Smashed Avocado-Gate - Bernard Salt

Your 'smashed avo' guide to investing

 

Enjoy obesity, heart disease, depression, increased suicide risk, divorce, family breakdown and barely seeing your children.

100 minutes to work and you defend that?

You've been screwed. Your life is on many levels worse than previous generations. You will miss time with children should you have them. All that lost time over all those years. The physical and psychological toll commuting takes on you.

There are studies on this stuff. Your life is worse as a direct result of tax policies that now hang on, choking the life out of our country.

One of the worst things about our massive stupid housing bubble is that people don't understand how badly they've been screwed.

Only when it's too late, when you suddenly get a bad diagnosis or your adult children have moved away and you don't hear from them much because your relationship was degraded over two decades because you weren't there do you suddenly realise what you lost.

 

Commuting 1+ hours to work is death.

I'm not exaggerating. It results in obesity, depression, family breakdown, divorce, reduced time with children and a whole lot of bad outcomes. There are studies on it. Google it.

It's not whining to discuss our current reality. Here's reality: the LNP got in by the slimmest margin. They're imploding. The chance of a Labor Government next election is looking good.

And what will they do? No more NG for established homes. NG for new only.

Bank Royal Commission.

Been reading about Canada lately? Few rule changes and pop goes their bubble. Conservative estimates are a 20% drop.

That's all it took - a few rules changed.

So no, it's not a good idea to "stop whining, gulp down debt to live in Geelong just so you can commute to Melbourne, end up fat, sick, depressed, divorced and with kids who don't see their own parent. A few rule changes and there goes 20% without a problem.

Adapting to the reality of now doesn't mean "work harder and sacrifice more to pour your money into the Ponzi scheme".

It means do something else.

 

Yes I do.
I will do the things I need to do to set my family up. Plus - at my current income levels - and as I continue to grow them, I certainly won't be spending 40+ years in the 'workforce'.
Oh and I had plenty of other options for PPOR which would have meant a shorter commute for me. But this location gives my wife a 5 minute commute to her work. Balance in all things.

Considering I am dramatically better off than my parents or grandparents were at my age, maybe I just don't fit into these statistics of yours. Once again it's anecdotal - but you did imply that I was specifically screwed, when frankly I don't believe I have been.
Oh and don't assume to know anything about my family life, health or values.

 

It's OK, we are not only screwed, we must be carbon copies of every other person in Australia because the studies say so.

Not only cant I afford a house in 2016, I couldn't afford one in 1988 either. I didnt spend any money on alcohol and nightclubs but I ended up with a fully paid off house in the burbs and two adult children in University, no car loans and no credit cards. Just like the statistics failed to say. O that's right, I have just been informed that statistics are facts

 

Your own figures show you paid 5x yearly wage and today would have to pay 9-11 x the same wage.

Your own figures today show you would not be given a loan, that because your property is two-three times more expensive in real terms you'd be a renter.

It's basic mathematics. You can look up inflation calculators and see it for yourself.

That fact you had to commit fraud back then to get a loan is just more evidence of how close you were to being locked out of the housing market.

 

I think you are doing great @Cimbom. I have met plenty of people who wouldn't move anywhere to better themselves because they are too lazy to move from their comfort zones. These are the ones who tend to whinge the loudest, I have (anecdotally) noticed.

 

It's common that people think they are the exception. Eat too much, get fat but heart disease or stroke won't be coming for them. Why I knew a fictional guy who smoked a pack a day and lived to 90!

It's better to assume you're not different. It's better to assume commuting 100 minutes to work has the same effect on you as it does to all those people who have been studied.

So that does mean obesity and depression. It does mean children who have a worse experience because their parent is literally absent a huge number of hours.

It means instead of having memories of playing with you in the park or joking around they have memories of mum putting them to bed and only seeing dad a few minutes in the morning all week. It means you being too tired to interact as well as you could if you weren't commuting 100 minutes to work.

Hey, maybe you're different. Maybe you won't get depressed or overweight or have liver problems if you drink too much.

Maybe you're different from all the participants in peer-reviewed studies from credible researchers.

But somehow I don't think so.

So yeah, I don't know you and your life but you tell me you eat more calories than you burn and I'll say you'll get fat and increase your risk of heart disease. Tell me you commute 100 minutes and I'll say you're losing a lot of good stuff and increasing the risk of a lot of bad stuff.

It's not personal. It's fact backed by studies. Anyone considering buying a house with a 100 minute commute should consider the facts of reality and what that will do to them and their family rather than the anecdote that it's all good and nothing bad comes from commuting three hours and twenty minutes a day five days a week.

 

Where does BK say that he eats too much?

 

I don't believe you - show me the statictics .

I remember reading somewhere that 71.473286429648% of anecdotes were supported by statistics.

In the same article, it said you can use 100.000000000% to prove any point of view .

 

Sure. And I do agree on a number of points. No I'm not the exception (although I am interested to know the length of time that these studies were conducted over).

These are things (the commute especially) that we assessed and sacrifices that we chose to make to achieve what we wanted bigger picture.
I firmly believe nothing worthwhile in life comes easy and that sacrifices must be made. The commute is a short term sacrifice I'm making in order to provide for my family and to set us up financially in the long run. On top of that there are things I can do to mitigate the risks associated with the sacrifice. Calorie management, home gym, etc.

We are a lucky generation. Do we have our own set of challenges? Sure. Do we have an absolute abundance of opportunity as well? Absolutely.
And I'm also aware that I'm leveraged and long Sydney property. It's a conscious decision. If I'm wrong - then so be it. We can only do the best we can at any moment with the information we have. I've made my choices and I'm happy with them.

 

And there is it... facts don't matter. Feels beats reals. Basic math shows you wouldn't be able to buy the same house on the same equivalent wage you had in 1988 but that doesn't matter because statistics lol, right guys!

 

oh no, looking into my future I'm going to be fat, depressed, divorced (even though I'm not married), my kids are going to hate me and I'm going to either kill myself of die of heart disease.

Another 1 hour+ each way work traveler here. Does it change the fact that I do it by choice living on acreage as living with neighbours and making noise/smoke/walking around naked by their rules was slowly killing me inside. I get up before anyone else is on the road and I'm home before my kids and partner get home most days.

 

Nor was I being property centric.

Other markets all perform relative to property. It is essential to understand the Beta of each asset class and to diverify the investments.

Some years one asset class will outperform the asset class, in other years it may well be another asset class. All equities are not the same, same as properties think residential v commercial, city v country or blue chip v start up, different industry sectors, managed funds v direct investment etc.

Investment in equities is easier due to the lower entry hurdle, lower transaction cost and transfer duties. However, it requires more discipline for the investor to keep reinvesting all dividends in the market to build up their capital.

Likewise, the investor should be taking advantage of leverage to achieve their savings goal sooner - if the rely solely on dividends, interest or distributions to grow their asset base they will be sorely disappointed.

 

I agree 100%, and that is why diversified portfolios are so important, but weighted correctly to the more likely-to-rise investment sector.

 

@emza, I agree with a lot of your points which are valid for Syd/Melb, but notice you're posting from QLD, do you think you think we are in a bubble here in BNE?

If so, I'd have to disagree.. For $500k you should still be able to buy in Mt Gravatt East on the southside or Stafford on the northside. Under 40mins on the bus, or not much more riding a bike (fantastic for your health). Only a couple years ago, this scenario was possible in Holland Park and Kedron - fantastic suburbs!!

 

I just take all statistics/polls/surveys with a HEAVY dose of skepticism. We all know the quality of the results is dependent on the quality of the questions and the quality of the respondents.

I get surveyed by telephone at night at home on a regular basis. The calls always occur around dinner time. This really annoys me as I hate the intrusions. So, I give absolute BS answers. If others behave like me, the results are pure BS.

Reminds me of a skit I once saw where men were being polled with the question "Do you still beat up your wife/partner?. I know it is an awful question but can we just park that for a minute. I can't remember the actual number but it was something like 95% of men said No.

The findings from the poll was "95% of men have admitted to beating up the wife/partner". I know it was a skit but comedy is a reflection of reality.

There are many other examples:- Polls showed Britain would remain in the EU (wrong), butter is bad for you (now it good for you), ...

As I said, I take all statistics/polls/surveys with a HEAVY dose of skepticism.

 

Actually this is quite funny... the flaw in this hypothesis isn't the statistics but rather assuming the interpretation of such stats using "basic math" is appropriate.

The interpretation of the stats is hardly "basic math", unless you use that term to describe graduate & post graduate math levels, which I can only assume you have attained such a level of math skills which you now assume to be basic level, to speak with such authority on the issue of compiling & interpreting these demographic & economic stats.

If you'd like to discuss the mathematical facts, post up some of your source stats so that we can have an informed & educated discussion. I'm more than happy to discuss classical frequentist or bayesian studies to a post graduate level of applied probability & statistics. I'm looking forward to learning something new.

 

The bubble is widespread across Australia. Nowhere has been unaffected.

You can look at country towns where the median wage is $40K and their house prices have hit $300K+. It looks like a bargain to anyone shopping around and plenty are priced out of the capital cities and so they flow out to these country towns.

When you look at the data, you can see that prices have outstripped wages from a long time now. Wages are flat or declining.

That house for $500K in Mt Gravatt East - yes, it's inflated. The median house used to cost 2-3 times the median wage (sometimes higher in Sydney, like 3-5x).

The median wage is $47999. So for a single person, the median house is 10.41 x their yearly income.

Two couple home is on $95998. That $500K median house is now 5.2 x their yearly income.

Then if you start digging down into it, you can see that couple must both continue working. Can't take off time for a baby without a significant money cushion because one income can't support that $500K home. Lose a job and they're screwed.

So yeah, it is a bubble.

 

My life experiances differ from your thoughts and theories thats why I choose to disagree with you. Yes I understand how important peer reviewed studies are in real terms, but just because a study shows that xxxx is going to happen to xxx amount of people doesnt mean you have to just let it happen, there are always ways to be proactive against it. My old man worked 12+ hour days with almost an hour commute each way, up until we moved 20 mins closer when I was 15yo. I never saw him during the week at all really. But do you know what my most favorite memories growing up are? Camping/fishing/taking the boat out with the old man almost every weekend.