Why you can’t invest now

[Sunstone]

Dear guys,

Something that I think is good for us to think about or something we can show to people we want to motivate to change.

Cheers,

Sunstone.


Why you can’t invest now

No matter what stage of life you are at, there are bound to be many good reasons why you cannot invest at this particular time.

Age 18 – 25 I can’t invest now. I’m just getting my start in life. I don’t make a lot yet, and I’m entitled to have fun while I am young, and I’m saving for a new car. There is plenty of time. Wait until I start making a little more. Then I’ll invest.

Age 25 – 35 I can’t invest now. The car registration is due and the brakes need replacing on the car. I’ve got a growing family on my hands. Children and a house cost a lot of money you know. It takes all I have to keep them going. As soon as they are a little older, it’ll cost less, then I’ll invest.

Age 35 – 50 I can’t invest now. I’ve got two children in high school. It’s all I can do to pay their expenses. In fact, I had to borrow to pay their school fees last year. This is the most expensive period in a person’s life. I can’t save a cent; and the car needs new tyres!

Age 50 – 65 I can’t invest now. I know I should, but things aren’t breaking like they were. My car is so old now that it costs a lot in maintenance. It’s not easy for a person my age to step out and get a better job. I’ll have to ride along where I am. Maybe something will break my way.

Age 65 – I can’t invest now. We’re living with my son and his wife. My pension doesn’t go far. The only asset I have is my vintage car. I wish I had started saving twenty years ago, but it’s too late now. You can’t invest when there is no income.

The convenient time to start investing never comes.

 

[Rolf Latham]

Hi SS

As a Professional Salesperson i can tell you that I cant motivate people to change.

If Im lucky I can irritate some emotional issue that may have held them back in the past. Humans will only want to do what they want to do.

I have always said my biggest enemy is my clients' indifference.

My clients' biggest enemy is themselves.

If we all got out of our own way we could all achieve much more for ourselves and others dear to us.

ta

Rolf

 

[Glenn]

I would have to agree with Rolf here and also suggest that while many salesman focus on their product, they totally miss the "why" which is the reason people will make a purchase/investment.

A recent discussion with a friend revealed that her grandfather(born in Australia) rented a house all his life and died about 10 years ago, leaving the grand sum of $12k to his long suffering wife. This got me thinking about the book, The Richest Man in Babylon and the way that Arkad professed that the want to be rich among other things, comes out of a love for the wife and a love for the king, while an indifference of wealth is in turn an indifference to the wife and king. In our land of such abundant opportunity, it amazes me that so many of our people are so selfish that they squander almost every cent they ever earn with most only passing the family home to their family when passing. There seems to be little thought given to generational wealth like some of the wealthier families create and maintain....and it doesn't have to be property that creates this as putting just 1% of someone's net wages into Australia's top 10 companies (by market cap) shares over 40 years would produce outstanding wealth for future generations...why would you want them to struggle when it is so easy to create a vehicle to provide income for them?

Last night on TV (SBS or ABC) there was a show about a farmer in New Zealand who thought this way (but only passed the farm to one son out of possible 2... the other was a bit dark on daddy!) and the son who received the farm suggested that he had not really inherited the farm but was appointed a custodian...he was able to receive the income (generous) from the farm but was expected to pass custody to a worthy son. The rich the not-rich people of this world seem to think so differently about money that it is remarkable. Twice in the last week I have heard people say that they intend retiring and spending all of the money that they have accumulated.....

Glenn

 

[cathyb]

Glenn

The farmer on tv last night was in fact a direct descendant of Macarthur (famous Australian pastoralist) of Camden who settled the area in the early 1800s with 100s of thousands of acres - now they only have 1000 left that is run as a dairy farm. Apparently the last 10000 acres was sold to a developer in the 1970s - what a gold mine that would have been had they kept it. Camden is southwest of Sydney and the centre of major growth.

Cathy

 

[Peter_Tersteeg]

I read somewhere that without the right education, wealth only tends to last 3-4 generations.

Generation 1 spends their life accumulating assets.

Generation 2-3 spends their life enjoying the fruits of the labour of generation 1.

Generation 4 wonders why their parents were wealthy and they're not.

Generation 5+ (if they're fortunate) starts again...

 

[Kevmeister]

Sounds like Generation 1 spent too much time accumulating wealth to teach their children (Generation 2) about how to do the same for themselves!



Kevin.

 

[Macca]

Hi Kevin,

The actual cause of the "shirt sleeves to shirt sleeves in 3 generations" phenomena has been studied quite a lot.

I believe what it is, is simply that some one with enthusiasm and drive sets out to better their position in life. They may start a business, buy a farm, invest in real estate or simply find some profit making venture that they are better at than others. They create the wealth, they encourage their offspring to go on with what they have created but the off spring don't have the magical "IT" that is required so they battle on, gradually going back wards. Quite often because their parents were successful they have had everything they want when kids and don't grow up with the hunger that drove their parents to succeed. The grand kids get it even easier because when the achiever dies the kids sell off whats left and live on the money. By the time the grandkids mature their parents are living on the proceeds so very little left to inherit.

I have seen this in 3 different families.

If you want your kids to be ambitious, learn to say no, let them do without every latest fad, make them wait until Christmas or birthdays for gifts. Let them save up their pocket money to buy what they want.
They then grow up with a lot more ambition than those that were spoon fed.

Macca

 

[bbruham]

G'day all,

The first generation builds the wealth.
Second generation triples the wealth.
Third generation loses the lot!

Is this goodbye the Packer's?

First gen. Frank Packer.
Second gen. Kerry Packer.
Third gen. James Packer.

As a fan of the Packer's I hope not.
Actually a fan of Kerry.
It's great to see people like these aspire to greatness.
Let's hope this is way off this time.

Bruce G.

Winners make it happen.
Loses let it happen.

 

[Ross Sneddon]

An old saying, trite but often true

"Clogs to clogs in three generations"

Regards

Ross

 

[davids]

Hi all,

I have seen through my own families experience that if the second generation is not tought how to not only maintain, but continue accumualting wealth, it will be squandered.

Davids

 

[adaran01]

I find it quite common and very distastefull, the amount of people hanging around there parents waiting for them to drop off so they can get at some inheritance.
I have done pretty well for myself, even though I still struggle (relatively), and no-one has given me anything, apart from a good upbringing.
I have told my parents the only things I want when they go are items that are of sentimental value.
What they should do is in their retirement take out the biggest loan possible against their house, and go on one hell of a world holiday together.
Life as far as Im concerned is what you make it, recieving a handme down from someone is not going to make me feel better, why?, because I can't look back and say I did this, I made my life what it is.
I respect a great deal the people who start with nothing, and build from that, I don't respect someone because they had it handed to them on a plate.
I remember seeing a story about the youngest self made millionare (about 9 yearts old). It turned out his Dad was a filthy rich doctor who had quite obviously helped out, give me a kid from a working class suburb in any major city, with a family who is struggling to make ends meet, then I will believe its not some sort of media stunt.
Regards Adam

 

[JumJones]

Part of my retirement plan, and before I drop off, is to lock up most of my assets in a trust whose purpose is to donate to childrens charities. I wont have to go on a spending spree befire I carck (sp?) it, because I already live and experience life to the fullest. I certainly am not miserly, apportioning about 20% of all income to having a damn good time.

When I go the kids will only get one thing .. all the experience I can possibly impart in the fiscal realities they face. Whats the use of giving someone wealth? We all know what happens to most lotto winners .. the only ones that do any good are the ones with financial sense. I say give them some wisdom, start them young to give them experience, and the rest should take care of itself.

Heh, my folks retired at age 50, having just paid off their house, with 2 IPs, and are travelling the country selling coffee and doing odd jobs (the crazy old bugger still climbs trees in spurs to lop branches!!). They absolutely love their life, and I dont give a stuff that I'm not getting one red cent inheritance. I was taught financial responsibility, decency and most of all charity.

Sunstone .. you left out 0-18 age bracket. Educate them and they wont have to save for a car, a house, a portfolio. It will all be automatic. It wont be saving, it will be called being financially responsible, of which investing is part thereof.


Back to lurking..

 

[geoffw]

I had most of my support from my parents when I was growing up. I can only see a lot of the sacrifices they made in retrospect. They put so much in for us at a time when they were trying to build up a business- I'm sure the business would have done a lot better withuout us- but it left them comfortable and able to semi-retire early.

I realised some years ago that I needed something better than superannuation to be able to retire comfortably myself. It just took me some years to find the answer myself. The answer I was found was somewhat different for me than it was for my parents- and different again than it was for my maternal grandparents- who retired well off by speculating in vacant land just outside a country town.

Now my parents have done the hard yards (metres?) and are enjoying retirement. They're 75, and still healthy and strong. They're living on annuities- so I know that my retirement plan does not include anything from them. They will probably outlive me. I'm very thankful to the likes of Peter Spann, Jan Somers, and contributors to this forum for helping me to realise that there is a way that I can have a financially healthy, if not early, retirement, despite a late start.

 

[paulzag]

Allow me to run against the herd for a minute.

Imagine how you'd do today if you'd started with a financial education and some capital to make it work.

I will not live miserly and conserve my wealth for the kids. Neither will I squander it and force them to make their own way.

I set an example that includes charitable giving. As a matter of fact I give sacrificially - it hurts to give 10% of my gains away. Imagine what I could do if I kept it? But it I don't start now when will I start?

OK so my kids will get a financial education plus a series of venture capital investments to back their ideas. They'll make mistakes, expensive ones. But how else will they learn? And how will they grow wealthy if you starve them at the beginning? What good could they do in the world if they became billionaires?

Wouldn't any of you like your achievements to be exceeded by your offspring?

Regards

Paul Zag
Dreamspinner

 

[Desto]

Yep, it was definitely not a good time to invest for me. So I did and I suddenly have a budget for my 'discretionary' expenses and I don't feel guilty about enjoying myself, knowing that a good portion of my money is invested and working hard for me.

As for building wealth for the next generation, nope. I don't have kids, but even if I did, I'd make sure they are educated in managing finances and how to create their own wealth. If they want it, they'd have to work for it.

In the absence of kids, my money will go to create a charitable foundation, maybe a scholarship fund, so this way I have contributed a little to the betterment of society.

I"m glad I took the plunge when I did.

 

[Ross Sneddon]

Hi Guys

One thing I note are the number of people who all say, and I have been no exception, "I will give my kids the best Financial Education" I can and then they are on their own etc., etc..

I agree with this philosophy but the thing that alarms me most is that kids are NOT taught financial matters at school. I have checked extensively within my limits and I don't know of any school that teaches "finance", money matters, investment, and those other things we talk about on the forum.

Now I would be happy to stand corrected, but I don't believe kids are exposed to savings systems, investment planning and implemantation, long term savings and investment, retirement planning, and all that unless they are from fortunate families. I didn't get the knowledge mainly because my parents didn't understand either. What little they learned themselves, they did their best to impart to me, but surely education should be better than this.

I learned I think, in a manner similar to many of you who contribute to the forum, and that was partly by accident and partly because we attended seminars, read books, this forum, luck, trial and error and from wherever.

And yet it is so important, perhaps more important than many of the subjects currently taught at school. Education in my mind is essential and you can't get too much of it, but surely there is a better approach to finance education than simply hit and miss.

One of my sons spoke to me earlier today and we have arranged to meet tomorrow so that Dad can teach the son about finance investment. Now there is a broken family situation involved here and we have not had as much access to each other as desireable, but as an individual, he is not stupid. He is a graduate in Laws with honours, master of Arts plus a PhD to boot and he said to me today, Dad I don't know anything about investment, will you teach me?".

Frightening, isn't it. It frightened me. I now have a vocation, one to which I will dedicate a lot of time and care.

But what of education generally. I am not a teacher but think this is something we need to addreass, What say you?

Regards

Ross

 

[Danni]

Ross,

Alas, you are correct. Our educational system, from primary through to University, does not at any point cover personal financial management (maybe if one does take some kind of finance course at university?).

I have experienced secondary education both here in Australia and in Germany. Both had zilch about managing one's own finances intelligently , other than, 'have a budget and don't spend more than you earn'.

I am from a relatively poor background. My mother was a WWII refugee and wanted us all to get degrees and not have to work menial jobs for a meager wage. Well, we did just that. Then I realized that while I had a high income, it was spent as quickly as it was earned.

I learned about investing in property by accident because I always had an indying desire to have my own home. So I read up about home buying. While scanning a bookstore's bookshelves, I came across a book called, "Investing in Real Estate on a Budget". Being totally inexperienced in buying real estate since my family has always rented, there is just one line that I remembered from this book as I went about to search for my place in the sun, 'time heals many mistakes in real estate purchases'. So I bit the bullet, followed my heart to the bay and bought a piece of land to build the smallest house that I felt comfortable with paying off.

Then I started reading more and I worked out that my superannuation would probably amount to around $100K, if I'm lucky and work until I'm 65. I didn't like that prospect at all. More reading on my favourite subject of real estate investing, finally moved me in the right direction; and I'm still learning.

I spent many years at university getting a string of degrees, but not one of them taught me what I really needed to know.

I don't want to be cynical, but society does benefit by making sure that as few people as possible find out how to create wealth, and ensure that as many of the population as possible remain ignorant and unmotivated in this matter. After all, we want our properties to be rented out by those who work hard for a living but are always broke, or those who live for the glitz and glamour of a city apartment, but are always broke and think that this is their lot.

D.

 

[NigelW]

I'm with Paul on this one. I want to help my kids (altho they're some long way off yet! ) but they'll have to present a viable business plan to get venture cap from me!

It is of course a very personal choice, but I think half the fun of making money is being able to buy things for your family that will bring them great joy or even just make their life easier.

 

[Ross Sneddon]

Hi Nigel

My point is that if your kids in due time have been unable to learn about investment practices and all that investment means, they will be handicapped in knowledge.

Will they be able to assess an investment possibility and prepare a viable business plan for presentation to you. We all want to help our kids. It is the manner of assistance to which I refer.

I really think we are saying some similar things here.

Regards

Ross

 

[Kevmeister]

I agree that financial education has to be one of the most overlooked area of education in our education system. My daughter is 16 months old and I will do our best to both educate her and possibly to have sufficient self-wealth to help her when appropriate.

But I also believe that children need to appreciate work and achieving things themselves to make them appreciate what they have. I bought and paid off my own car etc (hmmm, not a good "investment" though!) with 100% of my own money, not even a loan from my parents (who couldn't afford it anyway), and it has taught me to appreciate the car, look after it, and appreciate the enormity of the commitment I took on for 5 years or whatever.

That leaves my wife and I in a dichotomy of wanting the best for our child but knowing that by giving her too much in the future we may actually be doing her a disservice. She might become reliant rather than self-sufficient, unappreciative instead of appreciative, etc.

I think having a good job may well still be good advice, but as another forumite said, the more you earn the more you spend. It is the bane of nearly every income-earner I expect.

In some ways, even simple bits of advice like Paul Clitheroe who suggests saving 10% of your income *always* is useful. I would prefer to say "invest" rather than "save" but that still leaves a big question of "how".

One thing I notice as I get older is that the years seem to pass quicker. A year for a child is an eternity. Whilst as adults we are prepared to hold property for 15+ years these timeframes are almost incomprehensible to most 15 year olds, who think "that's my entire life".

The education battle is not really just an education battle either. It's a battle to educate your child against a society which as a whole is becoming more consumer-driven, more motivated by the desire for instant gratification, etc.

Education will only be half of the battle. Convincing your children that delaying their gratification by investing money now, for their future, will be the harder sell I believe. Peer group pressure can be implicit, like the implicit pressure one might feel to wear new fashion clothes just because your friends are.

It will be an interesting parenthood...

Kevin.