What can you do personally

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I will say in advance that my advice is not rocket science and comes directly out of the material in the main article. It will probably not make you rich, but more importantly, it may keep you from being poor at the worst time.

It’s pretty straightforward, diversify.  No, the ASX doesn’t count.  The WXOZ fund which is traded on it does, though (full disclosure, I own this, but even if all of the people in Australia put all of their money into it tomorrow it wouldn’t help me, it’s a global index tracker).  I would move away from any of the opaque Superannuation funds that don’t tell you where your money is going because it might all be in some domestic pot (you probably need that to keep up high returns in the short run).  If you are determined to invest in the domestic housing market in Australia, then Huffle is trying to create a fixed-income product which will also create a fixed-interest housing loan for 20 or 30 years.  It may be a less-volatile investment vehicle.

Minimize fees.  The average super fund is getting about 1.5% on the money in the account. By global standards, this is insane. Similar services are provided by index trackers in the US and Europe at .3%. INGDirect has a really low cost self-managed super fund (this I can’t do because I’m a US person, and they don’t want to deal with the paperwork overhead of dealing with the IRS, SEC, etc).  FatCat funds has a look at the overall expenses of the various super funds as a proportion of their assets, they are worth a look.

Run the numbers on your house, and any you plan to invest in.  I rent, but I squirrel away the money that I would have put into equity into a savings account.  This is trebly good.  First, I am not locked into a house as my family expands and contracts. Second, I can wait until the market is truly low to buy. Third, I actually make more money renting.  The place I live in went for $1M when it was on the market, and I pay $720/wk for it.  Presuming an average debt burden.  My landlord is probably paying $1000/wk in interest. This is a negative rental yield (i.e I give him less than he pays).  I am happy to be subsidized by someone who can only be buying based on capital appreciation, because the rent doesn’t make sense…Fourth, if you need to buy a house in this environment, then look into what is going on at Huffle.  They are trying to bring a fixed-interest loan of a 20-30 year duration to Australia.  This could be good for your wallet, but would also reduce the systemic risk in the economy, see here.

Please, tell me what you thought before reading this, and let me know if this changed your mind.