What Next

Negatives.........
The world financial markets in turmoil.
The New Zealand economy in recession.
House Prices are expected to fall further.
Unemployment set to rise.
We are officially in recession.
No more positive balance in the Government coffers we are now in deficit.

Positives...........
Inflation is now under control again. (no-ones spending so prices had to fall)
Interests rates on home loans are expected to fall.
We have a small tax benefit.
Election looming.
Oil prices have dropped.

Well if your job is safe I guess your current mortgage is looking like it is getting to be cheaper over the next few months, unless of course you have it all fixed.

If property drops 25% in value you can expect your bank to drop you a line if your borrowings are over 70% of current value because your loan balance may soon equal your property value and the banks do not feel comfortable if their is nothing by way of asset to stop you walking away from the house and the mortgage.

This is definitely NOT a good time to buy those rental properties in fact the Rabo Bank offer on their investments which guarantee a max 30% tax looks better every day.
If you really must consider buying a rental property then do NOT use those dreaded consultancy companies or you will really struggle, they make thousands of dollars from you for doing what you can basically do yourself. Don't believe me! then if they offer you an investment property check their price against local Real estate sales and private sales on the internet, you will save yourself between 10K and 20K and of course that would be an initial loss to start with, this means that if the value drops then you are certainly putting your home at risk because the bank will look at the asset value of both the investment property and your home and a total entity.

The NZ banks may not guarantee your deposits (it is in consideration but don't hold your breath) however the NZ banks are very stable and in a good position so the risk of loss is very small.

Taking into account the current loss of value of some of our nations best performing companies if looking through rose glasses this may well be a great time to increase your stock portfolios but be in it for the long term and make sure the companies can survive, talk with your investment adviser and make sure they do the background work.

Money is tight internationally for the banks but there is still a lot of money available for major commercial projects through Global Pension funds and Private Equity Lenders it is just that traditionally most of the developers of such projects have relied on the banks to supply the money and they have forgotten that other avenues exist.

All in all I guess we are lucky being so isolated and small in comparison to other nations, we did not have the major risks with mortgage backed securities and those that did are now gone or on hold. I have to wonder how many investors in those funds actually understood what investments where being made and if their advisors actually explained it to them?

The law has now changing regarding investment advisors and insurance brokers selling products with investment elements, the government is getting pro-active.

Read up on the new laws......
The Financial Advisors Act 2008 and the Financial Service Providers (Registration and Dispute Resolution) Act 2008

Best advise I can give is
1. to talk to your financial advisor and I mean a serious talk about where to place you money right now.
2. talk to your mortgage broker about your mortgage and see what are the best options for you in the current environment, what was good 6 months ago may not be so good now. Your mortgage should be a living thing updated frequently and not something you set up and forget, well not unless you want to give the bank 3 times your original loan back in interest, I mean, come on, do you really think the bank is going to stop you doing that! If you don't get wise then you pay.
3. Buy your Christmas presents now (if you can afford to) because if the dollar keeps falling those imported toys and goods are definitely going to cost more come December.

Come 2009 my New Years resolution will be to remind myself that simple greed is an infection that can seriously effect every corner of the world.