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How to avoid financial regrets

MONEY causes more regrets than most other things, but the good news is that preventing these “what if” feelings later in life is easier than you might think.

Research released today by the Financial Planning Association shows that almost half of Australians regret that they did not save more money earlier, more than one-third wish they had spent less, and 27 per cent regret they did not invest more.

The FPAs Dare to Dream report says financial goals are Australians most popular life goals and 82 per cent believe they can create the life they want. However, almost two-thirds dont plan how they will reach their goals.

FPA CEO Dante De Gori says financial regret appears to be a national sentiment, and money remains a taboo subject for many.

Its front of mind of our thoughts, but 63 per cent of us are taking no action, he says.

Ignoring a potential money problem even if it is decades away wont make it disappear, and longer lifespans mean people can no longer expect an inheritance in their middle age.

De Gori says preventing regret starts with getting yourself out of the denial stage.

The first step is always the hardest, he says. That may be ringing your superannuation fund, talking with family and friends or seeking professional advice.

I think the step before getting advice is sitting down and understanding where your finances are, De Gori says.

And dont be afraid to share your plans with others. Tell people about what your goals and dreams are then you are accountable to someone to make them happen.

Social research group McCrindle conducted the research for the FPA and found that Australians biggest fear was not having enough money to retire.

The earlier you start saving, whether through super or other investments, the wealthier you will become.

McCrindle research director Eliane Miles says a big issue today is peoples short-term focus.

Most people say its not that I cant daydream and think about the future, its just that Im so busy thinking about the present, she says.

Dont allow that next wave of busy-ness to take hold before you act, she says.

Miles says a quarter of Australians never talk to anyone about their finances, not even their trusted partner.

Take a step to begin a conversation about money. Its not as daunting as people might think, she says.

Interest rate decision rate cut on the cards to think about locking in your home loan rate

THE Reserve Bank of Australia is strongly tipped to cut the cash rate this month, leaving borrowers to decide whether or not they should lock in their loan.

The cash rate has remained stagnant at two per cent since May last year but a sharp drop in inflation has experts tipping it will fall again from its already record low.

The board meets Tuesday and if it does cut rates all attention will be on lenders to see if they pass on the fall.

Last month Bank of Queensland raised its variable rate loans out-of-cycle blaming the fiercely competitive market and increased funding costs and these reasons could result in other institutions failing to pass on any cuts.

Whatever happens dont rest easy when it comes to assessing your loans as the variation between the lowest and highest variable rate loans remains high, according to the latest calculations from financial comparison website iSelect.

On a $300,000 30-year home loan the lowest variable rate is 3.98 per cent while the highest rate is 5.19 per cent a difference of 1.21 per cent.

The sites spokeswoman Laura Crowden urges borrowers to weigh up their options carefully to determine whether or not to fix their loan.

Its important to take into account your future plans when considering whether or not to fix your home loan,’ she says.

If you think you might want to sell or refinance your home in the next few years then its probably not a good idea to fix as youll have to pay break costs.

Borrowers should also be aware fixed loans are far less flexible when it comes to making extra repayments or allowing a customer to redraw on their loan.

On a 30-year $300,000 loan the average three-year fixed rate is 4.28 per cent the lowest offer according to their database is 4.28 per cent and the highest is 4.53 per cent.

Mortgage Choice spokeswoman Jessica Darnbrough says they have seen a large portion of customers locking in their loans.

An increase in funding costs has forced many of Australias lenders to lift their interest rates out of cycle with the Reserve Bank in recent months and moving forward this trend is expected to continue,’ she says.

To avoid these potential rate hikes, a growing number of borrowers are looking to fix part or all of their mortgage.

Data from Mortgage Choice shows more than one in five loans written is now fixed.