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Mad as Hell

By John Hargreaves 10 November 2014 51

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As Shaun Micallef says in his program title, I’m mad as hell!

Posters will accuse me of being biased and that’s just bad luck. I have nothing to gain from my outrage on this subject so let’s get that out of the way pronto.

As if the Government doesn’t insult the servicemen and women enough by offering them a pay rise of way below inflation, they are now offering, yes offering, nothing to their own employees, in the latest round of EBA bargaining, after delaying the discussions interminably.

They still want offsets though! Offsets for what? They say, let’s have productivity increases but we’re not going to pass any savings or productivity increases on to those who deliver them!

I’ve heard of ambit claims but a zero pay increase is just about the limit.

The CPSU and other unions are rightly upset on behalf of its members. It was good to see the members of the CPSU flex their muscles in Garema Place.

Guerrilla warfare by not answering phones; not doing some correspondence is ok to a point. Black listing any ministerial support, any support for senior departmental executives will have just as effective an outcome. It may come to strike action but look out for balaclavas and attack dogs. Remember Mr Abbott worked with Peter Reith!

But I’m not sure that the private sector is supportive of their public sector colleagues in this war.
They talk about shiny bums, fat cats and lazy bureaucrats. They don’t acknowledge that these are the same people who use their wages to keep them in business, especially small business. Small and medium business needs to remember that they are in a vulnerable slot in the economic food chain.

I’m also not sure that the general public are on board with the fight either. This calls for action.
Because, if the government gets away with this theft of workers’ rights and conditions, the private sector will be next. The business mandarins will take heart that they too can offer zero wage increases while putting up their prices and pay packets.

Zed Seselja says that addressing the budget crisis left by Labor is more important than pay rises for ordinary families. What? We are not in a budget crisis. This fallacy has been blown away ages ago.

We can spend billions blowing people up in the Middle East but we can’t afford to offer the lower paid public service family some hedge against the inflation which has been caused in recent times by price increases far more than wage increases.

Where is Senator Seselja’s loyalty? Where it has been always – to Zed Seselja. He won’t ever get a ministry in an Abbott government while he sticks up for the predominant employment group in his electorate of the ACT.

Interesting that at least Gary Humphries tried to buffer the effects of the Howard government’s assault on Canberra! With little effect but at least he tried. His successor doesn’t even try!

Now for those who accuse me of self-interest or political bias… I got a pension increase last time of a net near nothing. I had a whinge and got on with it. But I don’t have a family to support. I don’t have dependent costs such as school fees and kids’ sporting costs. I don’t have a large family with a lot of hungry mouths to feed. My daughter didn’t get preferential treatment with scholarships either!

So if there is going to be a zero wage increase let there be zero price increases as well. Like this is going to happen! Not!

I’d like to see the government become reasonable about a decent and legitimate wage increase and in lieu of this real industrial action – work to rule and national street marches.

Just let me know where and when and I’m in! I’m mad as hell!

What’s Your opinion?


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Mad as Hell
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dungfungus 2:23 pm 12 Nov 14

Garfield said :

dungfungus said :

Garfield said :

dungfungus said :

chewy14 said :

dungfungus said :

chewy14 said :

dungfungus said :

JC said :

watto23 said :

I have some sympathy towards service people and wages, but not towards public servants and wages, many of whom fail to realise they’ve been on an extremely good wicket for a long time and that even getting a CPI increase is a struggle in private sector in Canberra.

Actually most public servants haven’t received CPI increases for a long time. I know where I work and I am certain this applies to all Federal agencies all our pay rises have had to be offset by trading conditions or extra time. The fact they have been around the 3% mark is co-incidental rather than a pure CPI increase.

The same is true for this round of negotiations too, which makes the governments stance of a predefined answer of no all the more galling.

Jeez, does this mean the BMW and Merc dealers are going to suffer? Pubes may go back to buying Volvos like they did in the 1980s.
I can honestly say I don’t know one public servant who is doing it tough unlike most self-funded retirees I know.

How is it possible for a self funded retiree to be ” doing it tough”. Due to our lax pension restrictions, I’d suggest it’s night on impossible.

Read post #20 and you may get a clue.
Also, returns for fixed interest investments are now so meagre that capital is being drawn down sooner than anticipated which will mean more retirees will be relying on aged pensions.
More grief for the budget ahead but there is no budget crisis now, right?

I read it and it doesn’t described someone who is doing it tough. To be a self funded retiree you must be receiving no government assistance. This necessarily means that you have too many assets/income to receive even a part pension.

Currently for a single person The assets test means you can own a house of unlimited value as well as having other assets up to $770k.
For a couple it’s a house of unlimited value and other assets up to $1.1M.

Someone who has more than this is not “doing it tough” in any way.

In post #20, I was alluding to the already high and continually rising costs of living in the ACT.
It is one thing to have the basic assets but living off retirement capital because interest rates are kept artificially low can only go on until capital is exhausted.
Then it is time to claim the aged pension.
I watched Australian story last night about Bob Hawke. Here he was, enjoying a cigar like Hockey and Korman, on the deck of his multi million dollar mansion in Sydney.
I wonder how tough he is doing it now?.

This is somewhat off the original topic

The Labor Government’s high spending over-reaction to the GFC kept interest rates in Australia artificially high, not low. This is why the dollar stayed high for so long (and contributed to us losing some manufacturers). We’re only just starting to come back towards market level interest rates, and the next move by the RBA may be down, which is why fixed interest mortgages are currently lower than variable rate.

If low interest rates are having a big impact on your retirement earnings, you may not have a properly diversified portfolio that’s geared towards maximising your purchasing power over the course of your retirement. People think of interest earning deposits as being without risk, but they carry the risk of very low returns.

These days the time in retirement is generally 20-30 years, longer than any prior generation. Over the last 20 years the capital value of the Australian share market has increased by about 130% (2400 to 5500 points) and dividends (regular and increasing) have been on top of that. Combining capital growth, dividends and imputation credits the share market has probably returned 9-10% p.a. on average every year, down slightly from its long term average of around 10% as we still haven’t fully recovered from the GFC (as interest rates have been artificially high). 12 month term deposits might have returned 8-9% in the best of those years, with current lows of 3% for a rough average of 6%. An extra 3% p.a. makes a huge difference over the course of 20-30 years.

I’m not advocating people take all their money out of cash to buy shares, but some professional advice may be useful, as long as its not from a financial planner with conflicts of interest – so stay away from big institutions and find a good independent advisor. There are a few.

The best term deposit rate through the GFC was Westpac offereing 8%pa for 5 years fixed (not 1 year as you have suggested).
Not many people were able to get a slice of this as it is not always possible to break an existing term deposit at a lower rate to move into a higher rate. Investing in shares is all about good luck/good timing. Sometimes investors have to sell at a low point to generate mandatory pension income.
The following may be of interest:
According to Chant West the performance figures for the 7-year period are still weighed down by the ‘GFC effect’. The one-year, 3-year and 5-year returns reflect the strong performance of listed shares and property, which means the investment options with a higher proportion of growth assets have performed better over these timeframes, although presumably the volatile markets in the past month or two has hit those options the hardest.

Diversified Fund Performance: Results to 30 September 2014
Fund Category Growth Assets (%) 1 mnth (%) Qtr(%) 1 Yr (%) 3 Yrs (% pa) 5 Yrs (% pa) 7 Yrs (% pa) 10 Yrs (% pa) 15 Yrs (% pa)
All Growth 100 -0.9 1.8 11.1 15.5 8.4 2.4 6.8 6.2
High Growth 81 – 100 -0.7 1.8 10.3 13.8 8.4 3.2 7.1 6.5
Growth 61 – 80 -0.6 1.7 9.4 12.1 8.0 3.7 6.9 6.8
Balanced 41 – 60 -0.3 1.4 7.8 9.7 7.2 4.1 6.3 5.8
Conservative 21 – 40 -0.2 1.2 6.5 7.6 6.4 4.5 5.9 5.6
Note: Performance is shown net of investment fees and tax. It does not include administration fees or adviser commissions. An investment loss is displayed as a negative, for example, -0.9%.

Source: Chant West 20 October 2014 media release (www.chantwest.com.au)

The reason I looked at a 20 year timeframe rather than a shorter one is that financial planning should run all the way through to the end of estimated life expectancy. The reason that I said I don’t advocate everyone take all their cash out of the bank to buy shares is that share values can be volatile in the short term and there needs to be sufficient cash on hand, after factoring in dividends, to meet pension requirements during periods when the capital value of shares has dropped. I picked the 1 year TD rate as its pretty good compared to that for shorter periods while still allowing reasonable flexibility. Long term share investing is not about timing/luck. Investing in the market to try and catch the ups and miss the downs is gambling. When individual investors do that they are inevitably selling below the peak and then they only buy again one prices have started to rise – thus missing out at both ends. Investing is about accumulating and not being spooked into selling when there is a temporary decline. I have family members with more shares held in their super now and more income being earned than when the GFC started making itself felt. They haven’t added any funds to it as they’ve been retired and they’ve been drawing their mandated pensions. They haven’t changed their investment mix at all since then as there was nothing wrong with the structure. In long term share investing, GFC’s and the like are statistical blips. Even with events like the Great Depression, Australian shares have averaged better returns than property or fixed interest over the long term since 1900. Its all about patience and being structured properly so as to be able to sit out the years when the short term volatility that comes hand in hand with higher return investments produces the 1 in 5 years of negative returns.

I put a small lump sum into an index fund 2-3 years ago followed by regular monthly contributions and that investment has been returning an average of over 14% p.a. even with the continued post GFC volatility (which has seen annualised quarterly returns vary between 0 and 33%). I might have been able to get 6% on a term deposit. After allowing for inflation of say 2.7% pa, my return has been 240% better than fixed interest. With Canberra house prices having been relatively stagnant and rental returns dropping its been better again than residential property. Those funds are part of my retirement planning, which at this point is a timeframe of up to 60 years, so short term volatility is not an issue.

If I were 20 years younger I would probably opt for what you are doing. It’s very well thought out but a lot of people in shares on the cusp of retirement had most of their superannuation wiped out during the GFC.
That is about the reference I make to “timing”.
The problem is that on retirement, the emphasis is on preservation of capital as there are no second chances.

Garfield 11:36 am 12 Nov 14

dungfungus said :

Garfield said :

dungfungus said :

chewy14 said :

dungfungus said :

chewy14 said :

dungfungus said :

JC said :

watto23 said :

I have some sympathy towards service people and wages, but not towards public servants and wages, many of whom fail to realise they’ve been on an extremely good wicket for a long time and that even getting a CPI increase is a struggle in private sector in Canberra.

Actually most public servants haven’t received CPI increases for a long time. I know where I work and I am certain this applies to all Federal agencies all our pay rises have had to be offset by trading conditions or extra time. The fact they have been around the 3% mark is co-incidental rather than a pure CPI increase.

The same is true for this round of negotiations too, which makes the governments stance of a predefined answer of no all the more galling.

Jeez, does this mean the BMW and Merc dealers are going to suffer? Pubes may go back to buying Volvos like they did in the 1980s.
I can honestly say I don’t know one public servant who is doing it tough unlike most self-funded retirees I know.

How is it possible for a self funded retiree to be ” doing it tough”. Due to our lax pension restrictions, I’d suggest it’s night on impossible.

Read post #20 and you may get a clue.
Also, returns for fixed interest investments are now so meagre that capital is being drawn down sooner than anticipated which will mean more retirees will be relying on aged pensions.
More grief for the budget ahead but there is no budget crisis now, right?

I read it and it doesn’t described someone who is doing it tough. To be a self funded retiree you must be receiving no government assistance. This necessarily means that you have too many assets/income to receive even a part pension.

Currently for a single person The assets test means you can own a house of unlimited value as well as having other assets up to $770k.
For a couple it’s a house of unlimited value and other assets up to $1.1M.

Someone who has more than this is not “doing it tough” in any way.

In post #20, I was alluding to the already high and continually rising costs of living in the ACT.
It is one thing to have the basic assets but living off retirement capital because interest rates are kept artificially low can only go on until capital is exhausted.
Then it is time to claim the aged pension.
I watched Australian story last night about Bob Hawke. Here he was, enjoying a cigar like Hockey and Korman, on the deck of his multi million dollar mansion in Sydney.
I wonder how tough he is doing it now?.

This is somewhat off the original topic

The Labor Government’s high spending over-reaction to the GFC kept interest rates in Australia artificially high, not low. This is why the dollar stayed high for so long (and contributed to us losing some manufacturers). We’re only just starting to come back towards market level interest rates, and the next move by the RBA may be down, which is why fixed interest mortgages are currently lower than variable rate.

If low interest rates are having a big impact on your retirement earnings, you may not have a properly diversified portfolio that’s geared towards maximising your purchasing power over the course of your retirement. People think of interest earning deposits as being without risk, but they carry the risk of very low returns.

These days the time in retirement is generally 20-30 years, longer than any prior generation. Over the last 20 years the capital value of the Australian share market has increased by about 130% (2400 to 5500 points) and dividends (regular and increasing) have been on top of that. Combining capital growth, dividends and imputation credits the share market has probably returned 9-10% p.a. on average every year, down slightly from its long term average of around 10% as we still haven’t fully recovered from the GFC (as interest rates have been artificially high). 12 month term deposits might have returned 8-9% in the best of those years, with current lows of 3% for a rough average of 6%. An extra 3% p.a. makes a huge difference over the course of 20-30 years.

I’m not advocating people take all their money out of cash to buy shares, but some professional advice may be useful, as long as its not from a financial planner with conflicts of interest – so stay away from big institutions and find a good independent advisor. There are a few.

The best term deposit rate through the GFC was Westpac offereing 8%pa for 5 years fixed (not 1 year as you have suggested).
Not many people were able to get a slice of this as it is not always possible to break an existing term deposit at a lower rate to move into a higher rate. Investing in shares is all about good luck/good timing. Sometimes investors have to sell at a low point to generate mandatory pension income.
The following may be of interest:
According to Chant West the performance figures for the 7-year period are still weighed down by the ‘GFC effect’. The one-year, 3-year and 5-year returns reflect the strong performance of listed shares and property, which means the investment options with a higher proportion of growth assets have performed better over these timeframes, although presumably the volatile markets in the past month or two has hit those options the hardest.

Diversified Fund Performance: Results to 30 September 2014
Fund Category Growth Assets (%) 1 mnth (%) Qtr(%) 1 Yr (%) 3 Yrs (% pa) 5 Yrs (% pa) 7 Yrs (% pa) 10 Yrs (% pa) 15 Yrs (% pa)
All Growth 100 -0.9 1.8 11.1 15.5 8.4 2.4 6.8 6.2
High Growth 81 – 100 -0.7 1.8 10.3 13.8 8.4 3.2 7.1 6.5
Growth 61 – 80 -0.6 1.7 9.4 12.1 8.0 3.7 6.9 6.8
Balanced 41 – 60 -0.3 1.4 7.8 9.7 7.2 4.1 6.3 5.8
Conservative 21 – 40 -0.2 1.2 6.5 7.6 6.4 4.5 5.9 5.6
Note: Performance is shown net of investment fees and tax. It does not include administration fees or adviser commissions. An investment loss is displayed as a negative, for example, -0.9%.

Source: Chant West 20 October 2014 media release (www.chantwest.com.au)

The reason I looked at a 20 year timeframe rather than a shorter one is that financial planning should run all the way through to the end of estimated life expectancy. The reason that I said I don’t advocate everyone take all their cash out of the bank to buy shares is that share values can be volatile in the short term and there needs to be sufficient cash on hand, after factoring in dividends, to meet pension requirements during periods when the capital value of shares has dropped. I picked the 1 year TD rate as its pretty good compared to that for shorter periods while still allowing reasonable flexibility. Long term share investing is not about timing/luck. Investing in the market to try and catch the ups and miss the downs is gambling. When individual investors do that they are inevitably selling below the peak and then they only buy again one prices have started to rise – thus missing out at both ends. Investing is about accumulating and not being spooked into selling when there is a temporary decline. I have family members with more shares held in their super now and more income being earned than when the GFC started making itself felt. They haven’t added any funds to it as they’ve been retired and they’ve been drawing their mandated pensions. They haven’t changed their investment mix at all since then as there was nothing wrong with the structure. In long term share investing, GFC’s and the like are statistical blips. Even with events like the Great Depression, Australian shares have averaged better returns than property or fixed interest over the long term since 1900. Its all about patience and being structured properly so as to be able to sit out the years when the short term volatility that comes hand in hand with higher return investments produces the 1 in 5 years of negative returns.

I put a small lump sum into an index fund 2-3 years ago followed by regular monthly contributions and that investment has been returning an average of over 14% p.a. even with the continued post GFC volatility (which has seen annualised quarterly returns vary between 0 and 33%). I might have been able to get 6% on a term deposit. After allowing for inflation of say 2.7% pa, my return has been 240% better than fixed interest. With Canberra house prices having been relatively stagnant and rental returns dropping its been better again than residential property. Those funds are part of my retirement planning, which at this point is a timeframe of up to 60 years, so short term volatility is not an issue.

dungfungus 9:47 am 12 Nov 14

Garfield said :

dungfungus said :

chewy14 said :

dungfungus said :

chewy14 said :

dungfungus said :

JC said :

watto23 said :

I have some sympathy towards service people and wages, but not towards public servants and wages, many of whom fail to realise they’ve been on an extremely good wicket for a long time and that even getting a CPI increase is a struggle in private sector in Canberra.

Actually most public servants haven’t received CPI increases for a long time. I know where I work and I am certain this applies to all Federal agencies all our pay rises have had to be offset by trading conditions or extra time. The fact they have been around the 3% mark is co-incidental rather than a pure CPI increase.

The same is true for this round of negotiations too, which makes the governments stance of a predefined answer of no all the more galling.

Jeez, does this mean the BMW and Merc dealers are going to suffer? Pubes may go back to buying Volvos like they did in the 1980s.
I can honestly say I don’t know one public servant who is doing it tough unlike most self-funded retirees I know.

How is it possible for a self funded retiree to be ” doing it tough”. Due to our lax pension restrictions, I’d suggest it’s night on impossible.

Read post #20 and you may get a clue.
Also, returns for fixed interest investments are now so meagre that capital is being drawn down sooner than anticipated which will mean more retirees will be relying on aged pensions.
More grief for the budget ahead but there is no budget crisis now, right?

I read it and it doesn’t described someone who is doing it tough. To be a self funded retiree you must be receiving no government assistance. This necessarily means that you have too many assets/income to receive even a part pension.

Currently for a single person The assets test means you can own a house of unlimited value as well as having other assets up to $770k.
For a couple it’s a house of unlimited value and other assets up to $1.1M.

Someone who has more than this is not “doing it tough” in any way.

In post #20, I was alluding to the already high and continually rising costs of living in the ACT.
It is one thing to have the basic assets but living off retirement capital because interest rates are kept artificially low can only go on until capital is exhausted.
Then it is time to claim the aged pension.
I watched Australian story last night about Bob Hawke. Here he was, enjoying a cigar like Hockey and Korman, on the deck of his multi million dollar mansion in Sydney.
I wonder how tough he is doing it now?.

This is somewhat off the original topic

The Labor Government’s high spending over-reaction to the GFC kept interest rates in Australia artificially high, not low. This is why the dollar stayed high for so long (and contributed to us losing some manufacturers). We’re only just starting to come back towards market level interest rates, and the next move by the RBA may be down, which is why fixed interest mortgages are currently lower than variable rate.

If low interest rates are having a big impact on your retirement earnings, you may not have a properly diversified portfolio that’s geared towards maximising your purchasing power over the course of your retirement. People think of interest earning deposits as being without risk, but they carry the risk of very low returns.

These days the time in retirement is generally 20-30 years, longer than any prior generation. Over the last 20 years the capital value of the Australian share market has increased by about 130% (2400 to 5500 points) and dividends (regular and increasing) have been on top of that. Combining capital growth, dividends and imputation credits the share market has probably returned 9-10% p.a. on average every year, down slightly from its long term average of around 10% as we still haven’t fully recovered from the GFC (as interest rates have been artificially high). 12 month term deposits might have returned 8-9% in the best of those years, with current lows of 3% for a rough average of 6%. An extra 3% p.a. makes a huge difference over the course of 20-30 years.

I’m not advocating people take all their money out of cash to buy shares, but some professional advice may be useful, as long as its not from a financial planner with conflicts of interest – so stay away from big institutions and find a good independent advisor. There are a few.

The best term deposit rate through the GFC was Westpac offereing 8%pa for 5 years fixed (not 1 year as you have suggested).
Not many people were able to get a slice of this as it is not always possible to break an existing term deposit at a lower rate to move into a higher rate. Investing in shares is all about good luck/good timing. Sometimes investors have to sell at a low point to generate mandatory pension income.
The following may be of interest:
According to Chant West the performance figures for the 7-year period are still weighed down by the ‘GFC effect’. The one-year, 3-year and 5-year returns reflect the strong performance of listed shares and property, which means the investment options with a higher proportion of growth assets have performed better over these timeframes, although presumably the volatile markets in the past month or two has hit those options the hardest.

Diversified Fund Performance: Results to 30 September 2014
Fund Category Growth Assets (%) 1 mnth (%) Qtr(%) 1 Yr (%) 3 Yrs (% pa) 5 Yrs (% pa) 7 Yrs (% pa) 10 Yrs (% pa) 15 Yrs (% pa)
All Growth 100 -0.9 1.8 11.1 15.5 8.4 2.4 6.8 6.2
High Growth 81 – 100 -0.7 1.8 10.3 13.8 8.4 3.2 7.1 6.5
Growth 61 – 80 -0.6 1.7 9.4 12.1 8.0 3.7 6.9 6.8
Balanced 41 – 60 -0.3 1.4 7.8 9.7 7.2 4.1 6.3 5.8
Conservative 21 – 40 -0.2 1.2 6.5 7.6 6.4 4.5 5.9 5.6
Note: Performance is shown net of investment fees and tax. It does not include administration fees or adviser commissions. An investment loss is displayed as a negative, for example, -0.9%.

Source: Chant West 20 October 2014 media release (www.chantwest.com.au)

TFarquahar 5:26 am 12 Nov 14

You do yourself a disservice by the tone of your emotion. If I get upset because my understanding of bad policy and its detrimental effect on people less well of than I am, are you suggesting that as I am a Labor aficionado, I am not entitled to express my outrage in polite terms? Your tone is offensive and unnecessary.

Thank you John for your polite and considered response. I believe you may have meant to put the word ‘by’ instead of ‘but’. I am glad that you find my tone offensive and unnecessary. Thank you once again for starting my day on a truly happy note.

Garfield 5:56 pm 11 Nov 14

dungfungus said :

chewy14 said :

dungfungus said :

chewy14 said :

dungfungus said :

JC said :

watto23 said :

I have some sympathy towards service people and wages, but not towards public servants and wages, many of whom fail to realise they’ve been on an extremely good wicket for a long time and that even getting a CPI increase is a struggle in private sector in Canberra.

Actually most public servants haven’t received CPI increases for a long time. I know where I work and I am certain this applies to all Federal agencies all our pay rises have had to be offset by trading conditions or extra time. The fact they have been around the 3% mark is co-incidental rather than a pure CPI increase.

The same is true for this round of negotiations too, which makes the governments stance of a predefined answer of no all the more galling.

Jeez, does this mean the BMW and Merc dealers are going to suffer? Pubes may go back to buying Volvos like they did in the 1980s.
I can honestly say I don’t know one public servant who is doing it tough unlike most self-funded retirees I know.

How is it possible for a self funded retiree to be ” doing it tough”. Due to our lax pension restrictions, I’d suggest it’s night on impossible.

Read post #20 and you may get a clue.
Also, returns for fixed interest investments are now so meagre that capital is being drawn down sooner than anticipated which will mean more retirees will be relying on aged pensions.
More grief for the budget ahead but there is no budget crisis now, right?

I read it and it doesn’t described someone who is doing it tough. To be a self funded retiree you must be receiving no government assistance. This necessarily means that you have too many assets/income to receive even a part pension.

Currently for a single person The assets test means you can own a house of unlimited value as well as having other assets up to $770k.
For a couple it’s a house of unlimited value and other assets up to $1.1M.

Someone who has more than this is not “doing it tough” in any way.

In post #20, I was alluding to the already high and continually rising costs of living in the ACT.
It is one thing to have the basic assets but living off retirement capital because interest rates are kept artificially low can only go on until capital is exhausted.
Then it is time to claim the aged pension.
I watched Australian story last night about Bob Hawke. Here he was, enjoying a cigar like Hockey and Korman, on the deck of his multi million dollar mansion in Sydney.
I wonder how tough he is doing it now?.

This is somewhat off the original topic

The Labor Government’s high spending over-reaction to the GFC kept interest rates in Australia artificially high, not low. This is why the dollar stayed high for so long (and contributed to us losing some manufacturers). We’re only just starting to come back towards market level interest rates, and the next move by the RBA may be down, which is why fixed interest mortgages are currently lower than variable rate.

If low interest rates are having a big impact on your retirement earnings, you may not have a properly diversified portfolio that’s geared towards maximising your purchasing power over the course of your retirement. People think of interest earning deposits as being without risk, but they carry the risk of very low returns.

These days the time in retirement is generally 20-30 years, longer than any prior generation. Over the last 20 years the capital value of the Australian share market has increased by about 130% (2400 to 5500 points) and dividends (regular and increasing) have been on top of that. Combining capital growth, dividends and imputation credits the share market has probably returned 9-10% p.a. on average every year, down slightly from its long term average of around 10% as we still haven’t fully recovered from the GFC (as interest rates have been artificially high). 12 month term deposits might have returned 8-9% in the best of those years, with current lows of 3% for a rough average of 6%. An extra 3% p.a. makes a huge difference over the course of 20-30 years.

I’m not advocating people take all their money out of cash to buy shares, but some professional advice may be useful, as long as its not from a financial planner with conflicts of interest – so stay away from big institutions and find a good independent advisor. There are a few.

Blen_Carmichael 3:59 pm 11 Nov 14

Hargreaves, Hargreaves – ah yes, the pollie who gave us the Al Grassby statue.

justin heywood 1:16 pm 11 Nov 14

John Hargreaves Ex MLA said :

….the conservatives in this country give lectures in hating. Labor people are just amateurs in this game.

And yet…..I’m sure John that in real life you speak of other things but on this site you are almost entirely focused on the righteousness of your side of politics and the evils of the other, seemingly to the point of obsession. Maybe after a lifetime of hating the Libs it is so normal to you that you don’t notice it.

In my opinion Dungers could be regarded anti-Labor but is generally polite and reasonable, just persistent, which is why I think he irritates the Left. If you think his posts have bile in them you should read the sort of comments from the left on ABC’s The Drum.

There are plenty of people here just as obsessively anti-Liberal – there used to be a lot more, but the sort of stuff the real haters on the left used to write wouldn’t get past the moderators now, and rightly so. Dungfungus had nothin’ on those guys.

rommeldog56 12:58 pm 11 Nov 14

In post #33, JohnHargraves ExMLA said : ” I have a problem with governments of both persuasions ripping off people in the community in the name of macroeconomics when these same people prop them up.”

John. Does your version of “macroeconomics” include the ACT Gov’ts up to tripling of their Annual Rates – because they are progressively abolishing stamp duty on purcahse of a house ? From an existing homeowners perspective, thats like legalised theft because existing homeowners have already paid that stamp duty. Now they have to pay it again, and again, and again…..

Seems to me that this current ACT Labor/Greens Gov’t is like all Gov’ts – probably worse. They all rip voters, residents and Ratepayers off and squander the $. Just look at the reintrodction of fuel indexing by the Feds !

Also, there are some really silly, ill informed comments on here about self funded retirees. And these people vote ? It’s no wonder then we have the Gov’ts we deserve. Geeezzzz…..

Mysteryman 12:35 pm 11 Nov 14

Antagonist said :

I see you still have nothing to come back with. If it is below CPI it is not an increase, no matter how much you wave your arms, or how literal you get. Theft is still a good metaphor 🙂

You’re wrong. It’s still a *pay* increase. It’s more money than they received the previous year. Their weekly pay is greater than it was was previously.

It’s an increase regardless of the buying power of that money.

dungfungus 12:30 pm 11 Nov 14

chewy14 said :

dungfungus said :

chewy14 said :

dungfungus said :

In post #20, I was alluding to the already high and continually rising costs of living in the ACT.
It is one thing to have the basic assets but living off retirement capital because interest rates are kept artificially low can only go on until capital is exhausted.
Then it is time to claim the aged pension.
I watched Australian story last night about Bob Hawke. Here he was, enjoying a cigar like Hockey and Korman, on the deck of his multi million dollar mansion in Sydney.
I wonder how tough he is doing it now?.

Sure the ACT is expensive to live in, sure if you invest wholly in fixed interest investments when interest rates are low your capital might not grow. This is all irrelevant to the point that we are discussing.

The point is that your definition of basic assets is a single person owning a house (which can be any value) plus other assets of at least $770k?

You think that people with those sorts of assets are “doing it tough”?

If that’s the case, I’d be interested in who you actually think is doing well for themselves.

Have you ever heard of being asset rich and cash poor?

I was really hoping you wouldn’t try and trot this ridiculous argument out. Have you ever heard of liquidating your assets to produce an income stream? Getting a reverse mortgage on your house?

You’re starting to remind me of the stories that the Daily Telegraph used to put out after every interest rate rise a few years ago. eg. Headline: “Families Doing It Tough – May Have to Sell Investment Properties”.

Once again, if you are a true self funded retiree, there is no objective way that you can be included in the group of people who are doing it tough.

Reverse mortgages are a rip-off. I am sure Bob Hawke hasn’t been forced that way. Maybe I should have become a socialist as they all seem to be well off.
I don’t mind drawing down my retirement capital (this is what it is for, after-all), its just that this wasn’t planned this early, so, unless term deposit interest rates double and the cost of living in the ACT drops I have no other choice.

chewy14 12:00 pm 11 Nov 14

dungfungus said :

chewy14 said :

dungfungus said :

In post #20, I was alluding to the already high and continually rising costs of living in the ACT.
It is one thing to have the basic assets but living off retirement capital because interest rates are kept artificially low can only go on until capital is exhausted.
Then it is time to claim the aged pension.
I watched Australian story last night about Bob Hawke. Here he was, enjoying a cigar like Hockey and Korman, on the deck of his multi million dollar mansion in Sydney.
I wonder how tough he is doing it now?.

Sure the ACT is expensive to live in, sure if you invest wholly in fixed interest investments when interest rates are low your capital might not grow. This is all irrelevant to the point that we are discussing.

The point is that your definition of basic assets is a single person owning a house (which can be any value) plus other assets of at least $770k?

You think that people with those sorts of assets are “doing it tough”?

If that’s the case, I’d be interested in who you actually think is doing well for themselves.

Have you ever heard of being asset rich and cash poor?

I was really hoping you wouldn’t try and trot this ridiculous argument out. Have you ever heard of liquidating your assets to produce an income stream? Getting a reverse mortgage on your house?

You’re starting to remind me of the stories that the Daily Telegraph used to put out after every interest rate rise a few years ago. eg. Headline: “Families Doing It Tough – May Have to Sell Investment Properties”.

Once again, if you are a true self funded retiree, there is no objective way that you can be included in the group of people who are doing it tough.

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