As the election draws closer, I hope for a focus on the longer term and not just short-term vote grabbing efforts. The measures in the recent Budget were largely already known. Three items that are especially valuable to improving the lives of many Australians are increases to childcare support, increased wages for aged care workers and making health care more affordable. Inflation returning to the RBA’s target range will hopefully steadily flow through to assist all Australians with the cost of living.

Uncertainty in the markets is especially related to the current political uncertainty and its effect on the world’s economies and people’s lives – think of the ballooning US debt; the disruption of world trade with tariffs; the fear being experienced by those in war zones.

A senior Vanguard economist describes current market volatility as: driven by concerns over where we are in the economic cycle rather than over one particular episode; therefore likely to last for longer – think weeks and potentially months, not days. For the US economy he describes two major uncertainties: increased use of Artificial Intelligence and its effect on the jobs market; the growing debt and the pressure that may flow to higher inflation (the Federal Reserve inflation target is 2%).

The strategy of having sufficient cash or guaranteed income available to cover two years of required spending remains important… and as Warren Buffet reminds us, ‘Markets can climb a wall of worry’.

Wishing you health and happiness.

Tom

at Financial Springs