New cases of Covid-19 in most of the states in Australia have started to slow. Whether or not we will face the second wave of COVID-19, but the economy will certainly take its time to recover.
The Federal Government may consider taking new measures to support individuals and businesses further in coming months. Following is a quick overview of the supports that are already in place due to the Coronavirus:
Government support for individuals:
- Two payments of $750 to social security, veteran and other income support recipients (first payment from 31 March 2020 and the second payment from 13 July 2020)
- Access to the JobKeeper Payment from the employer (if eligible) equal to $1,500 per fortnight
- A time-limited supplementary payment for new and existing concession recipients of the JobSeeker Payment, Youth Allowance, Jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit equal to $550 per fortnight
- Early release of superannuation funds up to $10,000 in the FY2019-20 and a further $10,000 in the FY2020-21
- Temporarily reducing superannuation minimum draw-down rates for account-based pensions to 50% for the retirees in the FY2019-20 and FY2020-21
Government support for business:
- Increasing the instant asset write-off threshold for depreciating assets from $30,000 to $150,000
- Allowing businesses with turnover below $500 million to deduct 50% of eligible assets until 30 June 2021
- PAYG withholding support, providing up to $100,000 in cash payments which allows businesses to receive payments equal to 100 per cent of salary and wages withheld from 1 January 2020 to 30 June 2020; and
- Temporary measures to reduce the potential actions that could cause business insolvency.
Full details and eligibility to access these measures are available on The Treasury website.
Additionally, many banks have announced to pause mortgage repayments for between three to six months for the homeowners experiencing financial difficulty due to COVID-19. Importantly, in most cases, interest will still be capitalised and added to your outstanding loan balance. Therefore, it may increase your repayments or loan terms. Talk to your lender to find out more.
Based on the last eight market crashes, the initial decline to recovery, the average crash duration is 41 months. The market bottom usually occurs around seven months after the initial 20% decline. Therefore, it can take roughly 7 months for the market to hit bottom and the following 34 months to recover. However, the circumstances of the current market crash are unique and may not follow the previous patterns.
What should you focus on personal finance?
It may be tempting to sell all your investments now as the market declines. Conversely, it locks in your losses and may put your wealth in a weak position. If you have not already defensively positioned your investments, talk to us to best adjust your investing over the coming months.
You should also consider how to maximise your returns as the market recovers. Remember, investing and building wealth is a long-term game.
How to best look after health during COVID-19?
Maintain good health by eating healthy foods and exercising regularly to keep your immune system as strong as possible. Please observe the Government’s social distancing rules and avoid unnecessary gatherings.
What should I do next?
To understand the options available to adjust your finances best and the long-term effects of the current period are the keys to getting through this challenging time productively. Making informed decisions certainly can give strong foundations in your health and wealth as the world recovers and embarks on a new period of growth.
I can help you to get personalised advice before you make any significant changes to your financial situation.
Note: *The above information provided is general in nature. It is not to be relied upon as personal financial advice. As it has not considered your personal circumstances, needs or objectives.