The Big Picture
My honest read on this month is that it has been one of those periods where the noise and the underlying story are pulling in very different directions, and knowing which is which matters more than almost anything else right now. February ended on a genuinely strong note, with share markets hitting record highs and company earnings coming in well. Then a conflict broke out in the Middle East, oil prices surged, the Reserve Bank raised its rate twice in quick succession, and the headlines turned dark fast. What I keep coming back to is that the forces that matter most to your long-term financial wellbeing are rarely the ones dominating the front page, and I want to walk you through exactly what I think this month means for you.
Why the oil price matters to your household
The single development I've been most focused on since late February is the surge in oil prices that followed the outbreak of conflict between the US, Israel and Iran. I think of the oil price as essentially a freight surcharge on the entire planet. When it spikes, almost everything that gets made or shipped becomes a little more expensive, and that cost eventually finds its way to the checkout, the petrol pump, and the Reserve Bank's thinking. What I find genuinely reassuring from where I sit is that Australia is a meaningful energy and resources exporter, and the fund managers we work with closely had already been building positions in Australian energy, copper and gold well before this conflict began, which means some of the same pressure driving up costs at the servo is also working in your favour through your investments.
Two rate rises and what they actually mean
The Reserve Bank has now raised its official rate twice in two months, taking it from three point six percent in January to four point one percent today and adding roughly one hundred and eighty dollars a month to repayments on a six hundred thousand dollar mortgage over that period. My read on this is that the reasoning is defensible. Prices across the economy are still rising faster than the Reserve Bank would like, and making borrowing a little more expensive is the main lever it has. What I find worth explaining, though, is that this lever works best when the problem is too much spending, and it is a blunter instrument when prices are being pushed up by an oil shock on the other side of the world. That tension is something I am watching carefully as the year unfolds.
What I'm keeping an eye on
My focus over the coming weeks is on how the Middle East situation develops, because the trajectory of oil prices from here will shape almost everything else. Think the cost of living, the Reserve Bank's next move, and the mood across global markets. I'm also watching the May federal budget closely, because how much or how little the government does to reduce its own spending will matter a great deal for whether the Reserve Bank feels it needs to keep raising rates or can afford to pause. Whatever the near-term picture, we have always believed building something resilient matters more than chasing the highest possible return, and that approach is doing exactly what it is supposed to do right now.
Overall Market Mood
Markets are in a cautious, watchful mood right now, with the conflict in the Middle East and two consecutive rate rises combining to make investors more careful and selective than they were just a few weeks ago.
Our Risk Stance
We are leaning toward caution at the moment, staying well-positioned in areas like energy, resources and quality healthcare businesses that have held up well, whilst keeping some capacity to act quickly if good opportunities emerge as things settle.
Investment Rationale
We are running a broadly protective approach right now, with a deliberate tilt toward areas that tend to hold their value when the world gets uncertain, whilst staying positioned to benefit from the parts of the market that are genuinely working in this environment.
What We’ve Been Hearing
01 Should I be topping up my super or paying off my mortgage first? ▼
This is one of the most common questions in personal finance and the honest answer is that there is no universal right answer. It depends entirely on which game you are actually playing.
A 35 year old on a strong income with $120,000 in super is not playing the same game as a 57 year old with $180,000 left on the mortgage and retirement three years away. The clock is different. The stakes are different. Giving them both the same answer helps one of them at best.
Here are the variables that actually shape the decision.
Your age matters enormously because super's power comes from time. An extra $20,000 in super at 35 has 25 plus years to compound. The same amount at 57 has roughly three years. The younger you are, the stronger the case for super.
Your tax rate often matters more than your mortgage rate. Concessional super contributions are taxed at just 15%. If you are earning above $135,000, your marginal rate is 39% or higher. On a $10,000 contribution that is a $2,400 guaranteed saving before the investment does anything at all. For high income earners this often settles the question before the return comparison even begins.
Your offset account is the option most people forget entirely. Money in offset earns your full mortgage rate, tax free, with complete liquidity. For many people the smartest first move is building the offset buffer before doing either extra super or extra repayments.
Your job security matters too. Super is locked away. If you maximise salary sacrifice and then face a period of reduced income, that money is unavailable. A mortgage with redraw gives you access when you need it most.
One thing applies to everyone without exception though. Never leave your employer super contribution on the table. If your employer matches contributions up to 2% and you are not taking it, that is a pay rise you are declining. On a $100,000 salary that is $2,000 a year going nowhere. Start there, always.
Super or mortgage is not a maths problem. It is a self-knowledge problem. The maths is actually the easy part.
02 With everything going on overseas, should I move my money out of certain investments to protect myself? ▼
This is a great question that we get asked a lot. Before I answer, let me ask you something back. Protect yourself from what exactly?
There are two very different things that can go wrong with investments. The first is that prices fall temporarily. The second is that you permanently lose capital. These feel identical in the moment but lead to completely different places. One is a storm you wait out. The other is lasting damage.
Volatility is not the real risk. Permanently losing your capital is the real risk.
Nobody has complete, reliable information about how the current conflict in the Middle East develops or ends. Not governments, not military analysts, not the largest investment banks in the world. What is moving markets right now is human emotion, not facts. And emotional investing has a poor track record.
Here is the thing about moving to cash. It feels like relief immediately. But then you face a harder problem. When do you get back in? The conditions that make re-entering feel safe are almost always conditions where prices have already recovered substantially. You protected yourself from the fall and missed the recovery entirely.
Research shows that missing just the ten best trading days in the Australian market over the past twenty years would have roughly halved your final portfolio value. Those days almost never happen when things feel calm. They happen during periods of peak fear. Exactly like right now.
Staying invested does not mean doing nothing though. Think of it like a soccer team. They never leave the field but they adjust their formation depending on the situation. When fear is high and markets are cold, as they are today, investment legend Howard Marks argues this is precisely when leaning into quality investments produces the best long term outcomes. When markets are running hot and greed is everywhere, that is the time to become more defensive.
The key is owning quality investments, maintaining genuine diversification, keeping enough income so you are never forced to sell, and holding a cash buffer that means a market fall is never an emergency.
Stay on the field. Adjust your formation. That is how long term wealth is built.