The International Monetary Fund (IMF) has predicted that economic growth in 2016 will be soft, and has some ideas on how governments can improve their cashflow. For the rest of us though, here are three handy tips on how to safeguard your savings in the New Year.
Managing Director of the IMF, Ms Christine Lagarde, said that rising interest rates in the United States and an economic slowdown in China will contribute to financial decline. “All of that means global growth will be disappointing and uneven in 2016”, she said.
Ms Lagarde has advised governments in stabilised countries to support trade demand, and to adopt appropriate fiscal policies. “Most highly developed economies (except the USA and possibly Britain) will continue to need loose monetary policy, but all countries in this category should comprehensively factor spillover effects into their decision-making”.
Even amidst an economic downturn though, average Australians can protect their hard-earned cash. Here are the top three tips available for people aged over 60:
1. Pay greater attention to everyday expenses
Writing down little expenditures (such as teas and coffees out) can reveal where your dollars go. Becoming a better manager of your own money, is the best way to protect your personal savings long-term. Understand your bill cycles and plot upcoming expenses on a calendar. These little measures can ensure there aren’t major dents to your nest-egg, no matter how the global economy performs.
2. Supplement your income with interest, not principals
An expert in financial planning for over 60s, Steve Vernon gave this advice during the most recent global recession. “My mother supplements her pension… with interest and dividend income”, he wrote. “She doesn’t touch the principal”. Indeed, even the most humble nest-egg can accrue interest over time. It’s preferable to use this interest, rather than dipping into your principal savings. Ideally this will mean that if global figures worsen, you still have money to fallback on.
3. Seek professional financial guidance
There are several financial-planning resources for people over 60, which are available free of charge. The government’s Financial Information Service phone-line and seminars can help you prepare for retirement, or better understand your pension. You can also determine your eligibility for extra benefit payments on the Human Services website, or calculate tax offsets for pensioners online. As with all financial advice, you need to speak with an expert to understand what impacts your circumstances personally.