Lately, I've been thinking about the domestic and international economy and the more I think about the situation and read the statistics, the more concerned I get.
The blogger, 'My-Wealth-Builder' wrote a recent post encapsulating his worries and they are similar to my concerns, which is why you are now reading a post about it. In terms of equity, I'm not heavily invested into equity right now and won't be for the foreseeable future. If Greece defaults, the equity markets will be hammered. If anyone thought the GFC crisis was bad, this could be worse because Greece has borrowed off several European banks and defaulting on those bonds may trigger a European financial crises.
- Looming potential default by Greece
- Struggling nations with huge debts such as Portugal, Ireland, Iceland and Greece, will they require further bail outs too? Are we looking at dominos lined up for a collapse?
- The U.S deficit, trillion dollar debts and woeful economy that is not recovering anytime soon. When will the U.S deal with their debts instead of printing off more money to band aid this problem?
- Australia's own flat housing and construction market, call centre and manufacturing jobs lost to cheap labour in Asian nations
- Japan, the second largest economy in the world is struggling with no end in sight to the struggle
- China, one of the largest economy in the world, heavily reliant on U.S citizens and their appetite for consumption will be affected if the U.S falters. There are also rumours about their property bubble but we'll never know for sure how accurate those rumours are. If the U.S falters, China's demands for Australia's commodities will drop
My most recent move was transferring some online savings to a term deposit that is earning 6.15% compounded monthly and 100% risk free. I do have equity holdings which I'm not going to liquidate. They're set on DRP (dividend reinvesting plans) and are held with a long term intention since I've got several decades to go before I reach my sixties so there's no harm in riding out the market with what I've currently got in equity.