The Corona Virus, also known as Covid-19 is putting an astronomical amount of stress on all individuals within the Australian community.
While the government is doing what they can to combat this problem, the financial instability may continue for quite some time.
Now, more than ever, you need to consider other financial options available to you to protect your wealth.
The Federal Reserve Bank
On Monday 23rd March 2020, the Federal Reserve announced that it would launch a barrage of programs directly aimed at helping markets function more efficiently during the Corona Virus crisis.
At the top of their priority list is a commitment to continue its asset purchasing program, stating,
“in the amounts needed to support smooth market functioning and effective transmission of monetary policy to broader financial conditions and the economy.”
In short, the Federal Reserve will be printing money in an effort to expand its balance sheet as necessary, rather than commit to a fixed target.
As a result of this continuing influx of new money into the system, the value of your money on deposit will continue to shrink.
How does this affect you?
To put it simply, a further 25% devaluation of the Australian dollar would see the AUD fall to as much as 0.35 to USD.
Furthermore, by printing 25% of the total yearly GDP in a very short time frame would also result in the buying power of the Australian Dollar fall as much as 25% in the very short term. In turn, that would also see the price for food, and essential goods and services rise by over 25%.
In times like this, Federal Reserve Banks globally think the best option is to print more money in order to manage the current crisis. However, whether this approach will work in the long run no one really knows, although, one thing we do know is that in the very short term everyone that is saving and investing is going to see the value of their money depreciate like never before.
Printing of Money
Since the last global financial crisis, governments have continued to print money, which has proven to be a form of certified theft on a massive global scale.
When the reserve banks print money on a large scale, they then lend to big corporate associations. These large corporations then use this printed money to purchase their own shares back, which artificially inflates the stock market price. In essence, these corporations are competing in an open market against investors like you and I with money borrowed from taxpayers.
What we have seen over the last 12 years on the stock and share markets is an artificial bubble, which ultimately, can not be sustained.
This bubble is expected to burst this year, with analysts suggesting we will see corrections of up to 90% in the companies who engage in this practice.
This poses a very big risk for people who have put their trust and their finances into managed superannuation funds, as these funds are now highly exposed to domestic and international share markets.
Global Financial Crisis of 2008
This is not the first time we have seen a global financial crisis.
In 2008, the global financial crisis (GFC) was mainly caused by deregulation in the financial industry. As a result of this, banks were permitted to engage in hedge funds trading with derivatives, with banks then demanding more mortgages to support the profitable sale of those derivatives.
When these derivatives crumbled, largely due to the housing and mortgage market, banks ultimately stopped lending to each other, creating the global financial crisis that we witnessed.
Real Estate Market
You may be of the opinion that the real estate market is a safer option for your investments; however, based on the results of the last 2 years we have uncovered some major flaws in the Australian real estate market.
It is undeniable that the Australian real estate market has performed well in the last decade, but this has been largely due to the amount of capital investment flows from China.
We are now yet again in a time of crisis.
The Australian big four banks have withheld over 85% of their lending to the Australian mortgage market. The majority of the mortgage market has been used to finance the mortgage bubble using foreign capital.
Due to the financial impacts of the Corona Virus we could very well be on the verge of the collapse of the big four banks. As mentioned in our last NGS Member email, the Bank Bail In is a very serious issue.
In the event of the Bank Bail In policy being activated, we will see Australians lose the funds in their saving accounts, business accounts and their superannuation accounts.
Self-Managed Superannuation Funds
If you have not yet, now is the time to consider moving your funds into a self-managed superannuation account.
By doing so, not only are you protecting your hard-earned wealth from all of the current uncertainties we are seeing within the Australian financial system, but also you are giving yourself the control you deserve to treat your wealth with financial respect.
NGS Crypto currently offers members, who invest with their superannuation, guaranteed minimum returns of 12% per annum, out performing not only all of the four big banks but every other managed superannuation company, which are currently averaging only a 7% return per annum.
With lockdown a more than likely reality, why not use your time wisely to look into your options and what is available.
Contact us for a free, no obligation chat about how you can protect your superannuation wealth.