What is the OCR and the OCR Announcement?
The Official Cash Rate is the interest rate the Reserve Bank of NZ sets for overnight loans between banks. It’s their tool to keep inflation in check. When the OCR goes up, borrowing gets more expensive, helping slow down inflation. When it drops, borrowing gets cheaper but so do the interest rates banks offer on savings accounts.
The latest OCR has been announced at 3.75%, down from 4.25%. This means lower mortgage rates could be on the horizon, but also lower returns on savings. Let’s break down what this means for you…
The recent OCR was announced at 3.75%. A reduction on the previous rate of 4.25%. Lowering the OCR generally means lower interest rates on loans, including mortgages, making borrowing cheaper for individuals and businesses. Let's dive into the latest OCR announcement and what it means for you...
As the first OCR announcement of the year loomed, many economists predicted a 0.50% drop in interest rates—and honestly, they were right on the money! With rates heading south again, there’s been a noticeable spike in property investment interest, which got me thinking: Why is property investment such a solid way to build wealth, and what makes our clients better at it than others?
Here’s the secret: it all comes down to smart strategies and some solid habits.
Compounding Returns
Think of compounding returns like a snowball rolling down a hill—except instead of snow, it’s your wealth, and instead of getting stuck halfway, it just keeps getting bigger. For example, a $500,000 asset compounding at 6% per year will generate half the returns of a $1 million asset. Basically, the more you invest, the more your money works overtime. So, keep rolling that snowball, folks.
Leverage
Leverage is like using a cheat code in the game of property investment—borrow some money, buy an appreciating asset, and let it outpace the cost of interest. Smart investors are not scared of "good debt." It’s the kind of debt that helps you acquire assets that grow faster than the interest rates. And with rates dropping, this is pretty much the best time to grab that cheat code.
Professional Help
Good investors know they can’t do it all alone—so they recruit a team of financial wizards to guide them. Think of it like assembling the Avengers, but for your money. Professional advice helps you make the right moves, so you're not flying blind. Naked Finance can be that team for you. With financial adviser specialising in mortgages, investments, insurance and so much more, we can be your financial GPS, guiding you toward a prosperous future.
The Power of Property Investment
As you may have gathered from this blog, we are all about smart investment and property takes centre stage in many people's portfolio. It’s like the tortoise in the race, slow and steady, but it wins. Property tends to appreciate over time in New Zealand, giving you both passive income and capital growth. It's like planting a money tree—you just have to water it (and maybe prune it occasionally). Do you think you are optimising your property for maximum benefit? If you want to chat more about it, our property team is always here to help.
Financial Literacy
At Naked Finance, we believe financial literacy + action = financial success. Knowledge is power, folks, and understanding how money works is key. Savvy investors make it a point to learn about business, finance, and taxes—and they’re the ones who spot opportunities that others miss.
Playing the Long Game
Building wealth isn’t about hitting the jackpot tomorrow—it’s about sticking to the plan and letting time do the heavy lifting. The best investors focus on long-term gains, not the latest market buzz. They ride out short-term ups and downs and stay focused on their goals. It’s the financial equivalent of a marathon, not a sprint.
So, if you want to crush it in 2025 and beyond, start embracing these principles. Because when you combine patience, persistence, and a few smart moves, you’ll be on your way to securing that shiny financial future.
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