Was your risk management sufficient coming into Covid-19 Crisis?

I got Centrelink as a back up plan.

All good.

Gee those dole queue lines are getting longer these days. Hope the govt don't go broke lol.

 

Currently, I’m still in work (I work in construction/consulting), but I think the company I work at is walking on very thin ice at the moment as most of our clients are postponing large projects they were about to start and no new small jobs have come in through the door in the last 2 weeks!! If things don’t pick up in 2-3 months time, I reckon I will be out of work.

In terms of risk management, I live with my parents, I have an investment property, my tenant is a single elderly man in his 80’s who is on a pension and I have over $100k in savings. Financially, I should be okay (even if I’m ineligible for Centrelink).

On the other hand, I have half a dozen friends who are in there late 20’s/early 30’s who I think will be financially stuffed. They have been made redundant, got no cash buffers and have heaps of debt. Even if the banks give them a 6 month mortgage holiday, I still think they will be stuffed!

 

Lucky to work in an industry that benefits during a downturn. No risk of losing my job but wife will probably lose her part time job.
Moved 30 % of super to cash in Feb so plenty of dry powder and physical gold has worked nicely as a hedge so not worried about my SMSF.
8 months holidays/long service owing if needed.
Cash to cover another 12 months living expenses on top of that.
Enough cash in offset to cover repayments on IP's for 4 years with no rental income.
Still have reasonable borrowing capacity.
Spent the last 20 years worrying that I was being too conservative (and probably was) but that should pay off now by being comfortable to take advantage of opportunities as they present.

Willy

 

My wife is down to two days per week now. I am still working 5 days, but if we lost our job and there was no income, we could live for 10 years without any money coming in. Funnily enough, I am still worried about my financial position! LOL.

 

What I mean is the long term effects from all this....

 

oh if you quit their job can get $800/week

 

Got plenty of cash reserve. Can cover all tenants not paying for a few years (if needed).

Also saving plenty of money not eating out like I normally do

 

It depends. Government workers are secure at this stage but not get a wage rise in the near term. That's nothing like losing a job.

If tenants are nurses, doctors or government workers they will be able to continue to pay rent. You won't be able to increase their rent in the near term. That's nothing like losing a tenant or having a tenant not pay rent because they are unemployed.

The big impact for me is airbnb, although I don't have a vacant airbnb property at this stage.

It will affect us all eventually, just more severe or less severe depending on a lot of things.

 

Wife working from home with full pay and I’m making about 70% of pre-virus takings (self employed in health field). Good position with 10 month buffer in case something goes wrong.
Not sure whether to buy another investment or sit tightly (currently have 4).

 

Yes and no, I have low debt and sitting on extremely low LVR. It has made me rethink my 3 mth cash buffer philosophy though. (My thought has always been having my liquid equities as back up after that. But i wouldnt want to cash out under current market conditions). I have been very fortunate that my employer has pretty much given me a blank roster with instructions to write my own overtime.

 

3 month is pretty low I think. You’d want at least a year? Many things can go wrong in life. Divorce, health issues, court case - or all at once.

 

Scary stats from Grattan Institute...

As the COVID-19 crisis deepens, few Australians have much cash in the bank - Grattan Blog

Our analysis shows that half of working households have 5.6 weeks’ income or less in the bank.2 The bottom 40 per cent of working households have about 3 weeks’ income or less in the bank. A quarter of all working households have less than one weeks’ income in the bank. Even at the top, about 40 per cent of the highest fifth of income earners have less than 4 weeks’ income in the bank.

 

Got burnt in the gfc overseas , made a lot of posts and comments about how I think this is going to go using my expierence overseas , a lot of doubt in reply initially but I see more and more people thinking the same now , personally I see it as 2008 (outside australia with steroids)

3 properties in australia. , 50% lvr on IP , ppor 10% , ppor is a bit of a renovators delight but has huge potential , when I bought it I wanted something to add to over time , my last expierence told me never get in too deep again , I’m no glad now I took my own advice . Only downside is it’s not the perfect house for now .

7no overseas , bought in down turn , properties probably up 50% (Pre covid 19 obviously ) , as all bought height of boom here and downturn there , another 25% on the fx. About 40% lvr and a good yield and rental income , enough accumulated to pay p&i for say 4 yrs before I would have to top up

development land as well but that just held for ultra long term

cash in 3 currency’s on deposit in australia in forgein currency accounts ,more than enough for a rainy day dabble in physical assets in downturns all sorts of stuff and buy and ship to where there is a market

little amounts of shares hardly worth talking about

as you can see very conservative, my ppor for instance

but once bitten twice shy , and I genuinely worry for people here

people know of a recession they know what the concept is , they have no lived thru it tho and to be frank have no idea of what is coming

 

To be honest never really set out to implement a fall back position.

I do count ourselves extremely lucky and fortunate however. Im 18 years IT, same employer with some large local government contracts.

Had an 8 week Europe trip planned this July which means I have over 26 weeks annual and long service.

Wife is senior payroll at a major company so she would be last to go if they shutdown all operations.

PPOR paid off.

4 investment properties with 1 vacant.

It is a little scary should all property rents dry up.

I figure we would struggle to save.

If that happened, first to go would be private schooling, Kumon, kids swimming, kids soccer, kids gymnastics and child care.

That’ll free up approx $38k a year.

 

But do these take into account say offset accounts?
I would assume the higher the incomes perhaps some cash allocated in investments too?
I don't think most Aussies are much of cash people society in general?

 

Fantastic and great to see

 

I would imagine it would include offsets but not undrawn/redraw/LOC.

Yes, no doubt there would be a lot of the top bracket with other means.

 

We put down a 50% deposit on our PPOR a few years ago and the offset is basically full - so well placed to take some opportunities, though will be very cautious as things wouldn't look as comfortable if we emptied the offset and prices fall more than 20%.

Certainly feel for anyone who bought with 20% or less deposit

 

Good position to be in. Make sure you read the posts on debt recycling before you put those offset funds to work.

 

I have had the family in full lockdown for 4 weeks as my wife is pretty cautious. Pulled the kids out of childcare, soccor, etc so expenses are way less. Grocery.bills are sky high though. I work in development part time in a new start up and am a stay at home dad so im used to the whole work at home thing. Wifey was on $250k pa but has been forced out of her job due to bullying (really bad timing) but insurance are covering part of her pay for 3 months. Our 6 properties are getting us by, only one vacancy luckily. My industry is getting hit hard sales are dropping off big time but I have a key role in the company so should be ok.
Before this happened i was pulling out equity to reinvest into a particular type of REIT which are really stable. So i have about 12 months buffer. Im out with the army guarding the hotels at then moment so that is my govt stimulus haha