The COVID pandemic has been awful for many around the globe. It has changed life as we have known it, perhaps forever.
If you can put that aside, for investors, super fund members and homeowners, 2021 was about as good as it gets. Let me explain.
Australia’s share market finished the year up 17%, helping to push the average balanced super fund to a 13.4% return and homeowners saw the value of their properties rise more than 20%.
This shares, super and housing trifecta means that if you started the year with $100,000 in super, an average house worth about $700,000 and $100,000 in shares, you made about $170,000 for the year. Almost all these gains were tax-paid. That’s on top of salaries, meaning millions of Australians made maybe a quarter of million dollars last year.
What is in store for 2022
In the absence of another COVID wave, the world may begin to emerge from the pandemic after Omicron hopefully peaks and begins to recede. The pent-up demand could explode out into an economic resurgence. A
fter all, the COVID wealth effect being observed across the developed world can’t stay locked up in bank accounts and personal balance sheets forever.
Supply chains the world over are creaking. Supply-side inflation in the US has just blown a gasket and tipped the scales at 7%. This combined with inflationary pressures elsewhere around the globe, and despite what Australia’s Reserve Bank might have us believe, doesn’t bode well for global credit markets. Let’s not forget that about 40% of the dollars Australian banks lend us is sourced overseas. The impact on interest rate can only be in one direction.
Share market watchers are right to be nervous, wondering if rising inflation is structural or transitory. Surely equities and property can’t have another year like 2021.
So, what do we do?
If all of this makes you feel anxious about the impact on your financial future, get in touch with us for an obligation-free chat. We understand that you might feel overwhelmed by the barrage of news, fake news, information and misinformation. Our job is to help you make sense of it all and bring it back to how it might impact on you. All you have to do is Get Started or Book an Online Consultation.