Options to turn crisis around

For every economic storm cloud there is a silver lining and for the shrewd money manager there are many opportunities to turn that financial frown upside down.

THE media is good at telling people the bad news.

And when it comes to the global financial crisis reporters have had a veritable feast of doom and gloom to pick apart.

But for every economic storm cloud there is a silver lining and for the shrewd money manager there are plenty of opportunities to turn that financial frown upside down.

From openings in the share markets to plummeting interest rates and the Rudd Government's cash bonuses, financial planners Alister Paskins, from Ord Minnett, and Stephen Lowry, from Alman Financial, agree there are opportunities if people navigate the financial crisis wisely. Here are some areas to make that dollar shine.

Share markets: When it comes to the cascading share market Mr Lowry said people could learn from the world's second richest man, Warren Buffett.

“He said he feels like a mosquito in a nudist colony, he is wondering where he should bite next,” Mr Lowry said.

“In Australia the shares market has gone down by approximately 50 per cent. The risk and return premium is increasing. For long-term investors the stock market offers quite an attractive return.”

Mr Paskins agreed that the market was low and there was good value around in the blue chip portfolio and large stable companies.

“What some people are doing at the moment is getting investment properties revalued. The low interest rates mean lower repayments; they are using that extra cash flow and excess in the properties to invest in the share market.”

Low interest rates: Mr Paskins said with low interest rates it was now time to pay off those loans.

“It is a perfect opportunity now to pay down debts. People should take advantage of the low interest rates and low inflation. We encourage people to attack the debt which has the highest interest rate and fees, such as credit cards and personal loans.”

Cash bonus: Come April many people will be receiving a $900 tax-free bonus. Mr Paskins and Mr Lowry suggested people should use it to pay off debt or tuck it in their superannuation.

“With the uncertainty of employment it may be good to reduce personal debt such as credit cards as well as those interest free loans - get rid of them before they kick over to a possible 25 per cent interest.”

Mr Paskins said some could turn their $900 into $1400 by putting it into superannuation and then taking advantage of the government's co-contribution scheme.

“The government will put in a $1.50 for every $1 so come tax time the bonus would have become about $1400.”

• This information is of a general nature. Readers should seek their own individual financial advice. It is important to discuss your personal finances with your advisor to ensure it is suitable for your needs and objectives.

Originally published as Options to turn crisis around