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Frugal and Fi(re)nancial Digest | Feb 2021 Newsletter

Updated: Feb 25, 2021

In this article

Market Wrap-Up

Special Guest Column: Shanker Ramakrishnan

The Stock to Look Out For

Cheapest Bill - Non-green Plans

Cheapest Bill - Green Plans

Cheapest Bill - GreenPower Plans

Heat Map for All Usages - Non-green Plans

Cheapest Interest Rates

Did you know?

Upcoming events that may impact the market

Market Wrap-Up

Global equities has retreated 0.1% for the month with the pandemic continuing to drive market behaviour. A number of strains have shadowed any hopes of a quick recovery. Something of interest that also dominated headline is the small number of stocks with highly questionable fundamentals suddenly rocketing upwards in what is termed "short squeeze" which has caused heavy losses for some hedge funds. But like all manipulated stocks there are also plenty of hedge funds that are major winners too.

The US market had a mix bag last month with the Dow Jones and the S&P500 index dropping 2.4% and 1.11% respectively whereas the Nasdaq Composite improved 1.42%. PMIs (manufacturing index of 59.1 and services at 57.5) paints a picture of continual improving economic activity. Construction has increased at its fastest pace since 2006 and property prices has made a 9.1% y/y gain. Covid is weighing on the jobs market although the Blue sweep of the Senate and Congress is expected to have a positive impact for the rest of the year. The Rescue Plan ($1.9 trillion) (10% GDP) on top of the previous $900 billion stimulus that passed through as well as the fast vaccine implementation is likely to have a dramatic impact on growth.

In Europe, UK lost 0.82% due to the lockdown and the Flash Composite PMI significant fall (50.4 to 40.6) to give the clearest sign of economy hit. The good news is more than 13% of the population have received a dose. There was also a last minute Brexit deal although this did little to slow the loss of the month. France fell 2.74% although Germany picked the slack with a gain of 5.21%. Once again, the concerns of vaccine supplies in other European countries continues to be an issue and may extend the downturn. Trials for both Johnson & Johnson, and the Novavax has shown positive signs of preventating hospitalisation.

Emerging markets outperformed the marketing, up ~3% with strong performance from China (+3.7%) and Korea (+3.58%) as robust data continues their growth. Argentina was a drag (-5.8%) with Mexico (-2.45%), India (-3.07%), and Brazil (-2.77%) bringing up the rear. The real GDP in China has risen 6.5% y/y with strong demand for health care equipment and WFH tech and industrial production improving by 7.3% y/y in December and 18.1% y/y export growth which contributed to a record trade surplus for the month.

Other assets of interest includes commodities (+2.6%), small cap (+2.1%) and growth MSCI (-1%).

Special Guest Column: Shanker Ramakrishnan

Interest Only, or Principal & Interest, what is better, and does this affect my Borrowing Capacity?

Many Borrowers seek Loans with some period of Interest Only during the Loan Term, and this is largely motivated by their desire to Preserve Cash Flow.

The Preservation of Cash Flow happens as the Minimum Contracted Regular Repayment during the period of the Interest Only Term is just that, an Interest Payment on the Loan Balance, with no Principal Component Paid.

Interest Only is very popular amongst Property Investors who want to add more Properties to their Portfolio and seek to Preserve their Cash Flow to enable them to do this.

But is Interest Only always a good idea?

What is not necessarily common knowledge is that Interest Only does come at a cost in the way of Reduced Borrowing Capacity, as well as some Banks/Lender actually charging a higher rate of interest when you Loan is Interest Only.

Let’s look at a Scenario:

Borrower: Single Female Applicant

Income: $100,000 Annual Salary

Credit Card Limit: $5,000

Monthly Living Expenses: $3,000

The Applicant Owns their Own Home unencumbered, and are looking to buy an Investment Property, which generates a Rental Income of $500 Per Week.

They ask the Bank for a 30 Year Loan Term.

If the Loan is Structured to Repay Principal & Interest over the 30 Year Loan Term, the Bank is able to lend them an amount of $758,265 as a Total Loan, and charge them an Investment Principal & Interest Rate of 4.39%.

If the customer now asks the same Bank for a 5 Year Interest Only Term during the 30 Year Loan Term, the Bank can do this, however need to now show Repayment of the Principal over a 25 Year Term, which reduces the Maximum they will lend to $691,698, and charge them a higher Investment Interest Only Rate of 4.69%.

The difference in Borrowing Capacity is an Amount of $66,567 less or a Reduction of around 8.8% when you do Interest Only.

In answer to the Question – ”Interest Only, or Principal & Interest, what is better, and does this affect my Borrowing Capacity?”, there is no better way other than to evaluate it in the context of what is right for your set of circumstances.

The Stock To Look Out For

Appen Ltd (ASX: APX)

Appen is a leader in the development of top quality training data used in machine learning (ML) and artificial intelligence (AI). Its clients are also some of the drivers of the artificial intelligence and machine learning field. Being a major establishment in the technology space poises it for growth, as stocks in the digital space have a high growth likelihood, especially those that already have a strong foundation. AI and ML are prospective fields in technology that promise all-round huge returns.

Despite all these advantages, Appen suffered a dip in share value in FY2020 for the same reason that many other shares did: Coronavirus pandemic. The management of Appen came out to say that the impact the pandemic had on some of its biggest clients has somewhat reduced the demand for its services in recent times. As a result, the stock took a dip to a 52-week low of $15.70. However, the stock has picked up recently and now halfway to the 52-week high of $43.66. Another downward pressure that has squashed the stock is the appreciation of the Australian Dollar.

However, this is not expected to last long as the companies across the board begins to recover from the effect of the pandemic. And now that the virus has a vaccine, things are set to look up for the stock in the long run. As a result, you could look to buy the stock now that it seems to be only temporarily weak.

The outlook for Appen Ltd stock on the fundamental analysis is to buy. Let’s take a look at what the technical analysis says.

Technical Analysis

APX has come a long way from its minimal growth prior to 2018. It now has more volatility and pronounced movements. And in its journey, it has moved within four major support and resistance zones on the weekly chart ($31.48, $27.48, $20.47, and $16.02). Also, the stock observes a major uptrend where price has currently pulled back to. This major uptrend coincides with the $20.47 support level and looks like the stock may bounce back up from there. You could take a buy position here, and you wouldn’t be technically wrong. You could also wait till the price breaks out of the pullback level as confirmation of a continuation to the uptrend.

Entry levels: Buy now that the stock is on the major support level (anywhere close to $20.57), or wait till the price breaks out of the pullback and retraces back to the resistance before buying. Get ready to cancel the trade if the price falls too far below the support level (anywhere below 16.02 support zone).

Seek Ltd (ASX: SEK)

Here is a blue-chip stock that is primed for more growth in this decade. Seek has been around since 1997 and is in the business of providing online employment, education, and training opportunities in 18 countries. Seek also has other investments that help boost the company’s overall returns. One of these investments is Zhaopin, based in China.

Zhaopin, like its parent company, also connects users with relevant skills and education to appropriate job opportunities. It is one of the leaders in this business across all of China.

FY 2020 was tough for many companies, and Seek was no exemption. However, the company has quickly bounced back and is currently pushing its 52-week high. Despite that, it shows no sign of slowing down. Seek aims to triple its revenue to ~$5 billion this decade from its current level of $1.58 billion. Although there’s no way to be certain it is going to achieve this Herculean feat, there aren’t many reasons to believe that it wouldn’t at least increase its revenue from where it is now.

The outlook for SEK stock is to buy, though it is already at its 52-week high and is selling at its highest price yet.

Technical Analysis

Currently SEK is where I like to call, uncharted territory. The reason is that it is not only past its 52-week high, it has also bounced out of the uptrend resistance support line into a space where new support and resistance lines will be formed on the monthly timeframe. After making the initial breakout from the uptrend resistance line, it retraces back to the line before continuing upwards, confirming the breakout. As a result, it makes sense to ride the breakout to the uptrend.

Entry level: Buy now (anywhere close to $30.35)

How I can save you money this month

I've done this very quickly to encourage people to check their electricity bill because there are always better valued options. I'm using flat tariff and 5000kWh/year as my assumption as this is considered the average in this area. If you want to check out the comparison for your area, usage and tariff type please click here.

Please note that Vic (5 network areas), WA, Ergon (network) and Tassie have not been added yet.

The rankings will change depending on your network area, actual usage, usage profile and tariff type.

Your energy bills are generally the top 3 or so expense you're likely to be paying so please don't hesitate in giving your current retailer the boot. It's easy and most sign-up takes just a few minutes. The only cost is generally the final read which can vary between $12 in Ausgrid to like $90 in ACT. Check with your current retailer before you churn.

The Heat Map - Energy Flat Tariff

I've built a heat map to demonstrate that just because an Energy Retailer is cheap for your friends, it doesn't mean it will always be the cheapest for you.

This is where the Retailer Comparison Tool comes in to calculate your specific network, tariff type and usage.


Flat + CL1


Red - Most Expensive

Yellow - In the middle

Green - Cheapest

Cheapest Interest Rates in the Market

*The rates are quoted based on a borrowing amount of $500k. Higher borrowings may attract greater discounts.

The rates were brought to you by Shanker Ramakrishnan, Director of SR Business & Finance Consulting Pty Ltd. Ramakrishnan is a qualified Economist holding Bachelor & Master Degrees in Economics. He is an accredited Finance Broker with the Finance Brokers Association of Australia (FBAA), and holds a Certificate IV in Financial Services, and a Diploma of Finance & Mortgage Broking Management. Ramakrishnan is an experienced & Successful Multi-Millionaire Investor across Residential Property, Commercial Property, and Self-Managed Super Fund Investments.

Contact Shanker Ramakrishnan at SR Business & Finance Consulting Pty Ltd if you want more details Email:

Did you know?

Chamath Palihapitiya said he owned the equivalent of $5 million in Bitcoin in 2013.

Imagine the gains on that!

Upcoming events that may impact the market

12 Feb - G7 Meetings

16 Feb - Monetary Policy Minutes

17 Feb - CB Lending Index m/m

17 Feb - MI Lending Index m/m

17 Feb - RBA Assist Gov Kent Speaks

18 Feb - Employment Change

18 Feb - Unemployment Rate

19 Feb - Flash Manufacturing PMI

19 Feb - Retail Sales m/m

23 Feb - Goods Trade Balance

24 Feb - Construction Work Done q/q

25 Feb - Private Capital Expenditure q/q

26 Feb - Private Sector Credit m/m

1 Mar - AIG Manufacturing Index

1 Mar - MI Inflation Gauge m/m

1 Mar - ANZ Job Advertisements m/m

1 Mar - Company Operating Profits q/q

1 Mar - Commodity Prices y/y

2 Mar - Building Approvals m/m

2 Mar - Current Account

2 Mar - Cash Rate

2 Mar - RBA Rate Statement

3 Mar - AIG Services Index

3 Mar - GDP q/q

4 Mar - Retail Sales m/m

4 Mar - Trade Balance

4 Mar - OPEC JMMC Meetings

5 Mar - AIG Construction Index

9 Mar - NAB Business Confidence

10 Mar - Westpac Consumer Sentiment

11 Mar - MI Infolation Expectations


Black - Medium Impact

Red - High Impact

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