Hi guys there are lots of discussion about how to invest on the forum, very good and insightful . just wondering whether we could discuss a bit more re why we need to invest. here are some thoughts from me, please feel free to criticise and add on. Why do we need to invest? With the busy modern lives, we hardly have time to think about our financial future or financial plan. Most of average Australians have the vague idea that with our current income, accumulated Superannuation and government pension, we should be alright. Are we really alright? Let’s look at some hard facts: The follow figures are from Department of Human Services, Payment rates for Age Pension - Australian Government Department of Human Services See attached, Chat 1 Then, let’s break down these figures to exam what it really means: See attached, Chat 2 It is not difficult to see the following: · The current minimum wage is $17.70/hr · The hourly rate of a single pension is $11.54/hr, which is merely 65% of minimum wage · The hourly rate of each person of a couple is $8.70/hr, which is 49% of minimum wage The minimum wage is effectively the poverty line. Just take a few minute to imagine that how you are going to survive on a income which is only 65% of poverty line. To make the matter even worse, the 65% of poverty line income is based on the assumption that you own your house straight out or living in a place rent free. It is scare, isn’t it? What about our Super? that is the money we are going to use for retirement. OK, let’s take a look at Super. For an average Australian family, Dad and Mum are 40 years old and both working, $150,000 combined income per year, 2 kids, with a $500,000 mortgage on their home, approx $100,000 in their Super account combined. The current employer Super contribution is 9.5%. Assuming both Dad and Mum both retire at the age of 65, the combined Super they will receive is $150,000 * 9.5% * 25 yrs = $356,250, plus their existing $100,000, the overall Super is $356,250 + $100,000 = $456,250. It doesn’t look too bad, isn’t it? But is it really not too bad? Let’s see In the current environment, people normally live to 80 to 90 years. Let take a middle figure of 85 years, which is 35 years of life after retirement. Now there are 2 scenarios to live through the 35 years 1. Using the return from the $456,250 in Super, let’s assume 5% return (which is a real stretch), the yearly return is $456,250 * 5% = $22,812/yr, and $438.70/wk. It is difficult to say the $438.70/wk is going to provide a comfortable life in retirement, isn’t it? And the $438.70/wk is the figure in 35 years, with 2-3% annual inflation, it is less than half of today’s value. 2. To draw down the principle of the Super over the 35 years, then this couple could only use $456,250/35 = $13,035.71/yr, which is even worse than the 1st option. And what if they live beyond 85 yrs, then there is no money for them to live on. Scary, isn’t it? We haven’t even touched on whether they could pay off their mortgage or not, which makes it even more depressing. The above is an example of where most of Australian families are at, with generous gestimate of household incomes, lots of families are not earning $150,000 per year, lots of Dads and Mums do not have $100,000 in their Super. What we could do? to invest: property, share, etc.