If you’ve been made redundant, it’s important to take action so you can protect the lifestyle you’ve worked hard to achieve. Depending on the size of your redundancy payout and your current savings, you may want to reduce your spending to help see you through until you secure another position.

Making the most of your money

You could consider depositing your redundancy payout into an online savings account to give you the potential to earn extra interest while you determine what to do with your redundancy payment in the long term. If you have a home loan, you may also consider placing the redundancy payout in your mortgage offset account to reduce the ongoing interest cost on your loan.

Watch your budget

It may take some time to find a new job, therefore, it is a good idea to plan how your finances will see you through to re-employment. Online budgeting tools can be very useful in helping you understand what you spend and can help to identify areas where you can cut back.

Bad debt

Some people use part of their redundancy payment to pay off debts like their personal loans, car loans or credit cards. If you do put some money towards your debts, you may want to pay off those with higher interest rates first such as credit cards. Paying off these high interest accruing debts will assist with your ongoing cash flows.

Managing mortgage repayments

Keeping up your mortgage repayments when you’ve lost your income is often a priority. Contact your lender to talk through your options if you’re concerned that you may be out of work for some time and are worried about paying your mortgage. Delaying or restructuring your repayments, extending your loan term or switching to an interest only loan may be options to help you manage your financial situation through this period.

Review your employee benefits

You may need to make decisions about your life insurance and super contributions. Your super may be affected in ways you may not have anticipated after you leave your employer:

• You may lose some or all of your insurance cover when you are made redundant. So, check to see if insurance continuation options are available if it looks like you’ll lose your cover when you leave your current role.
• You may not be able to claim against your salary continuance, income protection or Total and Permanent Disability (TPD) policy if you are injured or ill while you’re out of work. If you’re made redundant, check with your insurer to find out how your policy is affected.
• You may lose your employee benefits or any fee discounts.
• Your super contributions from your employer will cease.

Seek professional financial advice

You may also want to consider seeking financial advice to help you make informed financial decisions in times of redundancy so you can continue to reach for your long-term financial goals.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.

This may well be an understatement, but it has been an interesting year for financial markets, and it doesn’t look like it is finished yet.  Tensions between the United States (US) and China remain, which you would think will be tested further after the outcome of the US presidential election. But what does this have to do with investing?  Well, that depends on whether you want to think like an investor or like a gambler.

If your mindset is to achieve sustainable and growing returns over the long term then you’re thinking like an investor.

During COVID-19 lockdowns, the activity of speculating on the ups and downs of share prices has been prevalent.  This is essentially gambling and that’s ok, go your hardest if that’s a game you want to play, however, the only problem with gambling is, as most people know already, gamblers tend to lose.

An investor’s mindset is one of owning a piece of that business.  This requires owning a stock not for 10 minutes but for 10 years.  Only when you treat shares as an ownership stake in a business does one’s approach to allocating capital change.  Instead of betting on a price that shows up on a screen between 10:00 a.m. – 4:00 p.m. each day, you become interested in how the underlying business makes money, how it forms part of the business community and the economy and how it can grow over time.

Owning a business also affects the way you think about selling it.

If you owned a successful business here in Australia outright, would you sell it because of the concerns over who might win the US presidential election or because of a change in Europe’s inflation rate?  Probably not, however, because we don’t own a publicly listed company outright, the share price is subjected to those sellers who react irrationally on whether or not ‘The Donald’ will keep his job or get punted.

The consequences of buying and selling being based on emotion, impatience and fear is that share prices become yo-yos.  This can however, favour the investor who makes decisions based on the fundamentals of the ‘business’.  If the share price falls yet the fundamentals of the business have not changed, an investor thinks about owning more of that great business, not rushing to the exit.

If the idea of investing in a quality business appeals more to you than punting on where the share price will be today, tomorrow, next week or in six months’ time, you’re an investor.

Please note this article provides general advice only and has not taken your personal, business or financial circumstances into consideration. If you would like more tailored advice, please contact us today.