What are you doing with your superannuation?

[tech/a]

That's very surprising, Tech/a. Did he in fact buy the 12 houses (in which case the capital appreciation alone, without considering rental income) should have increased his worth very considerably in 35 years? Or did he stick the money in the bank?
Hard to see that $500K 35 years ago if well managed should have led to him having nothing today.

He bought a hobby farm 42 acres.(Still has it)
He was a butcher and ran a few head and even worked on a casual basis.
While today his net worth is higher. His liquid capital is skint.
Try telling an independant fitish 86 yr old that he should buy something smaller and enjoy life----to him he is and in his words--"they will cart me out of here in a box."

Sure some bad (emotional) choices
it would seem--but--

 

[johnnyg]

Fine if there was no inflation.

35 yrs ago my Father retired with enough to buy 12 houses.
Say 12 x today's average of $350K so that's pretty substantial.
It was around $500K
Today hes simply a pensioner.

Also imagine the 12 x $300 per week rent. Pretty substantial wage a week compared to the $200 per week pension.

 

[tech/a]

Also imagine the 12 x $300 per week rent. Pretty substantial wage a week compared to the $200 per week pension.

Had he done that and rented one for himself and Mum sure---he didnt!
How many would?
His thinking at the time was Buy farm freehold and with plenty left to live happily ever after. $200 a week was enough to live very comfortably particularly working part time and running a few head of cattle.

Today thats a couple of tanks of Gas!
Let me tell you it opened my eyes!

 

[johnnyg]

And mine too. There's some great advice in there tech, some I'll pass onto my own parents.

 

[tech/a]

And mine too. There's some great advice in there tech, some I'll pass onto my own parents.

Just drop it into the conversation as something to think about.

You know what parents are like---know everything---
I have the same problem with my kids---they know everything!

The final conclusion is that there must be people who know something who arent kids and have never had any!

Its all in the delivery---something I'm still learning---even on forums!

 

[kincella]

I would add some food for thought for all the players.....

the dollar devalues with inflation...I have seen figures of 70-100 years and less, where the value of the dollar has decreased by 95%
the dollar tomorrow buys less than it did today, for the same item
you need an asset that will keep pace with inflation....
as in property
the cash in the bank will be ok for a bit, so long as you dont spend the interest it earns, and you plough it back into the deposit.....but the whole point of the project is to provide an income in retirement

so lets do a quick exercise....most will retire around aged
55-60, leaving you to fund your income for the next 30 years
so do a quick calculation, if you plan on having 500k to earn 5%
that is 25,000 income a year.....but over the next 30 years, the buying power will have reduced by one third, so half way thru the 30 year period, still earning 25,000 pa , will buy you about 12500.....and by the end it will be almost worthless
property, on the other hand should keep pace with inflation, and the rental income should match it...with growth

an easy way to check to see how much the dollar devalues...
just look at house prices....
back in the 80's you could buy a median house for about 100k's, the same house today is worth 450k's.....
compare that with a cash deposit...for the same period....you would be underwater by 350k's in buying power or earnings...

one needs to save at least 10% of their income, for life, to overcome the problem...even then I doubt too many today will have 500k's set aside

 

[Bill M]

Fine if there was no inflation.

35 yrs ago my Father retired with enough to buy 12 houses.
Say 12 x todays average of $350K so thats pretty substantial.
It was around $500K
Today hes simply a pensioner.

There is no doubt in my mind that 12 x houses would go a lot further than squirrelling away 4% of the income. Some people are just frightened about risk, any risk. I would have thought though that with an average inflation of 4% p/a that the capital build up you are doing each year by reinvesting 40k of the income would take care of that. Potentially that $1 Million would be over $1.2 Million in 5 years time and in the mean time you are still living pretty well.

About your Father, there are plenty of Pensioners living in Million $ houses/properties and just won't sell up and downsize. I've asked a few about this from time to time and they usually say they want to leave something for the kids, their choice I guess.