
The Telcos have now in their wisdom decided we rural travellers & residents need to catch up with the rest of the world and no longer sell phones with antenna jacks. What they don’t tell you is what the alternatives are for those of us not living within visual sight of a tower (they seriously don’t believe such a species exists!). I never got an answer despite constant questioning and arguing with my Telco on this subject.
What to do?
I went in search of answers and spoke to the man in the know – Dave, from G-Spotter Antennas makers of the brilliant True Blue MiMo LTE G-Spotter antenna which I have been using for years. It has proven to be far better than my other ‘Yagi’ Antenna and a lot easier to use. Here’s what he had to say…
‘No need to worry as the technology has moved on and you no longer need to tether a phone directly to an antenna, as mentioned previously.
The key now is that 4G 700Mhz service can be accessed at great distances using external antennas. This enables both internet and mobile connection.
Now that Telstra, Optus & Vodafone have enabled ‘Wi-Fi Calling’ over their networks with late model smart phones, you can utilise Wi-Fi antennas to get even greater access.
So, if you cannot get signal where you are camped at the prime spot on the lake, just hunt out some a distance away and connect phone and internet via Wi-Fi.
The trick is to have a 4G 700Mhz modem plugged into an antenna to get fast internet. it does not matter if its Telstra or Optus. You then use’ Wi-Fi Calling’ enabled on the late model smart phone to make & receive calls, hence no tethering required.
You can share data across your mobile plans with both carriers as well, so if you have 10gig on a phone plan, you can share that across a data card. It won’t work with pre-paid plans though’.
There you have it.
I’m now in the process of researching the best type of ‘blue tick’ phone that has Wi-Fi Calling capabilities for a reasonable price – the latest Samsung 9 is way out of my price bracket and has more features than the Nasa Space Station, none of which I will ever use. More on that later.
Let’s now look at your antenna options and associated modems.
As mentioned I use a G-Spotter (slightly larger older version, as shown in photo below), which I fix to an extendable swimming pool cleaner pole and can be put up in minutes. It also fixes to a camera tripod for use inside the van or apartment.
The latest G-Spotter version is much slimmer and comes with an optional suction magnetic mount, so you can either just sit the unit inside your caravan or motor home, or on top of the vehicle with the super strong magnetic base. (it was designed for NSW firefighter and police vehicles).
To find out more about which is the best antenna to suit your needs send an email to Dave at: RV@gspotterantennas.com.au , mention my name and he’ll ensure you get the right advice and the right product.
Other options, are the bull bar mounted antennas. They draw signal from 360 degrees which is handy but not as efficient as a directional antenna like Yagi or G-Spotter. For ease of use consider attaching one of these to your wind-up TV antenna, gives more height & reception without the hassle of erecting mounting poles.
I’ve also seen Marine Antennas being fixed to the side of caravans that fold up & down (as they would on a boat) with reasonable coverage.
Just keep your eyes open at remote freedom camps for creative ideas on how to erect antennas and stay in touch.
For Mobile Broadband Wi-Fi Modems, you have a few choices.
I use a Netgear 4GX Advanced 2 (I had the Advance 3, but it won’t connect to a wireless printer, so I returned to the older model which works brilliantly). Sadly, these are no longer available via Telstra, but you can find them online (E-Bay, Gumtree or just Google search).
The Advanced 3 has been replaced by: Netgear Nighthawk® M1 and the Telstra 4GX Wi-Fi Pro.
This unlocked pre-paid unit is good value and takes sim cards from all carriers. Go to: https://amzn.to/2MHpKBv
These types of units are also known as Pocket Wi-Fi Modem, Dongles, Mobile Hot Spot Routers, Mobile Wireless Wi-Fi Routers. Titles you can use to search on Google.
Just ensure the one you chose has an antenna socket, which only needs to be utilise if the signal is weak and operates 4G 700mhz.
Pocket size means, you can take them to coffee shops or anywhere you feel like sitting whilst connecting to the world wide web. They take up no room in your RV and do not require installation as some fixed units do. Battery is re-charged via a USB port just like your phone. So simple, inexpensive and Wi-Fi Calling compatible.
I’ve seen the ‘so called’ latest fixed Wi-Fi units at the Caravan shows which are totally over the top, expensive and unnecessary when a portable one will do the same job and you can use it once back home or take on holidays with you.
There you go - your communication problems fixed in a single article and an email to G-Spotter Antennas.
This article is an extract from Chad’s RV Newsletter Aussie Life On Wheels:
- Sign up for the October issue: oncludes, RV Master Chef Series. Tips on Motorhome rental overseas. Phones, Modems, Antennas & Wi-Fi – Further Information that every RV’er really needs to hear… Go to: www.AussieLifeOnWheels.com
An entertaining read and a useful tool for all Caravan & Motorhome owners and would be owners.
Chad and his partner are veteran caravaners. (10 years into a 2-year trip around Australia!). Chad has spent years researching vans and equipment, knows most of the ins and outs of living on the road and how they earn a living from their van.
- The domestic sharemarket fell just under 1.5% across the month of September, with a slight fall in job numbers reported for July, and with the effects of the political unrest in August starting to show in worsening confidence levels.
- The Dow Jones rose 1.8% across September, with 157,000 new jobs reported to have been created in July and unemployment falling slightly from 4% to 3.9%.
- The $AUS rose ever so slightly from 71.9c to 72.2c against the $US.
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