Australia - Still the Richest Place on The Planet.
I was reading the Credit Suisse Global Wealth Report 2021 last night - free downloads of the Report and of the Databook - curious to see if the lockdowns had reduced our standing.
Surprisingly, instead of going down, Median Wealth actually increased in 2020 by US$32,280 to US$238,070 per adult - keeping us solidly in the number one position.
I think it explains why in pre-pandemic times, no matter where you flew on the planet - you'd always run into Australians, even though their numbers are relatively small. I think it also explains why so many people here have so many great kits of astronomy and photographic equipment.
I've attached Table 2 from the report which shows the rankings. Of interest is that the USA which comes in at No 2 in Mean Wealth per adult, doesn't even make the Top 20 in Median Wealth (it comes in at No23 with US$79,274 per adult) - for it's individual citizens, on average, any adult you randomly come across over there, is likely three times poorer than any adult you randomly come across over here.
I suppose the biggest curiosity is why our politicians never tell us we're the richest people on the planet.
One would think it would be a good selling point at elections.
Regards,
Renato
It has to do with our assets and one of our biggest assets is the home, Australia has one of the highest cost of property in the world. This is not liquid assets or liquid wealth but net assets
It has to do with our assets and one of our biggest assets is the home, Australia has one of the highest cost of property in the world. This is not liquid assets or liquid wealth but net assets
Indeed, but still useful when relocating overseas is an option
Our housing prices and quality are way out of kilter and surely there will correct someday or other
It is so hard to generalise...there would be many farmers who live hand to mouth yet their spread could be valued in the millions...even in the city you can have similar ..a mate of mine lives in a house worth 2 million dollars and he is on the old age pension and cash strapped...so sell up you say..this is his home ..who wants to move someplace new, no friends, find new doctors, mechanics etc...he will die poor really.
Alex
It has to do with our assets and one of our biggest assets is the home, Australia has one of the highest cost of property in the world. This is not liquid assets or liquid wealth but net assets
That's an interesting link, thanks.
Australian's Median Wealth is greater than the Median Wealth of any age category in USA below the age of 75.
Houses are liquid assets in the sense that managed funds and shares are - but they are still liquid. Put them on the market, wait a few weeks, and get the money 45 or 60 days later.
Credit Suisse have been publishing this report for the last 12 year - and every year, Australia has come in either in first or second spot. So this latest report isn't just based on the current spike in housing prices.
Cheers,
Renato
I only have limited sympathy for owners of very valuable homes who are cash poor. They should have long ago got a reverse mortgage, which would
have given them a large amount of cash to live a comfortable life on, and stay in their home until they die, when it is transferred to the ownership of the
Finance provider, and the balance of the cash would go to the estate's heirs.
Two of my friends did it about 15yrs ago, and have never looked back.
This wouldn't work for people who have the misguided idea that their
children must be provided for by leaving the house to them.
I imagine that plenty of people will disagree with my point of view.
Oops! sorry, hijack alert.
raymo
Last edited by raymo; 16-10-2021 at 08:42 PM.
Reason: more text
It is so hard to generalise...there would be many farmers who live hand to mouth yet their spread could be valued in the millions...even in the city you can have similar ..a mate of mine lives in a house worth 2 million dollars and he is on the old age pension and cash strapped...so sell up you say..this is his home ..who wants to move someplace new, no friends, find new doctors, mechanics etc...he will die poor really.
Alex
Hi Alex,
Your mate could do several things.
Sell the house, invest the money in managed funds, and rent in the same area with a much better lifestyle (5% of $2million is $100,000 income a year).
Or there are schemes around where one borrows money against the house to do as one wishes, and pay off the loan and interest on one's death.
Or live hand to mouth in a miserable existence, so that his heirs can whoop it up on his passing.
Your mate could do several things.
Sell the house, invest the money in managed funds, and rent in the same area with a much better lifestyle (5% of $2million is $100,000 income a year).
Or there are schemes around where one borrows money against the house to do as one wishes, and pay off the loan and interest on one's death.
Or live hand to mouth in a miserable existence, so that his heirs can whoop it up on his passing.
His choice.
Cheers,
Renato
It will be the last option that you list ...for many of our era the family home is regarded as the property of the family... And in some cases even money in the bank is treated as belonging to the heirs...I felt very guilty buying my astronomy gear because I felt it was wasting money that should go to my estate...I seem to have managed the guilt somehow and to go somewhat overboard
The approach is best seen with farmers who mostly should sell up and live a decent life but its the family farm... grandfather owned it... Simply cant be sold.
Another chap up here .. he and his brother own 25,000 acres...even at $1000 an acre we are talking big money...sell it?..no never..they are fifth generation...they could make a much better living with the cash elsewhere..they could just live off the capital and leave a huge sum...and they work just so hard to generate income...both hate the place.
But tell me...how do you make 5% these days as I would really love to know.
It will be the last option that you list ...for many of our era the family home is regarded as the property of the family... And in some cases even money in the bank is treated as belonging to the heirs...I felt very guilty buying my astronomy gear because I felt it was wasting money that should go to my estate...I seem to have managed the guilt somehow and to go somewhat overboard
The approach is best seen with farmers who mostly should sell up and live a decent life but its the family farm... grandfather owned it... Simply cant be sold.
Another chap up here .. he and his brother own 25,000 acres...even at $1000 an acre we are talking big money...sell it?..no never..they are fifth generation...they could make a much better living with the cash elsewhere..they could just live off the capital and leave a huge sum...and they work just so hard to generate income...both hate the place.
But tell me...how do you make 5% these days as I would really love to know.
Alex
Hi Alex,
Managed funds make more than 5%. My Allocated Pension has made more than 5% for each of the last 10 years - tax free after age 60. It's a problem now as one can only put in $100,000 a year - though they let you put in three years worth initially, then another three years worth in three years time and so on. You can pick whether you want it in cash funds, share funds, overseas share funds, low risk diverse funds, moderate risk diverse funds. And when you need some money, just go on-line and fill out a form to withdraw it, and you have the money in your bank account in two or three days.
And the money doesn't have to come from superannuation to be deposited into it.
As for your struggling friend with a $2 million dollar house. It belongs to him - not to the family. When he and his spouse passes, it will usually go to multiple heirs who will sell it to split the proceeds.
If he's single, he can take out $180,000 as a reverse mortgage, put it in an allocated pension and still not affect the old age pension (or over $300,000 for a married couple). He can then elect to receive say an extra $9000 (5%) a year paid monthly ($15,000 for a married couple), and take extra cash out when he needs it for a say a vacation. When he passes away, the heirs still get a big chunk of cash to split.
If the family/heirs don't want him to do that because they want it all for themselves - I'd disinherit the selfish creatures, as they obviously wouldn't care too much about him.
Seriously - what's the point of being asset rich if one wants to act like a pauper?
In Melbourne some years back, it was known that some poor old age pensioners were living in $3 to $4 million dollar houses in Albert Park. My thoughts were - for heaven's sake - sell the place, buy a cheap $2 million dollar place a few suburbs away, and get a limo driver to take you to visit your friends in the old suburb.
Cheers,
Renato
I only have limited sympathy for owners of very valuable homes who are cash poor. They should have long ago got a reverse mortgage, which would
have given them a large amount of cash to live a comfortable life on, and stay in their home until they die, when it is transferred to the ownership of the
Finance provider, and the balance of the cash would go to the estate's heirs.
Two of my friends did it about 15yrs ago, and have never looked back.
This wouldn't work for people who have the misguided idea that their
children must be provided for by leaving the house to them.
I imagine that plenty of people will disagree with my point of view.
Oops! sorry, hijack alert.
raymo
Raymo, I could not agree more. In fact perhaps it is time to either bring in an inheritance tax, or perhaps some form of recovery for the cost of the age pension from a person's assets when they die.
Raymo, I could not agree more. In fact perhaps it is time to either bring in an inheritance tax, or perhaps some form of recovery for the cost of the age pension from a person's assets when they die.
Better still..when you die whatever you have left goes to the State, sorry the Government, and pensions abolished so everyone works or dies ...survival of only the fittest..the very very fittest.
I think compassion seems absent when considering what it must be like for an old person having to change their location, even for those who can sell up move a couple of suburbs away and rent a car to drive around what was once their home turf...it turns out my mate has to sell ( he has to pay out other family which I only became aware of just now) and he is in a terrible state...he has lived in that house since he was seven years old...I told him he can live in my Sydney house until, whenever that may be, he can decide what to do... it is reasonably close..it suits me as well even though I wont charge him.
Just having someone there I can trust with all my stuff and hopefully organise tradesmen etc..plus I will set aside a section for the times I may go to Sydney which probably will be never...but I need to hold onto it as it must get rezoned for higher density sooner or later.. that higher payout would be very nice ...and I will make it that the developer pays both in cash and a home unit in what he builds...have my cake and eat it...the way I like yo do things..and he can live there if he needs to, for as long as he needs to..this guy has helped me all my life and deserves any help I can give him..I don't forget those who are decent and deserving.
And I hope he spends all his cash he gets from the sale as his Son hardley talks to him which upsets him no end.
Alex
Raymo, I could not agree more. In fact perhaps it is time to either bring in an inheritance tax, or perhaps some form of recovery for the cost of the age pension from a person's assets when they die.
No government would try that as that would guarantee they never get voted in again.
We are lucky in Australia, many countries have a death tax system.
Alex, as Renato and I stated, with a reverse mortgage your friend wouldn't
have to leave his home.
raymo
We are lucky in Australia, many countries have a death tax system.
Alex, as Renato and I stated, with a reverse mortgage your friend wouldn't
have to leave his home.
raymo
I should have said there is no way he would borrow one single cent but finding out he has to pay out his brothers stuffs him up. AND for me also I would not borrow a single cent...When in business a credit squeeze hit and I wanted to borrow more cash to buy out rent rolls as agents ran into cash flow problems..well not with standing presenting the bank manager with a fantastic spread sheets showing good, medium and poor projections , all showing good cash flows, not only did he reject my loan application but wanted me to reduce my overdraft...sure with things getting worse that can't happen...I went back to my office and was going to lock the door and throw away the key and leave..however I went inside built a spread sheet showing what came in what was to go out and when and could see if I just felayed paying certain bills on time to match specific income input then I could do without the overdraft, so next day I sought and received extensions on some bills and did very nicely...and to show how you can not shaft me and not get retribution..the bank had a debt with me of $15000 which they overlooked securing..this particular bank manager stuffed up...so when I left the last thing I did was visit the bank manager and told him he could whistle and think of the big favour he did that could have seen me close my business..oh I had found out he was very good mates with my local opposition so there was much more to my loan rejection and call in of overdraft than just business ...so I feel justice was done....HOWEVER from that point I decided that never would I borrow any money ever again.
Main thing is my mate will now have a bigger house and greater security for his future.
Alex
Reverse mortgage is really a misnomer, you don't borrow or repay anything
during your lifetime; the financial institution gives you a percentage of the
current value of your property, say 95%, and takes the property upon your death, which could be many years later. From memory you have to be over 60
to go this route.
raymo
I only have limited sympathy for owners of very valuable homes who are cash poor. They should have long ago got a reverse mortgage, which would
have given them a large amount of cash to live a comfortable life on, and stay in their home until they die, when it is transferred to the ownership of the
Finance provider, and the balance of the cash would go to the estate's heirs.
Two of my friends did it about 15yrs ago, and have never looked back.
This wouldn't work for people who have the misguided idea that their
children must be provided for by leaving the house to them.
I imagine that plenty of people will disagree with my point of view.
Oops! sorry, hijack alert.
raymo
I think people should have the choice to go either way (as it is now). For some the imperative is providing a "better setup" for their children which may have been influenced on how they were raised etc.
I have told my parents that they should do whatever the heck they want with their time and money and not be concerned about what they leave for myself and my sister. Not sure my sister sees it the same, but I'm not factoring in anything from them in my financial plans.
Reverse mortgage is really a misnomer, you don't borrow or repay anything
during your lifetime; the financial institution gives you a percentage of the
current value of your property, say 95%, and takes the property upon your death, which could be many years later. From memory you have to be over 60
to go this route.
raymo
I suppose that the only issue with this type mortgage is having a reputable provider - someone who will put the house up for sale at auction in the open market. As opposed to any disreputable type who might sell it to an associate at a lower price and rip the heirs off.
This sort of disreputable behaviour is known to have happened with sale of property after foreclosures.
Anyhow - it's pretty obvious that either by selling outright or getting this type of mortgage, one can indeed access the wealth in the expensive property that helps makes the country so rich.
I have a friend who - before the lockdowns - would spend more than half the year living it up with other Aussies in Thailand, where life is a lot cheaper and the weather heaps better than Melbourne's. Not sure about their health system though, should something go wrong. Plus there are plenty of YouTube videos on cheap countries to retire to and have a superb lifestyle relative to back home.
Regards,
Renato
Renato, I think you misunderstand how it works. The financial provider will
get the house valued, and if you are happy with the valuation, immediately
pay you that amount minus the costs involved in setting it up. You then
live there for the rest of your life. When you die the financial provider becomes the owner of the house. Your heirs will only get what cash and
other assets remain, such as cars, furniture, etc.
raymo
..and he can live there if he needs to, for as long as he needs to..this guy has helped me all my life and deserves any help I can give him..I don't forget those who are decent and deserving.
