Does earning $180,000 make you rich? Let's not pretend about who's rich and who's poor

Discussion in 'Property Market Economics' started by wombat777, 30th Mar, 2017.

Join Australia's most dynamic and respected property investment community
?

What level is your income and are you rich or poor?

  1. Yes, my income is greater than $180k gross and I think I am rich

    12 vote(s)
    8.8%
  2. Yes, my income is greater than $180k gross and I think I am poor

    15 vote(s)
    10.9%
  3. No, my income is less than $180k gross and I think I am rich

    15 vote(s)
    10.9%
  4. No, my income is less than $180k gross and I think I am poor

    22 vote(s)
    16.1%
  5. Yes, my income is greater than $180k and feel I am neither rich nor poor, but comfortable

    29 vote(s)
    21.2%
  6. No, my income is less than $180k and feel I am neither rich nor poor, but comfortable

    44 vote(s)
    32.1%
  1. Colin Rice

    Colin Rice Mortgage Broker Business Member

    Joined:
    9th Jul, 2015
    Posts:
    3,183
    Location:
    Perth
    And what you do with what you keep :)
     
    Perthguy likes this.
  2. Perthguy

    Perthguy Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    11,767
    Location:
    Perth
    Been there, done that. I dared to suggest that if my parents bought dumps in the worst suburbs of Adelaide, they might be lucky to generate a rental income of $50,000 gross rent. After expenses, they would be lucky to have $35k. I also dared suggest they would be eligible for the part pension. Howls of protest is right. They were accused of being bludgers and millionaires. Of course neither is true and that $35k is looking a lot more like $21k per year if they are lucky. Still, it shows the double standards. Read the comments here and $180k is easily justified as not rich. Read the comments there and $50k gross rent is rolling in it if you are retired :rolleyes:

    What Life is Really Like on the Pension

    Out of interest, have you seen a single poster here aspiring to retire on $35k income per year? I haven't. Yet when I suggest a couple on an aspirations $35k income apply for a part pension they are seen as greedy bludgers. Double standards much? I think yes.
     
    ellejay, Phase2 and HUGH72 like this.
  3. HUGH72

    HUGH72 Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,022
    Location:
    QLD
    Agreed, they are entitled to a part pension.
    I would be encouraging them to do something else with their funds at retirement age though.
     
  4. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,375
    Location:
    Buderim
    When we owned multiple IPs others thought we were rich. Don't own IPs anymore but nearly all shares. Now when I tell others we only own our home and some shares they aren't even interested. Far from thinking us well off they think we're stupid and will lose it all during the next sharemarket crash:D.

    Moral of story - property is evil:).
     
  5. Cimbom

    Cimbom Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,567
    Location:
    Back in Canberra!
    I'd be happy with about 45-50k assuming no housing costs (in Australia). Could do it with a bit less than that overseas
     
    ollidrac nosaj likes this.
  6. Perthguy

    Perthguy Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    11,767
    Location:
    Perth
    I agree entirely. Do you want to know how many times I had that discussion? ;)

    It certainly is! ;)

    What took me aback a little is the sheer ignorance of some of the comments from experienced property investors. i.e. if property investors are grossing $50k rent they must have over a million dollars in assets. Well yes, unless they buy in the slums of Adelaide where gross rents can be at a 10% yield :rolleyes:. I just find it ignorant, which is what annoys me.

    Then I open a thread like this and so many justifications about why a couple on $180k are actually on struggle street. Cry me a river people! :D

    You must not be trying hard enough! ;) (sarcasm)

    The prevailing PC index is $100,000 passive or don't even think about retiring. o_O
     
    ellejay and Nodrog like this.
  7. Nodrog

    Nodrog Well-Known Member

    Joined:
    28th Jun, 2015
    Posts:
    11,375
    Location:
    Buderim
    Your problem is you're hanging out with the wrong crowd, property investors;). You need to hang out with us share investors more often where greed is considered good, tax is bad and the net yield for shares on average is double that of IPs:p:D.

    Oops I can hear the stampede of property investors heading my way:eek:. Outta here......
    IMG_0170.JPG
     
    Blacky, Whitecat, wombat777 and 2 others like this.
  8. Perthguy

    Perthguy Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    11,767
    Location:
    Perth
    I would be a lot more comfortable if they had invested their capital in a couple or three of LICs. You know which ones ;)

    The argument for this is quite simple. Let's say they had $450k to invest.

    For resi they buy three dumps in Elizabeth LGA at $150k each rented out at $200 pw. Here are the fees for each:

    Stamp duty $4830.00
    Lodgement fee $1043.00
    Transaction fee $15.00
    Total $5888.00
    x3 is $17,664 capital gone just in buying.

    So they spend $467,664 to get $600 pw rent. After expenses that is $21,840 income, a 5% ROC.

    Now instead by LICs. Let's pick $150k each of 3 LICs (AFI, ARG and WHF). Brokerage is $28.50 *. Management fees of LICs is negligible.

    AFI MER 0.16
    ARG MER 0.15
    WHF MER 0.36

    I can't be bothered doing them all, so I will just do AFI.
    At a current share price of $5.82, $150k would buy us 25,773 shares.
    Last year the dividends were 24c per share, or $6185.56 of fully franked dividends based on 25,773 shares. However, because they are pensioners they would get a tax credit for the franking credits of $2,650.95. This works out to effective income of $8,836.51 minus the management expense of $9.89.

    On AFI, that would be $26,479.86, with no risk of vacancies, no rent defaults, no maintenance etc.

    * Selfwealth brokerage: $9.50 per trade regardless of parcel size.
     
  9. Whitecat

    Whitecat Well-Known Member

    Joined:
    3rd Jul, 2015
    Posts:
    4,358
    Location:
    Sydney
    I was wondering who had the money for a v8 if all the cashed up young tradie miners had left town
     
  10. Xenia

    Xenia Well-Known Member

    Joined:
    16th Oct, 2015
    Posts:
    3,863
    Income does not always determine wealth..
     
    MTR and Perthguy like this.
  11. Sonamic

    Sonamic Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    1,340
    Location:
    Sunny QLD
    Yes well the death of the Australian car industry has led some to the belief that HSV and FPV badged vehicles will soon become appreciating assets.
     
  12. Cactus

    Cactus Well-Known Member

    Joined:
    18th Jan, 2016
    Posts:
    1,445
    Location:
    Melbourne
    Will need to become a LMCT at this rate.
     
  13. 2FAST4U

    2FAST4U Well-Known Member

    Joined:
    3rd Jul, 2015
    Posts:
    2,304
    Location:
    Democratic People's Republic of Australia
    Shares look much more logical. Maybe it's just the Australian culture of wanting to be able to have the security of land/bricks and mortar or being able to say I have x amount of properties. The mainstream news also doesn't help as they use the volatility of the share market to make it seem like a casino. I know we're on a property forum but I'm looking forward to educating myself about shares and switching over to shares eventually once I have capitalised (hopefully) on the power of leverage from property.

    Have your parents ended up purchasing properties in the Playford region now?
     
    Perthguy likes this.
  14. Perthguy

    Perthguy Well-Known Member

    Joined:
    22nd Jun, 2015
    Posts:
    11,767
    Location:
    Perth
    I have to check. I think they got 2 and looking for a 3rd.
     
    2FAST4U likes this.

Buy Property Interstate WITHOUT Dropping $15k On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia