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Why are some people poor?

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Mr J said:
I would identify your words to come from someone who has never experienced poverty. Have you?
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No I have never experianced "poverty". I don't think many Australians have.

Are you saying that there are people in Australia who's fulltime occupation does not provide the basics of life.

Can you give me an example of an occupation like this. ( and I don't mean illeagal sweat shops ). I mean someone working fulltime earning an award wage.

And also if you can provide an example of how the person working this occupation could not have changed their situation by making better choices earlier in life.
 
Mr J said:
Remember that IQ can be misleading. It really just measures who is better at that specific test. Change the questions and time and the results could be quite different.
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A contentious point. I agree that results can be misleading, in several ways.
If you are not educated, or never done such things before, certainly.
Much debate about ethnicity as well, as negroid people consistently show lower average IQ.

An example is the Selective High School tests, which are IQ tests.

There are 2 Primary schools nearby that coach the kids in these tests and they consistently get a higher entrance rate than all the other schools.

I sent my third son for a few lessons with a private coach, cause I wanted to make sure he got in like his 2 older brothers ( they never got coached, and made it off the reserve list)..he got the highest mark, straight in.
(he would have been ragged as a dumbass otherwise)

Another thing I feel, is that even though I have a tested high IQ, something is missing, that others have, not sure what, but IQ alone is definitely not enough, makes me a bit lazy.

Determination and hard work overule IQ in my observation


awg said:
the concepts and maths of investing or trading are elementary.
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Chris45 said:
Elementary for a person with an IQ of 130+, certainly!
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Seriously what heavy maths do you need for trading or investing?

addition, subtraction, divide, multiply, percentages, probability, a bit of statistics

no trigonometry or calculus.

Computer skills seem to becoming ever more important,(for investing) I dont know if good IQ is correlated to good computer skills, but I suspect it is.
 
There's many factors that may help to explain why some people are poor.
I can think of some:

1. Lack of opportunity
2. Lack of education
3. Disability (mental or physical)
4. Family history (e.g. upbringing)
5. Welfare mentality
6. Refugees
7. Bad investments
8. Lack of housing
9. Lack of general skills

Besides being employed full-time, a part-time share trader and a hands on father of one, I also do voluntary work within the community in order to help out the less fortunate.

Those who might want to find out why some people are poor might want to consider doing a bit of voluntary work in order to meet such people. It is eye opening.

I live by the motto: I only look down on people in order to give them a hand up.
 
awg said:
Seriously what heavy maths do you need for trading or investing?
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None, but I have to assume that the advertised trading jobs don't do the same sort of work as I do. I think what is important is to think of the world in terms of numbers (specifically, to see everything in reward, risk and probability), so maybe that's why they prefer mathematically-minded people.

Determination and hard work overule IQ in my observation
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I imagine people with high IQs tend to be drawn to doing something, and they usually do it very well.

Computer skills seem to becoming ever more important,(for investing)
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We only need basic computer skills for trading/investing.
 
There must be poor people in order for there to be rich people. I want to be wealthier than I currently am. In order for that to occur a lot of other people are, by necessity, going to be poorer.

If you examine any society at any level at any time past to present through a financial lens, you'll see it's pyramidal in shape, the poor supporting wealthier individuals or groups.

Individuals react differently to the political economy they find themselves in. Their lives reflect the mindset and values they live by. There's nothing inherently bad/evil about this and there's no right or wrong way to live financially.

This doesn't mean being callous or indifferent to the suffering of others but being realistic enough to know you can't change the world or the people you share it with.

So when I say I want to be wealthier I really mean I want you, the reader, to fund that wealth and be poorer.

Sorry no offense meant, that's just life.
 
You don't need to be fantastic at math to invest.

If a person made a choice that from the moment they started working at 18 they set aside a portion of their pay each week. and over their working life they split this amount into a managed fund, extra super payments and buying a home. By the time they were 55 they would have a decent super balance, a decent managed fund and own their own home.

If they did this right up till 55 they would find them selves living in their home rent free cause they own it with a monthly payment from their super probally larger than their old wage, and a decent chunk in their managed fund that they can use for extras like holidays.
 

Pyramid type companies work in a way where everyone supports each other. The process is to keep people joining so the ones who enrolled before benefit. Obviously the last to join has the lowest income until they in turn have someone join under them. The last to join is obliged to encourage others join after them, or have no income. The people you enlist are your best friends because they are the ones who enroll your next source of income.

So in this practice everyone is a winner.
 

when I think of the pyramid you describe I see young people entering the workforce at the bottom of the pyramid, and as time goes by and they invest, buy a home and contribute to super they would be moving up the pyramid.

As people at the top of the pyramid age and retire, they would slowly sell off assets to fund life style which assists the people at the bottom continue to move up.

Offcourse if a person fails to invest, the only thing which will move them up the pyramid is their super contributions, So the process would be very slow.
 
awg said:
Seriously what heavy maths do you need for trading or investing? addition, subtraction, divide, multiply, percentages, probability, a bit of statistics no trigonometry or calculus.
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the concepts and maths of investing or trading are elementary.
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Awg, I think that was a rather broad statement and I may have interpreted it differently from how you intended.

I agree that the maths of basic investing is fairly simple and the Compound Interest formula is probably about as complicated as it gets for most people. The basic concepts of investing, eg Dollar Cost Averaging, etc into an index fund or industry leader share are also simple and I agree with Tyson that if everyone had the discipline to do it from an early age then they should be able to accumulate a reasonable amount of wealth over time which is what compulsory superannuation is all about. However, I think generating extraordinary wealth in a short time, such as Tyson did and I understand you have done, is much more difficult. Many people have tried to emulate Warren Buffet’s investment success but few have succeeded - why is that?

With the exception of options (Black & Scholes formula etc) the maths of trading may also be simple. Sure, the individual components of addition, subtraction, division, multiplication, percentages, probability and a bit of statistics are all fairly elementary but I think the difficulty is in putting them all together to create a winning system. The basic concepts of trading, “buy low sell high”, “cut your losses but let your profits run” sound so easy, so why do 95% of traders end up losing wealth rather than accumulating it? Surely intellectual ability has to be a factor. Could you train a monkey to be a successful trader?

I’m very impressed with Tyson’s achievement and wish he would expand on his post #141 and give more details of how he did it.
 

I want to make it clear that by no means do I claim to be a gun trader, far from it.

As per my first post in the thread, I subscribe to a variety of wealth accumulation strategies, in my case each one of them played a a part.

I was only able to reach a stage where my passive income exceeded my expenditure when I received an inheritance,(alluded to in my post) although I had built up an asset base equal to that, over many years.

My opinion is that there will always be a percentage of rich and poor, with the bulk in between, that is the human condition.

I nearly puke when I read stuff that says everyone can succeed..by definition this is impossible, as someone must come second, third, last etc, in order there be a winner. "Loser" psychology is of interest to me, as it is just as important to avoid mistakes, as it is to make the right moves.

Mistakes are inevitable, the more things you do, the more you make, although hopefully the percentage of errors falls.

This thread has morphed a bit from " Why are people poor" to "how not to be".

I wonder if the actions and results are the opposite?
(I think they are)
 
Sometimes I consider that the capacity to be a good investor/trader/wealth accumulator is at least partly a genetic trait, similar to whether we have skills in sport, art etc.

The basic principles are very simple, yet I know many otherwise highly intelligent people, well qualified in their own fields, who simply don't have any affinity with the world of money and investments. Try to discuss it with them and you just see their eyes glaze over.

Early conditioning must make a difference. I grew up with my father talking stock markets and property investment.
 

To make real money in any market you have to put it all on the line at some stage and hope luck is with you.

I sold to investor/developers who rubbed lucky beads before signing contracts.

Bizzare.

Most of the people I dealt with wren't nessessarily intelligent just risk takers who had the market on their side at the time.
 

I agree, know many intelligent people, that follow almost NONE of the principles I use.

My father was a share and property investor

TH's thread was interesting, he has an interest in high performance, and the 10,000 hour principle (that being the average time to master skills).
I agree with that as well

MrBurns said:
To make real money in any market you have to put it all on the line at some stage and hope luck is with you.

Most of the people I dealt with wren't nessessarily intelligent just risk takers who had the market on their side at the time.
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I got my biggest profit by risking all and leveraging as much as I could, on a private property syndicate development in Sydney, early this century.
If the market hadnt been on a long rise, I could have gone broke.

The wealthy entrepreuers I knew had all been bankrupt at least once
 
Absolutely agree and I did a little calculation to see what a young person could reasonably expect to accumulate over just a 10 year period along those lines if he lived frugally and dollar cost averaged into an index fund while purchasing a 1-bedroom unit.

I don't know how realistic I'm being in today's world but my assumptions were:
Single male of average IQ in a public service job earning initially $35,000pa and increasing to $62,000 after 10yrs (net income $31,275 -> $48,690)
Frugal living costs (nutritious low GST diet, 2nd-hand reliable small car, minimum entertainment expenses) = $10,000pa
Mortgage repayments on $250,000 1-bedroom unit = $17,500pa
Savings = $3,800pa increasing annually by $1,900 to $21,000pa in yr 10 and dollar cost averaged into a low fee index fund compounding @ 12%pa.

I calculate that he should have about $186,000 saved after 10 yrs. Not a bad start for a 28yo and easily achieved with a bit of discipline, but I bet very few average 28yos have anywhere near that much saved.
 
Chris45 said:
I did a little calculation to see what a young person could reasonably expect to accumulate over just a 10 year period

I don't know how realistic I'm being in today's world but

I calculate that he should have about $186,000 saved after 10 yrs
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Now for a little reality, $150 on booze, women, taxis, social drugs every Friday night x 52 weeks
over 10 years = $78,000 leaving this conservative, average young person with $108,000 still
not to bad, and he/she has had a little fun.
 
So_Cynical said:
Now for a little reality, $150 on booze, women, taxis, social drugs every Friday night x 52 weeks over 10 years = $78,000 leaving this conservative, average young person with $108,000 still not to bad, and he/she has had a little fun.
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$150 x 52 = $7,800. Bang goes the mortgage and/or investment plan! And I think you've just explained why some people are poor.

For better and healthier entertainment, join a sports club or surf club. (Too unrealistic?)

I could also add that, for some real fun, my frugal young person could use the money he saved from his after school job to finance a 2-3yr working holiday in England & Europe immediately after finishing high school.

If, from age 30, he had a partner who also worked and the money was used to supplement living expenses, he could easily continue to invest $1,750/mth into the index fund, and by age 50, he would have $3.76 million plus his 1-bedroom unit. He and his partner could then both retire early and live very comfortably for ever after.
 
What about kids, inflation and recession?

He could do all those things to save...and wind up a highly strung, boring old fart with no life experience too
 
white_crane said:
What about kids, inflation and recession?

He could do all those things to save...and wind up a highly strung, boring old fart with no life experience too
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But most importantly ... he will die financially wealthy.
 
So_Cynical said:
Now for a little reality, $150 on booze, women, taxis, social drugs every Friday night x 52 weeks
over 10 years = $78,000 leaving this conservative, average young person with $108,000 still
not to bad, and he/she has had a little fun.
Click to expand...

Just remember Pay your self first, The booze and fast women are ok (in moderation) if they are funded from whats left after you have allocated your planned amount into investments.
 
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