Wages vs CPI - Are you feeling Poorer?

Discussion in 'Property Market Economics' started by paulF, 31st Jul, 2019.

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  1. paulF

    paulF Well-Known Member

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    Interesting read breaking down CPI and wages from 2000 to 2019
    Wages are not keeping with Essentials (Health, Energy, Education) is the main point and hence why so many, especially families with kids, are feeling the pinch

    Reason you think you’re so poor
     
  2. Scott No Mates

    Scott No Mates Well-Known Member

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    Yeah but....I thought everything was going down.

    Land values are decreasing so are my land tax bills and my rates :rolleyes:

    My PAYG contribution to government coffers is going down :D

    Interest rates are falling (slowly) :cool:

    I'm underemployed so I am working less hours :oops:

    I can't afford the essentials including food, so I am losing weight now my pants are falling down :eek:

    My net wealth is decreasing so my govt benefits are going up :p
     
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  3. SatayKing

    SatayKing Well-Known Member

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    I must be. I'm not employed so I don't have any wage income. It's so cruel for those few who, like me, are in similar straightenend circumstances.
     
  4. MWI

    MWI Well-Known Member

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    Interesting read in deed.
    Makes me wonder if the health 200% increase will continue into my retirement and future at much older age I better check what surgeries I may require and do them now...if I only knew?;)

    But honestly, I measure my financial wealth in terms of net worth not so much my income. Similar like CF to CG, I require certain amount of CF, but I do like how CG unrealized does rise up.
     
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  5. paulF

    paulF Well-Known Member

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    Isn't that simply paper wealth though which can evaporate in a downturn? Hence why many think that turning equity into income is much more important than just having assets?
     
  6. MWI

    MWI Well-Known Member

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    Yes totally agree any asset value in paper can evaporate including any other assets for that matter (stocks, physical gold, art, paintings, jewellery, land, business value, etc...) but where I disagree is that turning equity into income is more important, for me it is not, having assets is more important to me and turning them into money, the other way around.
    I correlate to the same principle as during depression how holding money or really currency can deflate or make you very poor.
    Income is what.... money, and money is what.... a piece of paper or coins, basically any currency, but what is it really? It represents a purchasing power of value at any given point in time, really what at that point in time it can buy you.
    So if I say to you is $100 a lot to pay for a cup of coffee? Well If you earn $1000 a week today it would be 10% of your earnings, so very expensive, imagine paying 10% for EACH cup of coffee!
    BUT, if you earn a $1M a week today then it is very cheap wouldn't you agree? It is relative to what your earnings are whether it is affordable or not to you, yet it is still a $100 a cup.
    So money or income to me yes is necessary for living, that's how our world today operates on monetary value. But when I look how the wealthy people or estates were able to survive over many generations of recessions, wars, depressions, it was because they held their wealth not in money not in currency alone, but rather in assets (lands, artwork, businesses). Currency can be very easily manipulated by the government yet assets are much harder to do, especially physical property.
    Also, I understand that ALL assets classes through time become undervalued, overvalued and then revert to their mean, no one knows how to pick the bottoms or the troughs, otherwise we would all be very well off.
    So to me I personally would prefer to hold $10M in assets (my preference is property, paintings, jewellery or valuable stones...) than in currency alone, that's how I look at it. Then convert some assets in time, if and when necessary for extra currency.
     
    Last edited: 1st Aug, 2019
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  7. marmot

    marmot Well-Known Member

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    Some good points made.
    If you go back to the great depression , virtually anyone that had large debt was pretty well wiped out.
    The very very wealthy got through, but many business owners lost everything, because they suddenly could not pay back their debts, especially in the U.K.
    Those that had access to lots of physical cash or gold or other assets got through , but any sort of debt was the big killer
     
  8. MWI

    MWI Well-Known Member

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    Agree, any debts or holding cash as hyperinflation can wipe out you purchasing power.
    I was replying in terms of converting equity/assets to income or cash, I prefer to hold assets (which can go up and down) rather than converting or liquidating my assets to income/cash - just other way round.
    I don't know... would you rather have $10M in property (let's assume) or $10M in cash at the bank (or under your pillow/safe) today?
    Other way to look at it would you rather have an apple tree bearing apples each year and picking some or would you rather pick and hold all the apples it grew?
    (yes I realize the tree can rot and so on but assuming you take reasonable care of the tree and plant more trees or would you just want to keep buying apples - if that makes sense?)
     
  9. paulF

    paulF Well-Known Member

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    @MWI , great points , thanks for that.

    To my mind, physical assets are more of a store of wealth and completely agreed about assets reverting to mean.

    I think a good balance between equity assets and income making assets is the way to go hence why i still own property and been prepping to get in to shares to create a seperate income stream from that.