Another affordability question for youngsters discussion?

I suspect that (most) folks in their 40's and still have never saved enough to buy have probably been living a lifestyle of not enough money management in various ways up until that point.

If this is the case for your friends; I hope they can turn it around.

 

Of course. That doesn't surprise me at all either.

However I know for a fact that hospitality is dreadful pay . And even if they had 50k saved up. That's only 250k based on 80lvr
Even at 100k deposit that's 500k which I guess is fine for. A 2bdr apartment

To be honest If you've got very little saved up for whatever reason in. Your 40s and a 60k salary I think home owner ship is virtually impossible

 

On this income it would be very very hard to save a deposit, buy a house and still have enough for everyday life expenses - and at the age of 40 I would be depressed in that situation.

Why don't they study or self improve/educate oneself more so they have potential to make more money? Start a side business or work multiple jobs. Make it happen. I firmly believe that if someone wants something bad enough they can make it happen.

As harsh as it sounds money is an enabler - without it you limit your chances in a lot of things in life with investments being one of them.

Money makes money as the saying goes. I truly believe in that. So much easier to make money if you have money.

 

Going back to London for a second, my take is that property and rents there are broadly similar to Sydney for the majority of the market at a $2 to £1 exchange rate. As @JL1 said, you'll get a different sort of house for your money, such as a terrace instead of a detached, suburban home.

The super-prime end of the market is more expensive in London, and I think that there's a lot more rich people. You've got the City, media, and the whole of the EU on the doorstep.

High speed rail probably isn't necessary, but faster trains would make a huge difference.

In the Netherlands it's possible to get from Rotterdam Centraal to Amsterdam Centraal, a distance of 70 to 80 km, in about 40 minutes. That's equivalent to going from Springwood or the Central Coast to central Sydney, and you'd need another hour to do that trip.

Imagine being able to commute quickly from Wollongong or Bowral to the South, Katoomba to the West, or the Central Coast to the North? That would spread the Sydney workforce out, and reduce price pressure.

 

I agree, but before that it takes a changed mind to make more money. Then you leverage that to make some serious money.

 

One thing I have noticed with this industry over many years is there seems to be an enormous percentage of them are smokers..guaranteed wealth killer right there...doesn't make sense, but you can only leads horses to water.

I hope your friends are not smokers?

 

I don't agree.

From my experience; good money management makes money.

Once you have this fundamental; you can make more.

 

I think it will help with property prices. I personally don't like living near city - dirty, noisy, stressful. So if there's a choice to live in the likes of Wollongong and travel to sydney within 40 mins, I'll take it.

 

So your saying having $1k vs having $100k you can make more money out of the $1k just by purely money management? Dont kid yourself.

Like it or not money does make money.

 

I agree mindset is also a big factor. But if you dont have the drive or the competence and mindset in the first place as a businessman or investor - well your not going to succeed. Mindset and attitude goes with all facets of life not just investing.

 

That's what I was saying

 

I think if we assume good money management and investment knowledge is very important, having 50k and having 500k, there are definitely more options to make money faster with the 500k. That's been my experience, can't speak for others though.

 

This pretty much nails it. with department stores like Harrods and Selfridges, it makes David Jones look like Kmart. Definitely a next level elite class living there.

London has a lot of old money too. I have an old friend who owns a terrace that would be worth over AU$3m but is a penniless film maker. got it through inheritance and no doubt will never move. I assume (to a lesser extent) Melbourne and Sydney have the same edge over Perth and Brisbane, with the additional equity held in the housing market.

 

This keeps the prices down! I can see people spreading up and down the coast too in the SE Qld area.

But, unless it's enabled by fast trains, I can't see it working as well in Sydney. Parramatta is the second CBD, and closer to a huge percentage of the workforce, but it doesn't attract employers anywhere near the East does. So the city grows (west, southwest, northwest) and commuters travel from Illawarra and Central Coast too but the more affordable/newer housing estates aren't so close to the jobs. So the inner and middle rings stay being very premium.....

 

Inheritance is one way young people can own in a good suburb.... And also while properties change hands, they don't necessarily come on the market.
Anyway, a completely unlevel playing field. It is what it is.

 

I'm fortunately to have multiple groups of friends (high school, uni, semi work) who are mostly money-smart... as in politician-level 1.7 properties average between them. There's a couple who are living it up or unemployed by choice living at with parents, and we do a good enough job of steering clear of all money talk generally.

The positive flip is that poor money management keeps our economy going. So many non-essential services would close shop if the majority of the population practiced responsible financial planning.

 

But if you can't manage the first $1K you won't get to $100K. (Inheritances or gifts excluded)

Everyone has to start somewhere. It takes time to get compounding to work it's magic.

We saved hard for three years to buy our first home, financing very different in the 1970s. At the time I worked with a couple who decided saving was too hard, they would never get enough for a home deposit so instead bought nice furniture for their rented flat.....

Second home was so much easier. Same with IPs, the first one is often the hardest.
Marg

 

Just say a person with good management skills, investment know how and drive and capability. If he/she was given $1k vs $100k with everything else equal I will guarantee 100% that person will be able to make more from the $100k than the $1k.

There is really no debate about this. Everything being equal if you have access to more money it is easier to make money.

 

Of course you are right.

But I would think very few get given $100K. Most start at $1K and work up.....
Marg

 

$100k will definitely accelerate the equation, but you have to start with starting.

If a teenager leaves school, and gets a job, and then dedicates himself/herself to a steady plan of saving a decent chunk of their income each week solely for the purpose of putting it towards other investments, then invests that money into whatever and it returns them a dividend, or rent etc; they are making money.

Then it can become exponential later on....and does.

Here's a nice real life example for ya's;

Our oldest son is almost 16, and has been given pocket money (as well as secret savings we have deposited each week into an ING account and not told him about) since he was 5 years old...one dollar for each year of life. So as a 15 year old, he gets $15 per week, and gives us back $3.

We made sure he gave us back 20% of that money each week to go into his ING Investment account.

It is not much, but combined with our little contribution over the last 10 years, plus the interest earned; he has amassed $5k....not bad for a 15 year old.

I strongly suggested he invest the $5k into our Ubud Development earlier this year (with a guarantee that I would repay him the $5k if the whole thing went belly-up and he lost all his dough)...so he did.

Our estimation is that he will probably receive a lazy 50% return on that money each year...call it 25% to be ultra-conservative.

Now; he has a part-time job, and he is continuing the process; he saves 20% of his wages into the same ING account each week....and has already saved nearly $2k again into that account - ready for more investment....he cannot use it for any doodad spending at all - only investing.

How do you reckon he will be travelling financially by aged 25?