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Welcome to the humble savers newsletter

Christmas and the new year is almost upon us. At this time of year we often look back and wonder what happened to the year.

It has been a difficult year for the global economy and the financial markets continue to be quite worrying. Our article Worried About Your Finances was written with today’s economic events in mind. The article took on a new meaning when the Reserve Bank of Australia (RBA) issued a stern warning as it cut interest rates last week by 0.25%. The warning was simple, the global economy has some serious difficulties and Australia will not be immune to any down turn.

The major Australian banks took a while (seemed like forever), to announce their response to the RBA interest rate cut. Eventually they passed on the full 0.25% reduction which is good news for mortgage owners. However, for people who rely upon bank interest to meet their living expenses, it has a negative effect with their income reduced. The article Interest Rate Cut – What Does It Mean To You? provides practical tips for both mortgage and bank deposit owners.

This is also a time of year when many people will be looking to start their first job. Five Ways To Save Money – Your First Job is a practical guide for anyone who has just started to earn themselves some real money. Parents will also find it useful guide to help family members who are starting new careers. 

Financial Trivia
In the article, Interest Rate Cut – What Does It Mean To You? We mentioned that dividends paid by the major Australian banks are now greater than interest rates on bank deposits. What we did not mention is that the dividends carry a tax benefit (Imputation Credit) making them even more lucrative.

Why is there a tax benefit? Australian companies must pay tax on their profits before dividends are paid. The tax paid by the company is 30% of the profit and it is carried through as a tax credit in the hands of the shareholder

For example, at the time of writing, ANZ Bank currently has a dividend yield of 6.67%. When you add back the value of the tax credit, the dividend yield is worth theequivalent bank deposit rate of 9.53%. We will soon publish an article highlighting the full benefit of imputation tax credits in the coming weeks. 

Stories of Interest
Some stories that caught the eye of humble savers:

  • Ask the Readers: How to Help a Homeless friend? Posted by Get Rich Slowly. It does raise some difficult questions particularly at this time of year. The comments are a must read
  • For people with smart phones and tablets (the computer variety) 8 Apps Worth Downloading This Week from Mashable, a great website for anyone wanting to be more tech savvy
  • The Australian Bankers Association (ABA) released a new website Doing It Tough‘. Designed to show that banks want to help people struggling with their finances. They launched in the same week that the banks left their customers down by waiting for what seemed like an eternity to communicate a response to the RBA rate cut. A touch ironic or maybe a plan?
  • Humility, Key to Effective Leadership from Science Daily – Highlights that ‘Humble leaders are more effective and better liked’. Enough said!

We hope you enjoyed THE NEWSLETTER. Feel free to share with family and friends. Thank you for your support

The humble savers team

PS The article Christmas is Coming! 20 Quick Money Saving Tips To Get You Through The Festive Season Has been modified. Tip 1 – Originally stated ‘Don’t Panic’, changed to –  ‘Start Panicking’

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