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2013 is fast approaching and there is no clear idea of what it might bring. However, that doesn’t stop humble savers from making a few ‘financial’ predictions!

The Fiscal Cliff will be avoided

No matter where you live, talk of a Fiscal Cliff is dominating the financial news as we move towards 2013. The discussion highlights that the American economy (and thus the world economy) could fall off a cliff unless the US legislates new taxes and makes some expenditure reductions.

It’s all a bit dramatic and good for keeping politicians in the news. However, they also know that the must make the changes required and a compromise of some description will be made.

Inflation will remain low

Inflation has all the hallmarks of remaining low. There isn’t enough grunt in the world economy to drive up prices. This can be seen as good news for those planning major purchases

Interest rates – Staying low

Not one Government in the industrialised world is in any hurry of putting in policies that may see interest rates go up. This is mixed news – for mortgage holders it does provide some relief, but for people living off interest rates for a living, it is not good news. See the Post Living In Retirement With Low Interest Rates

Investment markets – housing and shares looking okay BUT to remain volatile

While anything can happen and something usually does, the outlook for both shares and property looks reasonably okay. However, the recent past clearly shows that both markets can be very volatile so expect the occasional sudden drop in values and the gradual restoration of these values.

It is often said that the share-market goes up by the stairs but comes down in the elevator.

Over recent years both business and the public have been reigning in their debt. The Governments on the other hand are still struggling with their debt issues as highlighted by Greece, Spain and Italy. This will keep a cap on economic growth but share-markets tend to like stability and progress. So we may see strong growth if we see solid progress at resolving Government debt.

Potentially here in Australia we could see a pick up in the share-market compared to other countries. While the rest of the industrialised world reduced their interest rates to close to zero, Australia kept their rates relatively high. This led to many Aussie investors keeping their funds in safe cash deposits.

Interest rates are now reducing quickly here in Australia and this could see a splurge of new money into the share-market as investors seek a better return. This new money may push up the value of shares.

It’s a shoppers paradise but be careful

Most retailers are struggling and there is no sign of this abating. This is good news for shoppers especially if you sharpen up your  negotiating skills. Some of the biggest savings will be made by your ability to negotiate a better deal especially on the big items.

Now you need to be careful, large items like cars are deprecating assets, that is they reduce in value. So you might feel that you have grabbed a bargain with your new car but the rate of depreciation will most likely be very quick.

As a rule of thumb, brand new cars lose about half of their value over three years. So stretching yourself for the bargain can be very costly over a few years.

Internet and Social Media – Good for shoppers

The internet through social media and combined with smart-phones and tablets had a new lease of life in 2012. This surge has already seen companies changing their ways and becoming more transparent, as there are plenty of people out there ready and willing to highlight the good, the bad and the ugly of all goods and services.

In 2013, we will see a new trend of shopping for most things by social media; this is already popular with travel. For example, the use of  Trip Adviser with shoppers reviewing ‘customer’ reviews before deciding upon a hotel for accommodation.

We will also see a lot more discussion and recommendations through Facebook, Twitter and Linked across a broad range of goods and services. Any company not being authentic with their advertising will be found out.

To our ‘humble readers’ – May you all have a Prosperous 2013 

 

General Advice Warning – All of what we have discussed in this post should be seen as general advice. The conclusions drawn upon in this blog post are like all other predictions; that is – they cannot be relied up. They have been drawn from experiences and debates.

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