Saving is pointless

[tech/a]

By now I think most understand my statement.
So how do we get ahead?
My answer is to make surplus to your needs
The bigger that surplus the easier your life in a western world will be .

To do this conventional thinking doesn’t cut it.

 

[waterbottle]

Savings have been pointless since ZIRP

 

[divs4ever]

By now I think most understand my statement.
So how do we get ahead?
My answer is to make surplus to your needs
The bigger that surplus the easier your life in a western world will be .

To do this conventional thinking doesn’t cut it.

depends on what you do with the surplus cash

some options aren't as good as they look especially if facing capital gains tax , inflation or you are in a moderately high income bracket ( 'rich ' but not rich enough to have it all rolled up in a trust account )

surplus to your needs only works if you deploy that surplus wisely ( to something that at least keeps up with real inflation , after the costs associated with the investment )

 

[tech/a]

I would probably disagree on the ranking but not the items.
And ranking might vary ..well does vary along your progress/age

Savings have been pointless since ZIRP

This is in my opinion conventional thinking.
ZIRP
Gave rise to opportunity that may never be seen again in a generation.

 

[tech/a]

depends on what you do with the surplus cash

some options aren't as good as they look especially if facing capital gains tax , inflation or you are in a moderately high income bracket ( 'rich ' but not rich enough to have it all rolled up in a trust account )

surplus to your needs only works if you deploy that surplus wisely ( to something that at least keeps up with real inflation , after the costs associated with the investment )

With enough surplus it really doesn’t matter how it is used.
But
Money certainly makes money.

 

[sptrawler]

With enough surplus it really doesn’t matter how it is used.
But
Money certainly makes money.

Therein lies the problem for the young, if you don't have money, the system has finally caught up with the middle class, they have to give all their money in rent and tax both direct an indirect, so those with money and property are going to clean up.

Those employed but don't own property are on the treadmill, those without property are waiting for it to be built and subsidised.

Another case of reality catching up with ideology and causing political swings the world over.

The western world is running out of other peoples money to spend, as Margaret Thatcher once said.

In most western countries, the rich are getting richer, the poor are getting more support and the middle class worker is paying for it, the rich are running the narrative but it can't last forever IMO.

Sooner or later the PPR and trusts have to be brought into mainstream tax.

But as you say Duck, make hay while the sun shines, gearing has been a terrific wealth creator, but it may will have run its course with the huge popultion increase.
Just my two cents worth, but I would be consolidating atm.

 

[tech/a]

make hay while the sun shines, gearing has been a terrific wealth creator

I’d alter the about to gearing IS and will remain to be a terrific wealth creator

Joe average is indoctrinated with the save like a squirrel and spend like a grinch mentality.

Look outside the square of Property
There currently lies the answer.

Gear and Compound
There will always be sun shining somewhere.

 

[tech/a]

I'll give an example for people perplexed by the concept beyond conventional thinking in the gearing domain.

Firstly not everyone will be in this position buy its --the thinking that's important,---individual application will vary.

I was talking with a mate who owns an Eastern Suburbs Pub in S.A.
The topic was Employment specifically how difficult it is to employ
people who are an asset to employers, at a rate of pay that companies can afford.
He needed a new head chef as he produced 4000 meals a week through his dining area.

Being a pub he set a wage of $95,000 a year (This is SA.) He had very little response and those that did were
no more than average cooks at best.
So he did something radical. He increased the wage to $150K a year
The result---he was inundated with applications. He spent 2 weeks finding the best applicant and working
through the following strategy.

He revamped parts of the menu and introduced new exciting dishes. He increased ALL meals $1
this returned an extra $4000 a week ($200,000 a year) more than covering the extra $55K

But then over the next 3 mths (he told me later) something else un expected happened.
His meals a week went from 4000 to 4400 a 10% increase with no increase in staff needed.

His investment paid very well.

 

[divs4ever]

I’d alter the about to gearing IS and will remain to be a terrific wealth creator

Joe average is indoctrinated with the save like a squirrel and spend like a grinch mentality.

Look outside the square of Property
There currently lies the answer.

Gear and Compound
There will always be sun shining somewhere.

leverage is great UNTIL someone wants you to pay back the loan quickly ( banks in particular are known for panicking early )

 

[tech/a]

leverage is great UNTIL someone wants you to pay back the loan quickly ( banks in particular are known for panicking early )

Can you give an example Divs

Over the years banks have changed--dramatically in my experience.

 

[qldfrog]

Can you give an example Divs

Over the years banks have changed--dramatically in my experience.

I like that threat Mr @tech/a , these truths you posted are indeed drilled down on us, even more in other countries like my birthplace
I had so much to unlearn, to go from employee to self employed, hardly made it to employing others.
Leveraging is obviously the way to go but it is hard to shake the weight of "debt is bad" and yes debt to buy a ppor, worse a new car is bad but when you could invest for more than the loan cost...
Unlearning cultural background is very hard: i know what i am talking about there, add the positive or negative nature of a person..i am nihilist
Not easy and thanks for that thread.
PS: i could not find back this list of yours i commented on initially, did you fork the thread?

 

[Value Collector]

By now I think most understand my statement.
So how do we get ahead?
My answer is to make surplus to your needs
The bigger that surplus the easier your life in a western world will be .

To do this conventional thinking doesn’t cut it.

Spending less than you earn eg saving is the first step in wealth creation, I don’t think it should be considered pointless, it’s kind of the foundation of wealth accumulation.

 

[Value Collector]

Therein lies the problem for the young, if you don't have money, the system has finally caught up with the middle class, they have to give all their money in rent and tax both direct an indirect, so those with money and property are going to clean up.

Those employed but don't own property are on the treadmill, those without property are waiting for it to be built and subsidised.

Another case of reality catching up with ideology and causing political swings the world over.

The western world is running out of other peoples money to spend, as Margaret Thatcher once said.

In most western countries, the rich are getting richer, the poor are getting more support and the middle class worker is paying for it, the rich are running the narrative but it can't last forever IMO.

Sooner or later the PPR and trusts have to be brought into mainstream tax.

But as you say Duck, make hay while the sun shines, gearing has been a terrific wealth creator, but it may will have run its course with the huge popultion increase.
Just my two cents worth, but I would be consolidating atm.

These days 3 people one earning $60k, on earning $70k and one earning $80k have a conversation about how the economy is against them and it’s impossible to save, but obviously atleast 2 of them are wrong.

 

[Value Collector]

Can you give an example Divs

Over the years banks have changed--dramatically in my experience.

A margin loan as a for instance can wipe someone out, leverage works when it works and it explodes when it doesn’t.

I have used leverage extensively, and flown within inches of the sun sometimes, it’s not something I would recommend to the ordinary saver/investor especially a beginner

 

[divs4ever]

Can you give an example Divs

Over the years banks have changed--dramatically in my experience.

i remember a tale of a farmer , was looking pretty tight for cash ( to pay the next payment on the loan ) now to be fair that bank was going to face another big hit when a high-profile entrepreneur went officially bankrupt ( and some saw that bankruptcy coming )

and BTW had a perfect record of timely payment until this episode ( which is why he was so deeply shocked )

BUT said farmer went to the local manager weeks before the payment was due and asked for some sort of relief ( part-payment or such )

the bank manager just said 'we will foreclose , we will just seize everything '

the said farmer was deeply shocked went home to tell the wife .. and the wife rang around the family members ( on both sides )

turns out the various family members rallied around PAID OFF THE LOAN IN FULL ( before the due date ) .. and the entire family group closed their accounts with the bank ( several were successful farmers ) .. and the story spread through the agricultural community like bush-fire (possibly reducing some investing/borrowing activities with that bank )

estimates say quite a few million dollars ( circa 1990 ) left the bank that month

now sure the banks may have softened since the GFC , ( when some of them got bailed out )

but can it happen again .. just one hard-nosed banker can cause a lot of panic ( and disruption )

 

[tech/a]

VC
I agree in essence
But if your savings are being out stripped by costs the only alternative is to earn ( however you can more ) Joining with a spouse 2nd and weekend work is the obvious other. But in the end how you get money to work for you is going to solve many problems. This may take years and a few attempts — it did me !

Margin
This is highly leveraged 50/100 or more to one is fine if you already have deep pockets and risking a small % of net wealth
But a deep understanding of Risk management wouldn’t go astray.

If your getting constant margin calls then what your doing isn’t working
I’ve heard some traders talk of margin calls as a right of passage, even proud of being called

Thanks VC

 

[kenny]

Enjoying the thread but I'm sensing that I'm missing the start of the conversation. IS this the continuation of another thread?

 

[tech/a]

I’m not really sure what Frog man is specifically referring to
But could be this perhaps

Financial Independence (Home Ownership, Super, Long Retirement) not possible for wage earners: What do we need and how do we get it?

Happy New Year everyone 2024 opens with many challenges for most. Following the discussion on one of the housing threads I feel that there is a great deal more that needs to be considered by everyone who chooses to live in western society. Getting a job is generally the first consideration...

www.aussiestockforums.com

 

[Value Collector]

VC
I agree in essence
But if your savings are being out stripped by costs the only alternative is to earn ( however you can more ) Joining with a spouse 2nd and weekend work is the obvious other. But in the end how you get money to work for you is going to solve many problems. This may take years and a few attempts — it did me !

Margin
This is highly leveraged 50/100 or more to one is fine if you already have deep pockets and risking a small % of net wealth
But a deep understanding of Risk management wouldn’t go astray.

If your getting constant margin calls then what your doing isn’t working
I’ve heard some traders talk of margin calls as a right of passage, even proud of being called

Thanks VC

Of course if your aim is wealth creation, you don’t perpetually save and hoard cash, you spend less than you earn so that you generate savings that’s step 1, step 2 is too deploy those savings into investments.

in regards to Debt, I heard Warren Buffett say “if you are smart you don’t need it, and if you are dumb you have no business using it.”

The ordinary saver will freak out if they begin getting margin calls, and probably don’t need that in their life, just spending less than they earn, and investing the savings if a Stockmarket index fund and some good property trusts will see them doing very well.

 

[Value Hunter]

Being a pub he set a wage of $95,000 a year (This is SA.) He had very little response and those that did were
no more than average cooks at best.
So he did something radical. He increased the wage to $150K a year

This is the part that most employers seem to not understand, if you want good employees you need to pay a lot!! Good employees are not cheap nor should they be!! If you spent many years building your skills you expect fair compensation for them. But most business owners are too dumb to understand and will pay peanuts while continuing to complain about how hard it is to find good employees. Its not hard at all. If it seems hard it just means you are not paying enough (or your working conditions are bad). It really is that simple. Labour shortages are for the most part a myth.