The main problem is that it does not pay to save. This is because savings are taxed on the nominal interest, not the real interest. As a result, savers are taxed too much and borrowers get too big a deduction.

This is why it is necessary to force people to save, as very few would do so otherwise.

Reforming the tax system would not solve the problem, as feckless people would still blow the lot, and look to the taxpayer to support them in retirement. It would still be necessary to force people to save enough to disqualify them from the pension when they retire, as the number of retirees in the next few decades will be so high that the current pension level would be unaffordable by the government.

It is not necessary for people to pay commissions to fund managers. Those who wish can set up their own self-managed super fund, as I have, and put their money in more secure investments with lower returns that give the same net result because there are no fees and commissions to pay.

Agree wholeheartedly - the only REAL money I've made has been in Real Estate - bricks and mortar. Hobby buying, repairing & selling motor vehicles used to be good cash money, but lucky to make $300 each these days, so I stopped. Bought a house out of it once!

Being in the right market at the right time for both buying and selling property is the trick. I think it was more good luck than good management on my part, but Brisbane property guru Noel Whittaker gave me some GREAT free advice back in Jan 1980 - POSTION, POSITION, POSITION and BUY the WORST house in the street, NOT the BEST - so all the better ones will promote your cheapy upwards.

Even better if you renovate - which we did. Doubled our money in under 3 years! Did the same again couple of times since, but don't expect to buy a similar property in the same city - all there prices have gone up with yours!

Great investment strategy though, if you are prepared to pre-empt the property values in cities that have not yet boomed.

As for Super, like someone said - no share-holders to skim off the cream, unlike AMP, National Mutual (now AXXA), etc etc. You will never have enough by the time their executive salaries and share-holders returns have finished with you! Won't even cover inflation in most cases.

Did you know an Insurance Co. Agent gets your full first year's premiums as his commission and teh second years premiums are then swallowed up by Administration Fees - legalised robbery - what a rip off!

Flez

Flezzey

I think compulsory super is an excellent idea- I know I struggle enough to save for a new car, yet alone saving for financing my old age (as I am twenty-three, justifying putting away money for retirement would be incredibly hard were I not forced into it).

That said, I do fail to see why it needs to be put into managed funds etc, rather than, say, a personal savings fund, perhaps managed by a government agency? So the money just sits there, not even accruing interest, just CPI? Just put it somewhere I cannot get my sticky hands on it, or I'd be scooting off for a jaunt to Europe for a while!

Also, I fail to see why some bozo who happens to be my fund manager should be able to invest my money wherever, and hope it goes up rather than down.

Dovif

your comments are mad.

Can you leverage with shares like you can for property?

Say you had equity in your home and you wanted to invest, what will the bank lend you more money for?

Have you seen property values half in Australia overnight? have you seen a significnant decline in prices over time ever?

Shares, being a pure investment market is frightening and full of unknowns, with any company you invest in you are relying on correct accounting, the directors, the outlooks and you are opening yourself to many external and unforseen factors. Planes can crash into buildings and effect your investment overnight, yet property is a physical and social need, inelastic, as well as an investment vehicle. People have to live somewhere, if they dont own they rent. They are apples and oranges.

Shares DO NOT OUTPERFORM Property, never have, never will over any 10 year cycle. Show me the evidence, and i will show you how if you invested the same money and leveraged and brought property how you would outperform shares totally.

The world is too volatile a place for my hard earned super to go into shares. And i can leverage myself like i want to with property to create the wealth that i need.

Oh, and if property does not go up in the next ten years like you mentioned, I WILL BUY YOU A HOUSE unencumbered in the suburb you are currently living in. Deal?

Property will take you from nowhere to somewhere, just follow the formula. Promise

Dovif,

No problems with my argument at all; except it wasn't an argument it was fact, providing you know what you are doing with property. Having previously been in finance for many years I can assure you any lows in property are just part of a well known cycle - you just have to work out where and when to buy, and when (in need) to sell. If shares work for you and you are comfortable with them then go for it. I prefer tangibles - bricks and mortar have stood the test of time. More chance of a stock market collapse or a super fund crash then there will ever be a block of land falling into the ocean.

realist

It is a question of preference.

I am an accountant and I do not like risk, with 0 gearing my share portfolio have gone up 300% since 1994, it has gone up 20-22% the last 3 year, which no property market in Australia had done so in the last 3 years. Like property, you can negatively gear shares, with most listed shares, you can gear their value to 70-80%, so gearing is the same for shares and property.

As I am an accountant, I deal with people with properties and shares all the time, apart from capital gain, people do not make money with property, while if you have shares, you are gaurenteed yearly return of 4% (5% after tax). Property in my opionion is more risky than shares,
you can easily lose your tenant and not rent it out for months, the lost rent stacks up, shares almost never have this problem.
I have seen many places trashed, and the owner having to spend thousands of dollar to fix the problem from a tenant who have moved out
Strata - Special capital levies
Agency Fees, Stamp Duty, exVendor duty, Land tax etc
While most investors invests in units, the money made in property are on land + house, and they are harder to rent out and have higher turnover rate and lower % yield, this is because people who rent a house, is mainly those who are saving up to buy

Also with shares, if you aren't happy with the market at the moment or think a recession is coming, it takes me 10 minutes to sell all my shares. It can take months to sell a property.

I have dealt with many people with shares/property in their superannuation fund, and over the last 20 years, the people make more money in share portfolios than property.