We are past the halfway mark in 2018, so now is a good time to review what we have learned, and what actions can be taken to maximise the backend of the year.

Here are our top investment insights for the first half of 2018.

“That Crash” Hasn’t Happened

In case you haven’t noticed, property prices have remained remarkably consistent. Especially since some analysts predicted that the Australian property market would experience a “significant correction,” in the first half of the year. In fact, while some areas have shown what could at best be described as a tendency towards slowing.. The market as a whole has remained healthy. What’s the lesson? Waiting for a significant change in the market before taking action could mean that you are waiting forever.

The Ongoing Psychological Impact of the Global Financial Crisis

The psychological impact of the global financial crisis (GFC) has been well documented in publications such as the Economist, and Psychology Today. Here is why this still matters:

At the start of the global financial crisis.. Many people experienced shock and disbelief that markets could be impacted so significantly and so quickly. In almost every sector, record losses were recorded in an insanely short period of time. But this was not the most significant impact as it relates to investment. Many people are now waiting for a similar event to occur again so that they can act. Having seen what happened after the GFC… Most industries managed to rebound reasonably well. Those who dared to purchase during the slump were well rewarded. Something of a “gamblers approach” has been created. Just as a gambler will look for the big win that will set them up for life.. A GSC focused investor will hold on to their money while they wait for the opportunity for the big win.

Don’t allow the psychology of the GFC to impact you in the second half of 2018.

The Reserve Bank Remains Cautious on Rates

There was much speculation that interest rates would go up considerably during the first half of the year. On the contrary, rates have remained static. As a result, the opportunity for investors to maximise their return. At least in the short term – remains solid.

With bank interest rates hovering between 4-5%.. There have been suggestions that a major increase was imminent and almost mandatory. However, both the Reserve Bank and major banks have shown a tremendous amount of restraint for two reasons:

  1. The Reserve Bank is acutely aware of the impact a significant rate rise would have. They understand that investors and homebuyers have helped maintain a robust housing market. Additionally, increasing rates quickly could jeopardise the stability of that market.
  2. Major banks are also conscious of the impact rate rises could have, but have the additional complication of the Royal Commision into the banking industry to contend with. This enquiry has meant that banks – many of whom have been exposed as having less than ideal integrity standards – have had to be even more conscious of public perception. In other words, banks cannot afford to be seen to jeopardise the housing market, and therefore people’s personal wealth.

As for the rest of the year.. That remains to be seen. But it would be unlikely that there would be any significant surprises. Additionally, it seems that prospects for investors remain excellent.. As long as they have the courage to act.