How COVID-19 is affecting your nest egg

Our favourite money man is Noel Whitaker. Noel has very kindly made himself available to talk with us on bank dividends and superannuation. And just that whole you know, how the coronavirus pandemic is affecting people's nest eggs and what they should know on that topic. So, you couldn't get better advice.

How COVID-19 is affecting your nest egg

John Deeks

Dr. Kieran Kennedy, a Dr. and so much more and wonderful to have him as a friend on Mind Your Own Retirement. But next, we're going to talk money.

And a good friend of YourLifeChoices and Mind Your Own Retirement is on the line now to talk money. Noel Whittaker a very, very big welcome to you sir.

Noel Whittaker

Thanks very much and great to be back with you again.

John Deeks

Well, Noel I'm very confused. I see the news every day and I see the share market going crazy up. I see going crazy down. Have you ever seen a seesaw like this?

Noel Whittaker

I've never seen it like a week ago we had the biggest rise in 40 years. Then another big hit, then a massive fall. So it's incredibly volatile and I think people just need to be a little bit careful of it. But it doesn't say you shouldn't be in it.

John Deeks

Well, you always give great sage advice to our YourLifeChoices members, What is the outlook for the bank and the blue chips at this time? Will they keep paying dividends?

Noel Whittaker

I'm getting a lot of questions about that because what's happened is - the Reserve Bank of New Zealand told banks they weren't to pay any dividends. And the reason was to keep the cash to strengthen their balance sheet.

John Deeks

Right.

Noel Whittaker

Now Prime Minister Morrison and APRA. Made public statements that would not be happening in Australia. So, I would think bank dividends will keep on going.

John Deeks

Right.

Noel Whittaker

Now if for some reason they did suspend it would only be for a six-month period and then they would resume. But I think it's most unlikely. But what I do think, we predict bank dividends will be cut by about 30 percent.

John Deeks

Wow

Noel Whittaker

So at the moment you can buy the big four yielding around nine to 10 percent strength. Now if they drop to 7 percent strength. That's not too bad, is it?

John Deeks

No, absolutely not. And they certainly are good value at this time. Are they not?

Noel Whittaker

Yes. I mean, what we know for sure is that interest rates will stay down, way, way down for at least three or four years. So people need to look elsewhere.

John Deeks

Now, what about the superannuation funds?

Noel Whittaker

Well, what happened is a lot of superannuation funds, I won't mention names have given very good returns. Returns far better than you would think they would because they're in things like development, so buildings and land subdivisions and stock in their unlisted assets.

John Deeks

Sure.

 Noel Whittaker

Now if you've got money in bank shares you know exactly every night what it’s worth. If you've got a half-finished building, you wouldn’t have a clue what it's worth. Cause now the problem is, some of these fund they don't have the cash, if all these people rush in and cash in their superannuation, they might be in a bit of trouble.

John Deeks

Am I hearing Noel Whittaker saying everyone just relax, stay calm, don't do anything rash because things are likely to come back and just, you know, hold your powder dry.

Noel Whittaker

But the big news today is Mayfair, now the modern Mayfair, they have been having huge full page ads in every newspaper, you know, offering way above market returns. And guess what? ASIC hit them last night. But let's hope none of our listeners fall for those big Mayfair ads. Right. One of the big warning signs, the big newspaper ads, or any reference by an ex politician or a sports person. Remember Whiskey two page ads 9.5 percent goes on.

John Deeks

Oh Noel, you're so right. And the old story, if it seems too good to be true, guess what?

Noel Whittaker

Absolutely. I’m also getting a few questions about ah you know, is my superannuation fund money in the bank, is the $250,000 guarantee in the bank? Is that okay? Well, if the bank can't pay you back the $250,000, it’s shares would be worthless.

John Deeks

Exactly.

Noel Whittaker

If all bank shares are worthless. Mate, it would be a very sorry state for Australia.

John Deeks

Go to noelwhittaker.com.au for more information of course, as always, your sage advice being a world expert on foremost authority on personal finances, you'll find Noel's tips on the YourLifeChoices website. Noel as always, sage advice. Be well, my friend. Take care. We need you in our world.

Noel Whittaker

Thank you so much. Appreciate it.






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