Your wealth and the Budget
The answers to these questions lie in understanding the many fundamentals of our financial environment. Let us analyse some very basic of these factors and understand how they would impact your networth irrespective of budgetary directives.
Interest Rate Movements
Interest rates have been high for quite a while and the possibility of a cut is lurking as well. For the ones who need clarity, interest rates tend to be low in times of prosperity and are high when there are clouds of financial worries. However, in all this there lies a bit of opportunity for the risk averse who can lock in higher rates for few years ahead. While for those having debts e.g. housing loans with long tenures, working capital loans, etc, the cost of borrowing capital increases.
What should you do? Should you prepay some part of the money borrowed or should you invest at prevailing rates? There is no direct answers unfortunately. However, as a general rule, when rates are going to fall or are falling you may invest into high volatility assets while on the other hand if rates are going to rise or rising consider moving out of high volatility assets.
The government has to make money. Period. If you and everyone around you needs to make money, remember the government feels the same. If you are stressed the government is also stressed in its
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