Last year you may have heard many chanting ‘survive till 2025’, which soon shifted to ‘thrive in 2025’, offering hope across news headlines and corporate campaigns suggesting that things are looking up. While economically things are looking up, the recovery may seem slower than what most people expected.
For now, we’re not focusing on the ‘harder than ever to get ahead’ message, despite it being a little true. Instead, we wanted to share some positives you can focus on for 2025. Because, let’s face it, headlines still drown us in negative news, but there really are opportunities that lie ahead for those who know where to look.
Opportunity one: Crushing the mortgage
Relief is in sight for those whose finances are tethered at the mercy of mortgage rates. The question now is: what will you do with your freed-up cash?
For many, when it comes to mortgages, the common focus is around how long one should fix for when theirs is up for renewal. But a better question to ask yourself is: how can you structure your mortgage optimally to increase the chances of paying it off sooner (and potentially saving thousands down the track)?
Let this year be the year where you take your controllables in your hands, particularly with your mortgage. Understand the systems you can create that will improve your cash flow to help you pay it off faster and, in turn, unlock future wealth-creation opportunities. Focusing on what rates will do now only serves you so far; craft a plan that enables you to crush your mortgage faster and reduce thousands on interest costs.
Opportunity two: Purchasing property for first home or investment
When mortgage interest rates are high, the housing market slows down, and sometimes causes prices to decline. We preface this next point to say that we don’t advise on timing the market. However, if you have been considering whether purchasing a property is on your time horizon (whether first home or investment property) this year could be an opportune time.
While the OCR hasn’t reached its expected neutral level of between 2.5% and 3.5% it is still trending downward. Interest rates play a big part in determining house prices, and so now could be a good time to enter before prices start to rise again.
If you want to understand whether property investing is a good idea for you, reach out to a financial coach.
Opportunity three: Growing your wealth
The financial markets have experienced a lot of volatility in the last couple of years (positive and negative), causing many investors to flock to safety via term deposits. When it comes to investing, our position is to invest based on your personal goals, your time horizon and tolerance for risk.
As the OCR starts to drop, so too will term deposit returns. If you’ve been thinking about expanding your portfolio, have a long timeframe to weather the movements and need better returns for your goals, it could be time for a review.
Keeping money in a savings account might seem like the safest thing to do, but if time is on your side, this could be the opposite. Over time, inflation corrodes your savings, diminishing your purchasing power later in life. Having a well-diversified portfolio that can weather the economic storms whilst providing a return is important for a thriving retirement in the future.
Opportunity four: Getting your New Year goals to stick
All of the above are great aspirations if you have your foundations set and already have financial momentum. But you might be at the start of your financial independence journey, or know someone who is. If this is you, we have an exciting new resource to help you get your financial basics straight.
Well-intentioned financial New Years resolutions are all well and good, until the desire and motivation diminishes. It doesn’t have to be this way. You can maintain progress through a structured plan that enables you to automate your systems, eliminate bad debt and gain lifelong skills around managing your money.
Make 2025 your year where you thrive financially. Discover the power of financial literacy, harnessing your mindset and tendencies for good, crush debt and master your money to grow wealth. Learn more about moneyfit.me here.
What’s in your control?
The world can feel scary at times, and news headlines can send us into a spiral of hopelessness. But know that there’s a lot within your control. It starts with realigning your focus and remembering what’s most important to you. Remember why you started in the first place. Attach your goals to realistic aspirations that keep you excited when the going gets tough. But most importantly, know you don’t have to be on this journey alone.
Talk to any of our highly experienced advisers should you need support with your insurances, KiwiSaver or wealth portfolio.
If you’re interested in exploring other strategies for your investment portfolio, we invite you to book a financial review. Contact the AdviceFirst team on 0800 438 238 or email hello@advicefirst.co.nz.
Disclaimer: This blog is for informational purposes only and does not constitute individual financial advice.