The ATO also collects around 35% (depending on the tax rates at the time and individual circumstances) of the interest earned on cash deposits. So the real rate of return is closer to 3.3%
So $100k cash compounded monthly at 3.3% over 30 years is $268,000 However your original investment's purchasing power is halved. i.e. a basket of goods worth $100 in 1990 now costs $200. So over 3 decades your investment has had a capital gain of only $68,000 in todays dollars.
Meanwhile if you held an ASX200 index fund you would have a capital base of around $1.2m And be earning dividends of around $48,000 per year. So every 1.5 years you make what cash made in 30 years
Property is similar Using your $100k to buy 1 Sydney house in 1990 for $155k at 35% LVR. Which would have been positively geared. You would now have a capital base of $1.2m and income of around $24,000 per year. (In reality you could have bought 3 at 80%LVR and have a base of $3.6m and income of $72k)
The point being that perhaps savers are being provided an opportunity at the moment to re-assess their investment strategy.
Oh, but that is all going to change with the big re-set right? Well if it does. And let's say it falls by, hmmm, let's go crazy. 50% drop across the board. The true bear apocalypse comes to fruition!!
Property and share buyers would have $600,000 assets. And savers would have $268,000 cash.
Which brings us back to greedy. Are the above property and share buyers greedy? All they did was choose a different investment class. Sure the property buyer borrowed a small amount of funds but does that make them greedy?
Are those that amass a nest egg to self fund their retirement greedy? Or are those that didn't and rely on a government "bail out" in retirement greedy?
