Top 5 tips from Finder’s inflation masterclass
Here are the top 5 tips shared by our experts to help you deal with the rising cost of living and surging inflation.
- Compare everything and stop being loyal to your bank
- Fixing your home loan rate might not be the best decision right now
- Don't settle for a low savings rate
- Diversification is key when investing in a volatile market
- Start investing as early as possible
Finder held a free inflation masterclass this week where our panel of experts discussed rising inflation and shared their best tips on what you can do with your money right now. The masterclass featured: Nicole Pederson-McKinnon, personal finance expert; Sarah Megginson, head of editorial at Finder; and Alison Banney, money editor at Finder.
1. Compare everything and stop being loyal to your bank.
If there was one key lesson to take away from Finder's inflation masterclass this week, it's the importance of comparing your products and services for better deals.
"I'm talking about your mortgage, your gas, your electricity, every insurance in your life, your credit cards…everything can be overhauled. If you've had those deals for 2 years or more, you're probably getting ripped off, you're probably throwing away money and no one can afford that right now." - Nicole Pederson-McKinnon
"I opened up my phone plan years ago and hadn't thought much about it. Now I work at home full time remotely, and I have internet at home so I don't need a phone plan with all this data. I was able to cut my phone plan in half by switching." - Alison Banney
'If you have any kind of sense of loyalty to your bank or lender, I would kick that to the curb. Shop around because the difference is massive…it adds up to hundreds of dollars a month and thousands of dollars a year." - Sarah Megginson.
2. Fixing your home loan rate might not be the best decision right now.
Home loan rates have been going up quickly, but this doesn't necessarily mean you should run out and fix your rate.
"One thing that fixed rates often don't come with is offset accounts. And these are incredibly powerful tools to really slash your mortgage interest and bring forward your debt freedom date." - Nicole Pederson-McKinnon
"Fixed rates are a really good idea if you crave certainty and you want to know your repayments won't change, but at the moment fixed rates are extremely high so I would really consider whether that's the right move for you." - Sarah Megginson.
"The money markets are actually predicting interest rates are going to start falling as soon as the middle of next year. That's less than a year away, so if you're locking in for more than a year you might want to be very careful." - Nicole Pederson-McKinnon
3. Don't settle for a low savings rate
If you're looking to earn a bit extra on your cash in the bank, it could be worth looking at a high interest savings account.
"One year ago you'd be lucky to find a savings account with an ongoing rate above 1-1.5%. Now there are several accounts in the market offering above 3%, or even up to 3.5%." - Alison Banney
4. Diversification is key when investing in a volatile market
Diversifying your investments is always going to be your best bet against volatility, but particularly in this environment with high inflation causing uncertainty in the market.
"One way to do this easily and cheaply is by looking at an exchange traded fund or an index fund. These are 1 trade…that track a whole market or index. So you get access to hundreds of underlying stocks or assets at once." - Alison Banney
Dollar cost averaging was also suggested as a good strategy to invest during periods of high volatility. This is the process of investing smaller, regular amounts each week or month instead of trying to pick the 'right' time to buy.
5. Start investing as early as possible
All the experts in our panel agreed that the one thing they'd tell their 19-year old self is to start investing early.
"My number 1 tip for anyone, particularly if you're young, is to harness the power of compounding. It's a game changer. If you're under 30, you could be a millionaire by doing very little. If you put $25 a week into the share market, with an average return of 9%, over 50 years you'll have $1.27 million." - Sarah Megginson
But if you're already in your 30s or 40s, it's not too late. The best time to start investing was 10 years ago, but the second best time is now.
You can catch up on Finders inflation masterclass with the video above, or head to our Cost of Living hub for more tips and resources to help you cope with rising costs.
