Making smart financial decisions

By Ashleigh Fielding | posted on March 26, 2020

PEOPLE concerned about their investment portfolios and loans due to the evolving beast that is the COVID-19 pandemic have been advised to remain calm and avoid risky financial decision making.

The Weekender sat down with Albany resident and Smartline Director and Personal Mortgage Adviser Eli Hayes to ask during this time of crisis.

For share holders:

The stock market has taken a massive hit during the COVID-19 pandemic and left people wary of how to act next.

Ms Hayes advised against selling stocks.

“It can certainly be scary to watch your own share portfolio lose value day after day,” she said.

“However, selling stocks after a huge market sell-off is possibly the worst thing shareholders can do for their long-term financial health.

“Shareholders should remind themselves that these losses are on paper only, but if they sell, they are cementing their losses.

“Stocks should generally be a long-term proposition and the goal of investing is to buy low and sell high.”

For borrowers:

A fifth Reserve Bank of Australia cut was made on March 19, bringing the official cash rate to a new all-time low of 0.25 per cent.

Ms Hayes said this meant banks were competing hard for customers.

“This means that now could be an excellent time for borrowers to get a great rate on their home and investment loans,” she said.

“They could also discuss the option of refinancing their loan or loans with another lender to take advantage of the competitive lending environment.”

Ms Hayes said lower interest repayments presented an opportunity for borrowers to use the extra money to make additional repayments on their loan.

By doing this, she said, would mean borrowers can pay off their loan quicker and reduce the total interest they will pay.

“Borrowers should also discuss alternative loan features and options with their mortgage adviser,” Ms Hayes said.

“For example, there are some very low fixed rate offers on the market that could be a good opportunity for some borrowers.

For those worried about employment:

Hundreds of businesses have shut down or are in the process of winding down services in WA due to the COVID-19 pandemic.

Small business owners, casuals who don’t have any leave entitlements, and those in industries where working from home isn’t an option are particularly vulnerable.

Ms Hayes said seeking advice sooner rather than later was the best option if people were concerned about their financial situation.

“If borrowers find that their income – or their job – is at risk, and are worried about making repayments on their mortgage, they should get in touch with their mortgage adviser as soon as possible to discuss their options,” she said.

“Many lenders are offering assistance packages for Australians impacted by COVID-19.”

As a general rule, Ms Hayes reminded people not to panic.

“Panic tends to lead to irrational behaviour, including poor financial decisions,” she said.

“The situation is uncertain but we should all use our common sense and remain calm and know that this too shall pass.”

Ms Hayes has a Diploma of Finance and Mortgage Broking and a Bachelor of Business (Accounting).