A letter to the young people in Sydney and Melbourne

If people were to listen to your wild and dangerous opinions that aren't very factual, when Sydney prices were 5x Annual salary, they would have cost themselves a lot of money and the potential to secure their financial future.

@Ald i am curious as to your portfolio if you have one? Can you elaborate to give your claims some more credibility? Because as a millennial, its hard to take your statements seriously. Have you been burnt in property?

 

Young people bearing the brunt of a weak economy

 

That's my point, they do increase at the same percent over the long run. Yes the net difference gets larger over time. But the return is the same.
There are other reasons for investing in blue chips cities such as less volatile etc. But I am not convinced that in future Sydney is going to increase more than other cities. It has not for the last 100 years or so. Its just always been more expensive. Check this data for example (although only goes back to 1970).

 

Seem to disagree on this point, the mentor that quotes that passage was actually Totally opposite to what you state. His attitude toward life was to be all that we can be, meaning to our greatest potential in anything we do or with anything we wish to attain, not just financial.
Perhaps check him out and his 'traits' as he calls it towards life....great human being...Jim Rohn!

 

I do agree with some points you raise....but I immensely dislike talking politics....my philosophy is to change and adopt since I cannot change what happens, I cannot change the 'WIND' (government, policies, taxes, rules, laws, regulations, wars, plastic bags changes...), I cannot change that after day a night will occur, or that after winter spring will come and so on...all this is out of my control!
Have actual friends who own mines abroad and here and understand genuine challenges and concerns from both sides. I too agree, we in Australia just sell too many valuable resources or land or great companies, we don't innovate and utilise and produce here, we don't have a plan for the future for Australia, IMO.
With education, our government yes currently considers this to be consumption rather than investment in our country, and at present they just see revenues. Part of the incentive would be an entry into Australia, so I would assume most would plan to stay here afterwards...?
If Australian wealth is compromised of around 50% in real-estate and 20% super, well I am not surprised they go after those industries and keep re-slicing/redistributing the compulsory retirement savings pie continuously, which they instrumented by the way (recent Super tax cap changes, LRBA lending changes, interest higher, etc...) and taxing real-estate (e.g. no CPI for the last 18 years in QLD land tax thresholds - yet increasing land valuations, paying higher rates because investor, splitting water and council rates hence can charge higher fees - more bills not as visible and painful, higher interest on loans, aggregate stamp duty if buying with family, NG on-off, on/off, on/off, depreciation changes, etc.).
As for managed funds or financial industry, well hence why I have dabbled only for the last 20 years or so and took total control of my finances (both private and Super). Well, at least I thought if I lose I will have myself to blame unlike those that lost everything with 'ENRON'.
And on last point from my volunteering canteen duty, both in primary and high school.... Primary food was all made and was great, yet high school was all pre-packaged and just reheated (suggested to my kids never to buy anything there...).
You raised some genuine points.....but what is the solution? As my mentor said, "We cannot change the WIND but we can change our set of sails"...that's how I try to live and deal with it....

 

I'd like to consider your arguments but your facts are simply wrong. Healthy canteens are already in place in school and school leaving age is not 16. You are basing your judgements on incorrect information. It also makes me reluctant to buy in to the other statements you are saying are fact.

 

Actually in some states you can still leave at 16. Its only recent that this was changed, for decades it was 16.

You dont know what a canteen is never mind what healthy food is. Furthermore so many schools only have their canteens set up to work 3 days a week. Even furthermore, they are set up to sell the cheapest food at the highest price, and because there has been some press attention to it in recent years they are changing and bringing in a few better choices.

When i see a canteen in Australia at a school or a university, serving children, a soup, a salad, properly prepared vegetables and some protein, followed by a piece of fruit for lunch at a adequate price that reflects the realities of being a student then i will be happy to say I am wrong. It will be a long wait,

 

Millennials face poverty in retirement without super overhaul, think tank warns

There you go. Its what i have been talking about for the last two years but have been censored from threads and attacked. Now people are starting to talk about it.

Incidentally I would like to point out something that is blatantly obvious but people have no clue.

In Australia, when you have interest rates at 1.5% which if you factor in inflation is actually zero percent, its a sign that the economy is in a crisis. read that again and perhaps you will understand.

When your economy is in a crisis, and you inflate what was already a housing bubble, you create a massive economic problem. I hope one day the youth of this country will be smart enough to hold a Royal Commision into the politicians that have ruled since 1980 in Australia and have sold them up ship creek.

 

What you say is true over the period of the last 40 years in Australia. Buying multiple properties in Sydney before a property rise and selling at its peak is what many have made millions on. But on the scale of 60 years its just impossible or it breaks the rules of economics. We live in a time of such massive credit availability like the world has never, ever, seen before. The impacts of this are simply not known. Every single time in history that credit was created on a similar scale to this , eventually when credit was tightened, asset values fell to their long term median which is essentially just the price near inflation. This crash has not happened because goverments are still printing money in eye watering numbers.

 

Your graph is pretty good and you will notice that the period of history where that growth started was associated with Volcker in the USA dropping the gold standard, and starting money printing. This is economics that is confounding the most intelligent economists and it works as long as you have the population of the world growing at a similar rate and the population of Australia growing at a rate that supports the growth while constraining land supply and infrastructure. Its killing the planet however.

Ask yourself a simple question
Where you born onto this earth to pay 12 times your annual life energy of work to pay for a house? If only you could just get away with 12 times annual salary, with interest you will pay your entire working life at the present prices. Where you born for that?

 

"Time is more value than money. You can get more money, but you cannot get more time"

both money and time are constrained.

Imagine a life where you ignore time and your real needs are fulfilled in a society that aims to do so, so that money is not the obsession it has become?

In Australia people believe that it is money that they are missing in order to feel secure and happy. I know that it is security of life that is missing.

Long ago we human beings knew how to live freely, in harmony with nature, and with each other and we maintained it, we fought for it to be maintained. But during bad times when control was lost to all, evil, selfish, insecure people, ones who stood for nothing as they were without morals, took control and they made everybody insecure to ensure they could be the only ones secure. These people are in charge now.

if anybody wants to change the world for the better there is only one solution, they need to change themselves until they discover morality and seek it to every occasion.

Do you know what a loser is?
Its a person who thinks he is smart by increasing the hardship of others so that he can be secure.
Imagine, banks believe that we should be mortgage slaves for 30 years so that they can live luxurious lifestyles.

 

Ald, I think you are quite young hence the frustrations, I understand.
Yes, life has challenges, and who are banks, or companies or governments or the wall street, all these are run by people, not some entity. And all people are different, people are irrational creatures that's what makes us unique, and yes greed can create more challenges.
I look at it this way, I cannot change who is in power, who makes the rules and regulations or the laws hence I can only change my set of sails, not the 'Wind'.
Yet when I look at time, time passes by for ALL people...we will not be here forever!
How many times will you be 18, or 28, or 38, or 48, and so on....ONLY ONCE (if we fortunate enough to get there, right?).
So as I become older, hopefully wiser too, I realise yes money is important BUT not the most important aspect of my life. What are we all chasing...I Believe we all want to be healthy and financially secure enough to be able to SHARE with those close to us those we LOVE!
A family member turns 80 soon, and we cannot wait to celebrate and reflect on the milestones achieved.
Trust me, our perspective on life changes as awareness makes us happier and more appreciative the older we become. I know some who are just grateful to wake up healthy the next day and couldn't care who is in power or what credit changes banks will make.....(doesn't mean they don't care they just care about other aspects of life more!).
Like the link below how to live beyond 100 illustrates that, there is no category for having more money to live a longer life (well other than having flue vaccine - if you cannot afford that..?) :
The secret to living longer may be your social life

 

I don't like paying 12 times But it's not something I can change ald.

 

I'm happy assets are 12 times, 15 times whatever times a salary. If people who have the money are willing to pay for the lifestyle they want then that's their choice. I'm in this industry to make money. I'm not here for spiritual guidance and kumbaya sing-alongs, hoping and praying real estate crashes.

Um this is a WEALTH creation forum.

 

Yes you can

By extracting yourself from the market and paying off all your loans and then investing in vangaurd and also some good stocks, you will easily outperform property, then you buy a property cash and unconditional and when distress comes to sellers you will capitalise on that.

Buy a property at 12 times annual salary and you will fail and you will be the distressed seller and i can take a bet with you that will happen. In fact more than 3.5 puts you in that risk category already.

 

Well you are the capitalist hoodlum as your signature states. So no surprizes there. But you dont know what i know and you will be singing kumbaya one day.

 

Seriously man, you cracked me up and made me spill my coffee while reading that!

Listen at the end of the day, all the resistance in the world won't matter. High demand stock in high demand locations will never (ok extremely unlikely) crash 60% and over the long term will keep rising. There's no two ways about it.

 

Let me just say this. The period from 2005 till 2020 in WA and 2012-2019 (perhaps longer) in NSW and the period from 2009 till 2019 (perhaps longer) will be studied by students of economics as the textbook cases of the most incompetent economic management Australia has ever seen and i wont be surprised if there will be Royal Commisions into this period of economic management in the future.

Inflation is running at about 2.8 to 3.1% depending on who does the calculation.

Interest rates are at 1.5%

That means real interest rates in Australia are actually negative.

That in economics is a country in utter economic crisis.

Only a total idiot allows property prices to ramp up during such a time instead of directing wealth into productive assets that provide new technology employment for the young. Only a corrupted total idiot subsidizes the property prices to ramp up during such a period. Either way it is not in the young peoples interest or to their benefit.

But if they are smart they would extract themselves from the stupidity and pay down all loans fast or get rid of loans that are burdensome. Right now if you are holding a loan on an asset that is more than say 3.5 times annual salary. Drop it like a hot potato. It will burn you.

 

I'm guessing you're no Liberal voter

 

What makes you choose 3.5x salary as a figure? Your argument is so generic and over looks so much.

Just as well there are people out there making $50k, $150k, $500k, affordable Houses at 3.5x for everyone!