Rate cut likely next week, and here’s why.


THE Reserve Bank will probably cut its official interest rate next week. That will take it back to the historic low-point of 3 per cent.

This was reached at the peak of the global financial crisis. It would though, be neither surprising nor shocking if it didn’t.

Not surprising, because like all the rate decisions in recent months, this one is again finely balanced. It could reasonably go either way.
Not shocking, because the – fully understandable – bleats from retailers aside, it really would not be the end of the world, if the RBA didn’t cut.
We all get terribly fussed over 25 points, which ultimately are neither here nor there.

Another 25 points off the official rate – perhaps 20 points off most home loan rates, but also it is very important to emphasise, 20-25 points off rates on deposits which also are key to spending, as well, is not going to unleash a spending binge.
Yes, it would probably give the critical three weeks to Christmas and the two weeks through the new year a boost.
But it’s not going to miraculously save the retail industry from its much more fundamental and much more intractable structural problems.

In particular, that we were already ‘overshopped’ in the good old days before the GFC. And both the post-GFC switch from spending to saving and the explosion in online shopping – more what it does to bricks and mortar margins than the actual dollar sales lost – have made it very tough at the retail coalface.
The 25 points off the cash rate, even adding it on to the 150 points of cuts already delivered, is not going to wash away all those really fundamental structural negatives.

Now the recommendation that governor Glenn Stevens will take to the board meeting next Tuesday was formalised yesterday afternoon, as it always is.
The recommendation, in the overall board papers, however, only goes out this afternoon, so it could be changed if there was shocking new information.

On the assumption that the recommendation was to cut, ‘something’ would have to suggest we were about to be ambushed by a sudden and unexpected boom. To persuade the RBA to stay its hand again. Some commentators have suggested that today’s capital spending numbers will be critical to the rate decision.

In practical terms, that could only be in one direction – indications that capex spending intentions were slowing faster than the RBA already anticipates. That is to say, to confirm the recommendation to cut.

As Terry McCrann explained two weeks ahead of the Cup Day meeting – at which the overwhelming majority of commentators expected right up until the day of the meeting, to see a cut – that there was in fact no way the RBA would cut after the too-high underlying inflation revealed in the September quarter figures. That was confirmed by Stevens in his statement on the day of the meeting, referring to “prices data slightly higher than expected.”

That was repeated in the subsequent formal minutes. And then in a speech last week, Stevens explained the Cup Day decision to leave rates unchanged with: “in addition, the latest inflation data, while not a major problem, were a bit on the high side.”

Simplistically this might suggest that Stevens would now want to see the next quarter’s inflation data before opting for a cut. That would postpone things to the first meeting back for the new year – in February.

A series of points counter that. First, the inflation genie didn’t even stick its head out of the bottle, far less leap out – it was only a “bit on the high side.”

Stevens needed to separate another cut from the inflation data, but only needed an immediate separation. A rate cut decision would go straight back to being ‘live’ at the next meeting.
That’s on the absolutely critical assumption that the RBA believed a further cut or cuts was likely to be necessary or even just appropriate.
And that was said precisely in the minutes: “Members considered that further easing may be appropriate in the period ahead.”

As Terry McCrann explained two bits of data would be critical. The jobs and jobless numbers and the wage inflation data. The jobs data was softish without being dreadful. It didn’t demand a rate cut, but it certainly ‘encouraged’ one. Provided wage increases were not threatening.
The subsequent wages data was lowish enough to allow the RBA to cut if it wanted to. But not that low, without being threatening, to make a cut a certainty.

Add it all together, a cut next week – rather than leaving a four-month gap from the last cut in October to the next meeting in February – is the ‘no regrets’ option.

Source: Terry McCrann Herald Sun

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For Sale Christmas Style

Living in a popular holiday destination like Cairns, means that your on-the-market home could attract visitors, not only of the family and friends variety, but of the potential buyer kind who are looking to relocate from interstate or overseas.

At this time of year the word ‘declutter’ seems unspeakable when placed in the same sentence as ‘decorations’, ‘holidays’ and ‘family’. However, the reality for you this year is that your home is on the market and it’s a game-changer. You don’t want all of your hard work preparing your home for sale to go to waste over the holiday period.

So how do you balance presenting your home to potential buyers and welcoming your family and friends during December and January?

‘On the twelve days of Christmas my agent said to me…’

1. Creativity is Key
Less is more when styling your home for sale so look at everything with a ‘half as much is twice as good’ attitude this year. Your focus is on inspirational ideas that halve the spatial impact whilst delivering double the benefit to family, friends and onlookers alike.

2. Setting the Scene
Potted colour by the front door is often recommended when styling a home for sale. At this time of year a vibrant door wreath can serve just as well to show a clear path to the front door for first-look drive-by viewers.

Door wreath viewed at http://retrorenovation.com

3. Colour Fusion
Christmas colours complement every palette from beachy blues to earthy tones and everything in between. When selling your home during the festive season, remember to use a colour palette indoors that blends with your existing colour scheme rather than a boldly contrasting one.

4. Star Attraction
This year, your home is the star, not the colourful decorations. Christmas accessories, such as your Christmas tree, decorations and lighting should accentuate the size and features of the rooms without overcrowding them.

5. Deck the Walls
Instead of pulling out the large traditional tree perhaps try inexpensive Christmas wall decals that make your living room look larger, fresher and modern. (Cutely decorated baby optional.)
Christmas Wall Decals from http://www.babyology.com.au

6. Religious Relief
Christmas is a wonderful time of year that is enjoyed by many Australians regardless of their religious origins. Celebrating the season without overtly religious overtones in your home-for-sale will add appeal to the broadest number of potential buyers.

7. Decor’ations
Simple vases and platters are inexpensive ways to add consistent style during and after the celebrations. The trick is to find items with year-round appeal that won’t be out of place in the wake of Santa’s sleigh.

Florals courtesy of http://www.floralimages.com.au

8. Lightening over Lighting
Remember, less is more when presenting your home to the market. Overdoing festive lights can detract from the features of your home inside and out. Far better to invest in washing windows and replacing interior bulbs with the highest energy-efficient wattage. These will show your home in the best possible light to potential buyers.

9. Candle Power
No other decorator item says Christmas quite like candles. They effortlessly blend your on-the-market home’s style with your celebrations. It’s recommended that you place candles at least 3.8 cm apart to make sure they burn evenly. Candle displays are also effortlessly restyled after the festivities.

Candles available at http://www.partylite.com.au

10. Storage Solutions
You want to be able to respond quickly to potential buyer requests to view your home, so enlisting the support of guests and having a place to store their bedding and belongings during the day is essential. Quick storage solutions will help you stay in control of your home’s presentation whilst on the market over the holiday period.

11. Glamour finishes
Can’t help yourself? Satisfy your Christmas styling urge this year by wrapping your gifts in glamour colours and metallic finishes. Go crazy with gold, silver, bronze and copper papers, ribbons and bows.

12. Giving Double
While not strictly a styling idea, gift cards or vouchers are a great gift idea when time and space are restricted. They take up a fraction of the floor space as traditional gifts but may be worth twice as much to your loved ones once the Boxing Day sales kick in.

Source: http://showsell.com.au

7 things to do if your property doesn’t sell

Your house has been dwindling on the market for months, even years, yet nobody wants to bite. What’s going wrong – and more importantly – how can you turn it around?

If your property has been on the market for a long time and you’re just not able to move it, here’s seven things you can do to get out of the rut and get that sold sticker.

1. Refresh your advertising

Most buyers are looking at properties well in advance of purchase. Some research for years. If your listing and promotional details remain unchanged for months on end, your potential buyers will notice – and not notice you as a result.

Shake up your advertising if it’s not working for you as it is.

Photos are one of the most important ways buyers connect with and spark interest in your house. Rotate them around and hero a different shot for people to come across first.

If you had a picture of the inside, try a shot of the facade from the street. Refresh them several times and test the impact on different people, including some you know and trust to give you an honest opinion.

Consider taking new shots if you others aren’t doing the job. If you had an evening shot, try a day time shot. Get help from professionals who know how to accentuate the positive.

Update your property description and try new ways to sell your place to the uninitiated. Work with your agent and be creative in content and approach.

Think carefully about your target market (if you don’t have one, that’s your first problem to solve…)

Try another of the realestate.com.au advertising options. Ask your agent to upgrade you to a featured or premiere listing, or send out a digital brochure.

Premiere properties receive 15 times more views and 8 times more enquiries than a standard ad. You’ll be throwing hard earned money away if you keep paying for an advertising plan that isn’t delivering.
Vary your tactics and when you see results, press your advantage.

2. Change your price

You’ll pay the price if you end up stubbornly attached to one.
The three most important factors in selling a property are location, presentation, and price.

Price points are psychological triggers. One to five thousands dollars in the right direction can spark interest and make a buyer feel a purchase is possible.

In a stagnant or depressed market, price is incredibly sensitive, and can stop an interested buyer from clicking on your listing or lodging that enquiry.
If you’ve had your property listed for some time, the market will have shifted around it. Your price might have started in the ballpark, but now it’s not tenable. Reassess based on comparable properties in todays market terms and re-advertise at a price buyers can confidently respond to.

Put yourself in the shoes of your buyers and be honest about a reasonable cost. Work with your agent and lower that price as much as you need to.
There’s no point clinging to a price dream if your property sits on the market for another year. If you want, or need to sell, then price to sell in the current market (not the market you originally bought in).

3. Take a break from the market

Three things tend to happen if you keep your property on the market for a long time without a break.

Buyers will make a mental note to avoid it, fearing something is wrong because it’s been hanging around so long.

Buyers will use it’s time on market as a negotiating tool, trying to leverage your desperation and arguing that you should be glad for any offer you get.

Or buyers will tune out your property altogether, skimming past it in listings because they’ve seen it so often they’re blind to it.

Three months is often a turning point, when buyers slip comfortably into one of the above scenarios, and you start to get worried.
Though some buyers are on the hunt for a while, each day they’re joined by even more.
If you can afford it, giving your property a rest for a few months means you’ll have a whole new crop of buyers ferreting out their perfect place. They’ll never have met yours, so you’re in with a fresh chance!

4. Give your property a makeover

Get the lowdown from your agent and, if they’re cooperative, buyers who’ve passed on your place. Ask them what turned them off and ask them to be brutally honest. Determine if a refresh is in order.

Ideally you’ll get some specifics that will help you focus any improvements you need to make. It could be the colour of the walls. The lack of decent curb appeal. A garden that feels too high maintenance. A small kitchen. The impression that too much renovation will be needed, or just that the place seemed too messy whenever it was being inspected.

If you haven’t invested in home staging, try it. The professional eye of a stager or stylist can set you up to appeal to your target market, and it doesn’t have to cost an arm and a leg.
Look at low cost, quick facelifts, like a new coat of paint, a better clean up inside, or some attractive plants in the garden.

It might be that a more substantial renovation is needed, and if it will increase your odds of sale and a good price, it’s probably a better alternative than sitting on the market indefinitely.
Weigh up how much you could invest in big improvements and talk to experts about the changes most likely improve your chances of sale. Be careful not to over capitalise (there are no guarantees), and remember that even a small effort could yield the return you’re looking for.

5. Go comparison shopping

You may have done a ton of homework on selling your house, but forgot to scope out the competition.
Work with your agent to get a handle on how your place measures up against similar properties in the area; in architecture and style, price, size, bedroom and bathroom numbers, land and yard area, proximity to amenities, quality of interiors, style of presentation, and everything in between.

Attend open inspections and auctions. Talk to other buyers at those homes and gather insights.
Don’t just compare the property itself. Have a snoop at how those homes are bring presented, how their open inspections are being run, whether they’re being sold at auction or by private treaty, and anything else that jumps out at you. See what’s popular and what people are talking about.

Comparing doesn’t mean making your property conform to everyone else’s.
It’s about getting in touch with the reality of the market in your area and price bracket. It’s staying abreast of trends or contexts that might impact your sale.
And it’s being able to post an asking price you can comprehensively, unbiasedly, justify. When you can compare apples with apples, you’re ready to set up shop.

6. Be open to advice
If your property has been languishing on the market for some time, you’ve probably already asked for help. You’ve checked with your agent, or asked family or friends about why they think your place isn’t hooking a new owner.

But let’s be honest. You might not be listening, especially if they’re telling you things you might not want to hear.
Ask for advice (if you haven’t yet, now’s the time), and truly be open to it; from your agent, from property experts, from potential buyers and those you trust.

Steel yourself for a reality check and commit to taking on constructive suggestions.

7. Don’t lay blame (especially on yourself)
It’s easy to point fingers if your property isn’t living up to expectations. Selling can be highly stressful, and if you’re in a tricky financial spot (eg. you’ve already purchased another property and are feeling the pressure to sell in a hurry), the tension can be crippling.

Like any stressful situation, getting upset or angry won’t help.
Even if you decide you need to move to a new real estate agent, don’t leave with a grudge or you won’t be fully focused on the new chance to sell your home. An agent and vendor relationship is a two way street and you two may just not have worked as a partnership.

Taking a break from the market helps get you back on track and stop blame in its tracks.
Maybe you honestly weren’t ready to sell.
Refocus, take a breath, then re-arm with any new tools or support you need to get back out there. There might only be some small changes to your home and your strategy standing in the way of you and the finish line.

Stay positive and you’re half way there.
Source: realestate.com.au

Are the RBA cuts finally beginning to change consumer sentiment ?

Australians are beginning to respond to interest rate cuts earlier in the year, with consumer sentiment surging to its highest point in 19 months.
The Westpac Melbourne Institute Index of Consumer Sentiment for November, released on Wednesday, rose 5.2 per cent to an index level of 104.3 – its highest point since April 2011.

A reading below 100 indicates more consumers are pessimistic than optimistic about the economy.
Westpac chief economist Bill Evans said the result was unexpectedly positive, given sluggish performance of the previous readings.
“After a long 16-month period when it held below 100 for 14 of those months, we are finally starting to see that the Reserve Bank (of Australia)’s 150 basis points of interest rate cuts is having an impact,” he said.

He added, though, that the index was still only 0.9 per cent above its level of this time last year.
Mr Evans said the uptick in sentiment was most likely based on global factors, as well as the RBA’s rate-cutting decisions in May, June and October.

However, a desire to boost conditions in the economy could prompt the RBA to consider easing rates at its board meeting on December 4.
“The Australian economy is facing uncertainty around the mining sector and with contractionary fiscal policy and a punishingly high Australian dollar,” Mr Evans said.
“We need further rate cuts to help build on these early signs that lower rates are having an impact on households’ confidence.”

All components of the data improved in November, with a rise of 11.1 per cent on the sub-index measuring views on family finances compared to a year ago, and a rise of 1.3 per cent on the measure of expected family finances over the next 12 months.

Australians were also positive about economic conditions over the next 12 months and five years, with the relevant sub-indices improving by six per cent and 3.4 per cent respectively.
The sub index tracking whether now was a good time to purchase a major household item rose 5.1 per cent.

However, state-by-state results suggested there was still some concern about the longevity of the mining boom, with confidence falling 5.2 per cent in Western Australia, and 8.7 per cent in South Australia, perhaps as a result of the Olympic Dam project being cancelled.

Commonwealth Bank senior economist John Peters said the survey suggested Australians were generally more positive about domestic and global conditions in November.
“It appears that the cumulative interest rate cuts over 2012 have finally propped up consumer attitudes and improved family finances,” he said.
“As well, a stable unemployment rate over November and the decisive re-election of Barack Obama in the US presidential election are likely to have had some positive influences on consumers.”
Source: Nine News Finance

Are There Genuine Signs of The Long Hibernation Being Over?

In various recent articles, I’ve tried to explain how Australia’s underlying fundamentals are actually very solid.
And by most measures, our economy seems to be travelling at close to its full capacity.
However, the contradiction is that Australia’s budget should now be running at a substantial surplus. And the reason it’s not relates to a number of structural issues.

Even though the high dollar is causing problems for our manufacturers, unemployment is running at just 5.4% — less than 0.5% above what economists deemed to be “effective full employment”. Because when it falls below 5%, this tends to put pressure on wages.

Anyway, it is the feeble retail sales (through a continued high level of savings) which seems to have become the most visible sign of general consumer conservatism. And this is what’s top of mind with most people.
However, in his column in the Age Harold Mitchell touched on the record level of betting that had recently occurred at the Caufield Cup.
And he then asked “… what does that mean when most parts of the country have been stumbling along in the doom and gloom for months?”

But there are other pointers as well …

Mitchell also highlighted the record level of new-vehicle sales; along with the considerable increase in overseas travel.

Clearly, the GFC frightened most people. But maybe, they have now become bored with saving. And are prepared to spend once again — provided it doesn’t cause them to increase their personal debt levels.

Rather cleverly, the car industry seems to have plugged into this consumer sentiment — by offering “0% finance, and 5 years to pay” on any new purchases.
That way, you are able to buy your new car … without having to create another interest meter ticking over.

Bottom Line:

You are now seeing a growing number of signs that people are finally stirring from their long hibernation.
Moreover, Super Saturday weekend’s strong auction results (with clearance rates for Sydney at 68%, and 66% for Melbourne) … have further confirmed an underlying strength, within the residential property market.

Therefore, the traditional holiday break over this Christmas may well provide the tipping point needed for an overall lift in confidence to emerge during a 2013.

And this also makes it the perfect time for you to acquire a neutrally-geared Commercial property investment … as the market moves towards its expected peak, in 2018-19.
Source: Chris Lang. Propertyupdate.com.au

A total solar eclipse touches Australia – Astronomy Magazine

A total solar eclipse touches Australia – Astronomy Magazine.

Law reform welcomed by the real estate profession

Tuesday 23 October 2012
The Real Estate Institute of Queensland (REIQ) has welcomed the announcement that the State Government will simplify the key piece of legislation which regulates the real estate profession.

Attorney-General Jarrod Bleijie made the announcement at the REIQ’s Annual General Meeting in Brisbane today.

The reforms will involve splitting the Property Agents and Motor Dealers Act (PAMD Act) into four separate Acts to better reflect and represent each of the sectors. The State Government has also committed to reducing red tape during the reform process.

REIQ chairman Pamela Bennett said the REIQ had lobbied for many years on behalf of its members to have the PAMD Act streamlined.

“A review of the PAMD Act in 2008 reported that consumers, the industry and fair trading officials found the legislation difficult to navigate due to its breadth,” she said.

“The REIQ worked hard with the then-State Government to facilitate change and it was announced more than two years ago that the legislation would be split.

“Unfortunately, there has been little progression since that time, so the REIQ and the wider real estate profession congratulate the Attorney-General and the State Government for their commitment to simplifying the buying and selling process for all Queenslanders.”

Ms Bennett said the REIQ had been involved in consultation with the State Government since the election to ensure the needs of its members and the wider community were being addressed.

“The simplification of the legislation will not only make life easier for all those who work in the real estate profession but will also provide significant benefits to consumers during the buying and selling process,” she said.

“The REIQ will continue to work closely with the government to ensure the reforms are a success for buyers, sellers and agents.” Source: Real Estate Institute of Queensland

North Queensland strata report vindicates insurers on pricing

Residential strata title insurance premiums in north Queensland have been underpriced for years and the business has provided poor returns to insurers, according to an Australian Government Actuary (AGA) report.

The investigation into strata pricing found average premiums have tripled since 2007, with a sharp increase in 2011/12.

But for every $100 of premium earned over the past six years, plus investment returns, insurers have paid out $130 in claims, commissions and operating expenses.

The calculations exclude reinsurance costs, which Government Actuary Peter Martin estimates have risen by 65% since 2007.

The report blames recent steep price increases on underpricing, improved allocation of reinsurance cost to policies and natural disaster losses.

The Federal Government ordered the AGA in June to investigate the causes of premium increases, following the House of Representatives inquiry into the operation of the insurance industry during disasters.

The AGA used data from the three major strata insurers – CGU, Suncorp and Zurich – from 2007 to this year. It says the business has been underpriced and insurers have not been price gouging.

Zurich CEO Daniel Fogarty says the AGA report “vindicates the approach we took in dealing with this”.

“It shows we went about things the right way,” he told insuranceNEWS.com.au. “We had a choice of pulling out of the market or supporting the business we were on, but pricing the risk accurately.

“We took a lot of heat, but we also made sure everyone, including the parliamentary inquiry, understood why we were taking the approach we did.

“It’s good to see the Government Actuary agrees there hasn’t been any profit for insurers in this small segment for a long time.”

But North Queensland MP Warren Entsch, who pushed for the strata inquiry, has branded the report a “whitewash”.

“I challenge the insurance companies to produce examples of ‘significant insurance losses’ for unit complexes and apartment blocks in Far North Queensland that would justify hikes of up to 1000%,” he told insuranceNEWS.com.au.

Mr Entsch says availability and affordability are issues, with some constituents claiming insurers are refusing to cover them at any price, based entirely on postcode rather than risk. “This crisis has now extended across the whole range of residential, rural and business insurance, too.”

The Insurance Council of Australia has welcomed the AGA’s findings.

CEO Rob Whelan says the report “supports the evidence that insurers provided to the House of Representatives… in late January, which showed insurers were readjusting their strata insurance prices to cover the underlying technical risks after many years of underpricing and rising reinsurance costs”.

The report says gross claims – relative to 2007 – rose 500% in 2008, and by 550% in 2010/11, although in the year to last June 30 claims were only 75% of the 2007 level.

The AGA suggests prices were historically too low either because insurers were trying to increase market share or because they did not understand the risk properly.

It says higher reinsurance costs cannot be blamed for the steep rise in premiums.

Far North Insurance Brokers Director Doug Olsen says profitability fell because some insurers competitively priced premiums without adequately assessing risk.

There are not enough insurers willing to write strata business in north Queensland, he says.

“A smaller number of insurers is taking on all the exposure, so they’re in an almost no-win situation if major losses occur,” he told insuranceNEWS.com.au.

“They can’t avoid them by spreading the risk, so they’re looking very carefully at their exposure to make sure they can manage it.”

Mr Olsen says it is not easy to get more insurers into the market because they are unable to take on more risk without appropriate reinsurance cover.

The AGA report says while there is limited competition in the market, “it is not clear that this has resulted in prices which are unreasonably high when assessed against the underlying risk”.
Source: InsuranceNews.com.au

Has the market entered a recovery phase or are we seeing a temporary improvement in housing market conditions? Source: Tim Lawless on October 18, 2012 in Research, RP Data Rismark Indices

 

Based on daily movements in the aggregated RP Data-Rismark Home Value Index (updated daily at http://www.rpdata.com, http://www.asx.com.au, Bloomberg & Reuters) covering Australia’s five key capital cities, Australia’s housing market reached a recent trough on May 30 of this year after values peaked 1.5 years earlier and 7.7% higher. Since the recent low point in the index, dwelling values across the five city aggregate index have gained 2.5%.
Each capital city reached their respective market peak and eventual trough at different times. Perth’s housing market peaked the earliest (May 9, 2010), followed by Brisbane (May 13, 2010) with the other major capitals finding a high point in October or November 2010.
Additionally, the recovery time frame and duration of the correction varies from city to city. The cities where housing markets were comparatively weaker recorded an earlier peak, while the stronger markets (Sydney and Melbourne) saw values peak later in the cycle. The combined Brisbane/Gold Coast market saw values consolidate over a two year period, with values falling by 12.9%. Adelaide’s housing market correction ran for 1.8 years, with values down 8.4%. In Melbourne, values fell by 11.1% over 1.6 years, Perth recorded a 12.5% correction over 1.5 years and Sydney’s housing market saw the smallest correction, with values down 6.8% over a 1.5 year period.

6 Rules to make sure you become wealthy

Regular Property Update blogger Pete Wargent recently wrote an excellent piece on the psychology of wealth creation. Source : http://propertyupdate.com.au

1 – Increasing your self-esteem
Why is self-esteem relevant to wealth creation? The reason is because if your self-esteem is low and you then achieve a level of success that exceeds what you believe you are worth, you will unconsciously sabotage your success.

2 – It pays to invest for the long term
Too many of us devise plans to make ourselves a little better off in the short term, but have no cogent plan for building wealth over the long term. True wealth and fortunes are built slowly but surely.
Following the principle and power of compound growth is the key to building wealth. If you can add some leverage – the use of other people’s time and other people’s money – you can join the ranks of the super-wealthy over time.

3 – Study and counsel with wise men
If you want to be successful, learn from successful people. Find someone who has achieved what you want to achieve. Study and follow their methods.
You may even be able to learn from some of their mistakes and reach your goals even more quickly and completely than they did themselves. This is a powerful tool known as ‘modelling’. I consciously use it every day.

4 – Paying yourself first
What do most of us do? Pay our mortgage, pay our bills, pay our credit cards and pay for other essentials. Then we look to see what is left over at the end of the month.
We need to see things another way. Invest a decent sum safely away first and then worry about the other payments thereafter. It sounds arrogant. It works.

5 – Controlling expenditure
Financial freedom is about having passive income – which flows to you regardless of whether you work – that is greater than your outgoings. There are two variables in that equation that can be adjusted to achieve the goal.
One is to increase the passive income figure (through investment). The other is reducing the outgoings (through thrift).
Where are the holes in your financial foundations? How can you plug the gaps?

6 – Taking action
It’s all very well studying these first five steps, but what really counts is taking massive and consistent action and simply never, ever giving up.
What is holding you back from starting today? A fear of failure? A fear of losing money? You’re “doing OK” without investing? When will you start to take action? Next month, next year, next decade?
You need to dare to be different to achieve wealth. Procrastination is the killer of all opportunity. Take action today!