Politics

'Plus and this is the big one Souly, and the very nature of what we are talking about

People who would access their Super for a house deposit don’t have the money to invest, that’s why they would want to access their super, so sure invest savings if you have it

But they don’t.

So they are losing. that renting/investing proposal only works if they are investing. They don’t have the money, hence why they want to access their super.

Now let’s use your calculations

So Shane and Jane get access to their Super and get approved for a loan for 320k and buy their first home in Cranny, 30 years, fixed variable, insured.

Over 30 years they will pay $217561 in interest on top of the 290 they borrowed. So all in they are out 510k on their home. Retire at 67, starting at a zero balance today (coz he cleared it to get the deposit) he retires with around 250k super, and a home, lets be conservative. Worth 400k

So his net worth is 650. (Not counting for 7 years he is free of his mortgage and could have saved 50k in that time

Callum on the other hand rents for the next 30 years of his life and starts his Super at the same time instead of zero with a base of 30k, he doesn’t invest because he never had any savings but plugs away renting.

He retires with around 340k

His net worth is 340k

And he spent , 617k in that same time on rent.

Post 67 Callum is still renting, paying his 396 and lives another 20 years.

Those last three years he does not have a cracker to his name if he only spent his Super on rent.

Shane has a roof over his head till the day he dies and his kids end up with 150k in each in inheritance.

So assuming his house doesn’t devalue to the point it’s only worth 80k when he dies, he made the right decision for his family in 2017.

This, your gesture is creating generational wealth for your children and grandchildren. They do the same thing as you did for their kids and you check out having turned your one home into multiple homes across your family.

You are a champ.

People who would have access to their super to get started don’t have kick ■■■■ parents like you. They need to get started somehow.

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Sorry you completely misunderstood.

What I was saying that if you were renting a property worth 320k and paying 396 p/w you were being ripped off. Doesn’t happen. If it was the case your property yield would be close to 6% and you’d be close to being positively geared. Melbourne yields are generally between 2 / 3%.

Your example is invalid (and wrong cause poor old Callum might just save for two more years to get his deposit instead of drawing on his super, not to mention Callum seems to be single on one income vs two). Why, because the issue here is making property more affordable for people to buy their first home. If simply getting a bigger deposit helped, then the first home buyers grant would’ve done the trick right? It didn’t increase the costs of homes by $10,000 when it was introduced right?

Why bother with super at all then? By your maths no one is better off with super. Salary sacrfice and all that is useless. Buy a house! Just get your employer to pay the super money into your savings account. Callum can’t win no matter what he does! Getting rid of super will mean the government can rake in an extra $25.1 billion per year!*

It took years and years for superannuation to be seen for what it is and you want to undo all that work for every generation going forward. We even increased the mandatory amount that is supposed to be paid to our super. Using super is a short term relief cause at some point if things continue as they are for housing prices even the extra super they get for the deposit won’t help.

Your sentiment is good, your maths and outlook are skewed.

*http://www.treasury.gov.au/Policy-Topics/SuperannuationAndRetirement/supercharter/Report/Chapter-2

I have no superannuation fund. I had a small amount accumulated from various employment over the years, but at 55, I cashed it all it to keep my business solvent during a bad period, basically so I could pay staff. Many small business people have been there.

We do have a number of properties, our home, my office & factory, Mrs Fox’s Medical Rooms and an investment property in Toorak.

While our home is nice, it is worth zip unless you sell it and you need to live somewhere, so while it will keep me out of the rain when I retire, it gives me nothing in income to keep me fed or buy me seats to the footy, or pay Foxtel.

The investment property and the Medical practice as subject to a large loan that means that currenly our equity is about 30%. The rent income from both places does not cover the mortgage repayments but it does cover the interest. When you add in all the costs it is very negatively geared, and unless there is a large capital gain we will at best break even if we sell. If negative gearing tax benefit is eliminated then it would hurt us further.

My office and factory is my super, I guess but in order to cash in, have to sell it and sell the business as well, and there doesn’t seem to be anyone beating the door down to buy it. The property is worth about $1,000,000 on a very good day, but could be as low as $850,000 if forced to sell quickly.

I did the sums, and if we had put all over money into a super funds like CBUS when we started our business 25 years ago and rented office and home, we would have had much less overheads, no interest payments, better cash flow control and a larger nest egg at 65, projected to be worth over $3 million.

We have all been bought up on the myth about home ownership, but it does not give great returns in retirement and is really only a boon for your kids when you die. In Germany, home ownership is much lower and not seen as important. Many rent all their lives in the same home with long secure leases.

Maybe we are looking at this from the wrong perspective. It should be about the best way to get a roof over our heads, and not housing ownership. Politically it should be about quality of life for all, which should mean less working hours, better life style and lower stress. Our economic system has made younger generations angry at older generations, and the future seems difficult for many. The gap between rich and poor gas widened, wages have stalled, the world seems more dangerous, and does Trump/Putin/Turnball/May etc have a solution ?

It is not an argument about Left vs Right, there is a better way, but farked if anyone knows what it is, or are prepared to actually find out.

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If your financial advisor is just suggesting that you should purchase more property and not include some diversification, you should sack them.

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as someone who works in this industry just a word of warning that SMSFs will be coming under very heavy scrutiny from the ATO in the not to distant future.

ATO have barely looked into the actual investments made by SMSFs especially in relation to property, sole purpose/investment tests etc.

See, we are talking about two different things, I’ve only ever been talking about why people would want to use their Super as a house deposit. Not make housing more affordable. While that is the obvious answer to housing obtainability it’s not going to happen.

I was only talking about two different senarios of two different households on the same income, one who rents and one who buys using the proposed Super method.

You continue to ignore the point I’m making is both households don’t have savings.

Compulsory euthanasia?

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Soylent Green.

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Not sure if covered, but why are we paying $1bn to a corrupt Indian corporation who cannot run a business well enough to recoup from their own investments to destroy large swathes of our environment to provide non-preferred fuel to an industry that already gouges consumers when any potential (read “bullshit”) benefit to the taxpayer will be completely localised in a small part of the country?

Asking for a friend.

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Because they are kicking back (or said they may) large sums of money to our politicians under the table

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Thing is, it kinda works for a given household in isolation, but on a nation-wide scale it falls to bits.

Basically, if you can suddenly use your super for a first home deposit, so can everyone else, which frees up a massive new pool of money into the housing market. Entirely predictable result of that is that housing prices jump rapidly - they did when the first home buyers grant came in, and this is an order of magnitude bigger. It’ll somewhat help first home buyers compete with investors for houses on a relative basis, but they’ll end up paying considerably more on an absolute basis. And cos house prices are suddenly rising even more rapidly, instantly there’s more incentive for investors to get into the market, so they’re willing to pay more - possibly more than first home buyers can manage. Catch 22. And cos first home buyers under this scheme would basically be sinking all their resources into one asset while investors are basically only using their spare money, if there is a property bubble and it bursts, the first home buyers will lose utterly everything while the investors will merely take a severe but not fatal haircut.

The fundamental problem is that housing has two roles – investment, and roof-over-head necessity of life. As an investment, you want its price continually rising and rising fast. As a necessity of life, you want it affordable to everyone. There’s no way to reconcile those two competing requirements.

On a broader economic level, it’d be good to decrease the amount of investment money dedicated to property. It’d make housing more accessible to lower-income earners, and it’d free up that investment cash to go into business investment, innovation, and sectors of the economy that actually create jobs rather than just sit around on qtr acre blocks. But saying that is easy and doing it is hard - for decades property investment has been an entirely rational choice (arguably the only rational choice) and there’s a huge number of people with their life savings in bricks & mortar. You make housing affordable (significantly reduce property prices, in other words) then those people get screwed over, unless you grandfather all your measures which basically enthrones them as a property-owning upper class.

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1953 was a mixed year

  • Good year for Grange, or so I am told

  • Collingwood the flag, Bombers were fourth

  • And us blokes born then were the last National Service lottery, which meant I didn’t go to jail…

So it seems we are the same vintage, must be the Mrs Foxes that keep me young.

what you say is all extremely valid, but again, and I re-iterate

The super solution is about people who are struggling to save a deposit.

House prices could halve, and these people are still not entering the market because they can’t save a deposit. The average household who is on 60k is in a lot of cases living pay check to pay check, or saving extremely slowly. House prices lowering would help in the sense that the amount the slow savers are saving would decrease meaning they get there sooner, but in a lot of cases they are saving slower than than the amount they are aiming for is rising.

There needs to be a lot of rules around how and in what circumstance people can access their super to supplement a deposit. Agreed. But I don’t think it floods the market. The FHG is a good comparision. But people need to understand there are a lot of roofers out there who are being severally impacted by investors and increased cost of living expenses.

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Running the numbers on your Shane and Jane scenario (using a big 4 servicing calculator that determines your borrowing capacity)

$65k household income - 3 kids, one wage - their borrowing capacity is $143k

Let’s be generous and add another 10k in tax free government income and ignore that they most likely have some sort of credit card facility, personal loans or car loans to their name and their borrowing capacity rises to $240k

So please tell me how accessing 30k in super is going to solve the issue of purchasing a median house? As I said earlier, it is irresponsible to put someone in a financial position where they are running to the line and not have at least a rainy day fund.

Introducing one half baked policy will not be the solution. We need to discuss the social issues (cost of living pressures, zero wage growth and expanding credit and interest markets) to work out how to best overcome this.

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If you can’t save while renting, then you can’t afford to buy (well, not anything similar to what you’re living in).

There will be a small window of people who can save a bit and will be able to accumulate a deposit quicker, but overall every buyer (potential or actual) is getting screwed.

Sometimes policy is not rational (mind you, for the moment this is PR and/or undermining, not policy). People support lots of things that aren’t good for themselves/the country.

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There are conditions where the selling of your business can be used as a one off contribution to your super fund. We did this a lot of taxi licence owners when they were worth half a mil in vic.

“Tonight the role of Tripper will be played by Benfti…”

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Interest rates are, right now, at historic lows. Someone who cannot save a deposit because they’re living paycheque to paycheque while renting has precious little buffer if they take out a mortgage and interest rates rise. Allowing them to access super to generate a deposit is papering over the cracks, and WILL pump more money into the market, unavoidably. You’d create a class of people mortgaged to the hilt, with all their assets locked into property in what is quite possibly a bubble market, who are starting from scratch on their super fund well into their 30s, and who have no capacity to absorb the financial shock from future interest rate hikes. It’s not a solution, it’s a bandaid. Worse, it’s a bandaid soaked in poo, cos it’ll end up making worse the problem it’s intended to solve.

The cost of property (both absolute and rate of increase) is the fundamental issue. Addressing that means addressing supply, and having a look at the tax incentives that are relentlessly channelling wealth from other investments into bricks & mortar.

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You really don’t care about the working poor, do you.

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