Time for the Baby Boomer to Pay Their Way.....

Anecdotes are meaningless as then all someone has to do is the present one stating the opposite view. It becomes fruitless. Eg. I have anecdotally observed how flippant people are with purchases of property in Australia that it is textbook evidence of a bubble. Proves nothing.

Because anyone can put themselves in debt and spend money the bank says they have. Hence why we are beholden to the bankers. It was so odious we had a royal commission.

For the most part, property is overpriced, as a national average. So no, not an investment instrument that excites me. I think better deals will reveal themselves.

You don't have an argument as to why you think capital gains will exist in your investments? You don't look at any models of what you believe growth to be and how much profit is possible? Don't get me wrong, market to market these change but this sounds even more like luck to me if this is the case.

My main points for why I think capital growth will not exist to the extent that it did previously:
- 2.3x (deposit/income ratio vs 0.9 in 1993). If we hit anything as we did in the past 30 years, in the next, the ratio is in the 5-10 range.
- Stagnant wage growth.
- Slowing global economy.
- Recession.
- Emergency low interest rates at an alleged time of non emergency.

This could all be changed by further unnatural government intervention.

 

Please explain.

What?

Something substantial like “I’m successful due to dumb luck”?

C’mon!!!

Like many others on PC, my mindset has changed dramatically since joining.

I have to admit not by posts regarding “dumb luck”

Property performs very badly compared with shares. Our shares portfolio has returned 16.45% pa since 2002.

I wish property did that. Like many others, the only way we can make property work is to use OPM.

I say it will but I have no idea when. I am a B&H investor, so I am not relying on booms.

My whole strategy is 100% reliant on “dumb luck” or so you would have us believe.

You stick to your strategy (whatever it is) and I will stick to mine.

 

First up. Correction. I AM a millennial. So yes. I feel I'm qualified to comment

That's cool. I was affected and still am.

Everything I said is true. I did sacrifice. Still am.

I didn't "create" the environment. As I said I am a millennial NOT a boomer. Also I have two daughters under 5. I fully expect their future to throw very similar difficulties and challenges to mine. I hope I equip them with the skills to cope and overcome and consistently strive to be the best they can be. In the end as long as they have their health then everything else is a bonus.

Except.. Ya know.. I am a young person? - and if more of us got on with it and made lemonade out of lemons then we wouldn't be having these conversations.

 

Your share portfolio is not the asx. Who's returns since then are not 16%. More anecdotes.

I feel like this dumb luck comment really did hurt, the truth has obviously struck a point on the ego. Just me more humble and accept it.

And to reiterate. Anyone know who worked as hard as you did, which I don't doubt you did, if they experienced similar growth on an asset that was a vital part of existence would be equally lucky, I hold myself to that standard too.

 

27 years after the 1992 superannuation scheme was implemented- a whole generation - with employee contributions stuck at 9.5% as Howard froze the SGC at 9% back in 2002-2003 (Gillard got 2 x 0.25% through in her short term to get it to today's 9.5%), and the compulsory 3% employee contribution by 2000 was killed by Howard in 1996.

''We will ensure that no more negative unexpected changes occur in the superannuation system, so that those planning for their retirement can face the future with a higher degree of predictability.'' Tony Abbott, 28 January 2013.
This is the same man who as Prime Minister extended the freeze on the superannuation guarantee paid to workers, so that it won’t reach 12% until 2025/26.

When your government's vision is only as myopically as far as the current fiscal year budget bottom line this is what you get. Many retirees have done the sums and worked out it would be more cost effective to **** all their super up against the wall and then put their hand out for the pension, which is what many of them are doing. Use the super to pay off the remainder of PPOR and spend any excess on new cars, travel, cash under the mattress etc. The issue is that it's up to younger Australians to fund these baby boomers who have failed to adequately prepare for their retirements/taken advantage of the system.

 

Agree, how is it that some faced in similar times with similar circumstance made their financial wealth?
A fact: A friend of mine just sold two companies for above $XXXM so how was he able to do it, and around 20 years ago also sold a company for $XXXM, a poor migrant who came here with suitcases only....?
Ah, yes anecdotal evidence and luck played a role!
Remember:
"Finding is reserved for those that search.", but some just like to search and concentrate on negative data instead.
Basically it stems back to the point of:
"If you really want to do something, you'll find a way. If you don't, you'll find an excuse."
...so I wouldn't bother any further, no point, some just know better?

 

But don't you realize that markets behave irrationally too because, what are markets or companies, if not a conglomeration of people, and people are 'irrational' creatures.
Hence it is not just facts/events from history that are a precursor for the future but emotion too....
That's why no one has a crystal ball into the future but Aussies do have a slight love affair with property. When that boat sails so will our sail, regardless of the asset class.

 

Pretty well versed in market dynamics. But in complete agreement about the emotional/FOMO nature, part of what forms my belief that we are in a property market bubble. The rise has outpaced fundamentals.

Markets will go the other way, just as irrationally. Or at least they would if we didn't keep socializing the property market. Running out of levers to do so.

 

You are right. For the last 119 years (from 1900 to 2018), the ASX has returned a paltry 13.1% per annum. That includes the Great Depression years which mine don’t. It doesn’t include the current stellar year which mine does.

That is fact, not anecdotes.

If I can get a return of 13.1% pa for 119 years, I would be stoked. Imagine the dumb luck of doing that!!!

Imagine the outrage if property yielded those sorts of returns!!!!

Nope. You dumb luck comment was ... just dumb.

 

Well this is where we disagree, about your belief that we are in a property market bubble. What are fundamentals if not instruments and rules and regulations, plus many levers still available for change? Will the government permit in such time like now to let it collapse, or take a huge dive....?
If 50% of Aussies wealth is in RE and 20% in Super, representing around 70% current Aussie wealth, where do you think the government will tinker with reforms if it needs too?
I don't know but I think at this stage unlikely unless you wish to destroy yourself?
I totally agree that each asset class will outperform, revert to mean and can dive irrationally down, history has proved that, however not many can actually pick such peaks or troughs?
Regardless, we are only looking at the conventional investment vehicles, there are many other opportunities out there (not available to many - professional investors, high risk, manufactured, etc...).
Anyway time will tell as it does not stand still.

 

It's good to know you know the difference between facts anecdotes. Use the former more. You'll appear more astute.

The stock market is also in bubble territory due for a similar correction to the property market.

 

It seems the only difference between you and I Is that you want people to make lemonade out of lemons. I want that too. I also just I don’t understand why we think giving them lemons is acceptable.

 

Not unfair points. But I wouldn't say many levers. A few more basis points and QE?

 

Subtle sarcasm too subtle for you?

 

Just curious Tim, are your parents Baby Boomers?
So I am trying to understand your real angst with what is currently happening in the property scene.
If you are trying to convey that it is way more difficult for younger people to get on the first rung of the ladder I can accept that, IF, they are buying in Sydney / Melbourne. Believe me Sydney / Melbourne is not my world! Many younger folk are creating opportunities for themselves outside the big cities.
The base line is make the most of what you do have, and create your own anecdote to possibly help people in the future.

 

Some things and some people won’t change - I think that about the same proportion of people will develop the skills and take the action required to create wealth now as 30 or 40 years ago. But I also think that the landscape today and moving forward will impact the relative amount of wealth that can be created and it may not be as good as it was 30 or 40 years ago.

Credit to the 'boomers' who took action despite not knowing what lay ahead of them,

FWIW - In terms of investing, I am 'having a go' and I hope I’m wrong with the statement I have made

 

Then we are in agreement. I'm talking about the Australian property market, Syd/Melb make up the vast majority of that. Their health is a sign of national economic health, of interest/concern of mine and my investing strategy at the moment.

 

I agree that Sydney / Melbourne is the major player in the property market. What health factors are you trying to understand? Remembering that markets do function on emotion, and are not always completely understandable. Sometimes, yes, it really does come down to luck. But if you are not in the game how can you attain such said luck?
You didn't answer my original question, are your parents Baby Boomers?

 

I didn't, not relevant. Wouldn't change any of my arguments. Refer to previous posts if you wish to read and address.