What Is Wealth Hoarding? What Does It Mean?

bargain huntress on 30/06/2023 - 16:15

It's something I keep seeing and hearing complained about. Including on ozb sometimes.

Often by millennials or younger. Often aimed at baby boomers.

I am a millennial and in a bad financial and life situation. But I don't get it because:

Didn't the people who are now retiring mostly earn their money?

I understand part of it comes from real estate gains that are harder to get now. But isn't that luck?

What is it the boomers should actually be doing according to the people complaining?

That's what I don't understand.

Financial

Comments

  • rayray78 on 03/07/2023 - 10:20
    +1

    I am Gen X, regardless of age I think most people are not financially literate enough. For example I see people losing so much on crypto and basically treating crypto and shares like a casino. Teaching basic commerce should be compulsory in high schools I rekon.

  • Hangryuman on 03/07/2023 - 11:53
    -1

    'What Is Wealth Hoarding? What does it mean?'

    I arksed Go(oogle)d

    'Hoarding in economics refers to the concept of purchasing and storing a large amount of product belonging to a particular market, creating scarcity of that product, and ultimately driving the price of that product up' - https://en.wikipedia.org/wiki/Hoarding_(economics)

    'What Causes Financial Hoarding? Most often, the cause of financial hoarding boils down to fear — fear of going broke, fear of not being able to access money, fear of being taken advantage of, fear of technology and so on' - https://www.kiplinger.com/retirement/what-is-financial-hoard…

  • outlander on 03/07/2023 - 15:48
    +2

    What is it the boomers should actually be doing according to the people complaining?

    Not voting for the liberals in the 2010 or 2016 election.

    • netjock on 04/07/2023 - 09:26
      +1

      Didn't LNP that is blamed for the $1T debt pile also bless us with a $19bn budget surplus recently?

      • NigelPearson on 05/07/2023 - 18:14
        +2

        No, Labor turned it around during their short time in charge!

        :-)

  • trapper on 03/07/2023 - 16:49
    +4

    'Wealth Hoarding' lol I've heard it all now, it's called saving for your retirement…

    • netjock on 04/07/2023 - 09:27
      +2

      It is only hoarding when someone else does it.

      You know hoarders never admit they have a problem.

      Complainers never admit they have a problem, it is just someone else's problem they need to take it upon themselves to solve.

      I hope I live long enough to see these people take a dump and tell us someone else should lend a hand to wipe it off their bum.

      • Juice-Wa on 04/07/2023 - 12:40
        -5

        I hope I live long enough to see these people take a dump and tell us someone else should lend a hand to wipe it off their bum.

        You mean like the boomers slowly losing gross motor control with age? But don't worry, they're not asking for it because they're too stubborn to admit they need to go into fulltime care :)

        • trapper on 04/07/2023 - 19:25
          +6

          What a repulsive comment.

  • Willy Beamish on 03/07/2023 - 18:20
    +2

    never heard anyone use that, but real estate is (profanity) in australia and unobtainable for majority of younger people unlike those boomers that paid 20k for a house they now want 2mil for. obvious exaggeration but you get the point. Also consulting jobs that pay stupid amount for doing nothing, gtfo.

    You want to own multiple properties and price younger generation out, ok good for you, but don't also (profanity) them up the ass with high rent also.

    • netjock on 04/07/2023 - 09:30
      +1

      unobtainable for majority of younger people

      Still affordable in Melbourne 20km from the city. Search for a suburb called Dallas. $450k for a 3BR 2 BR on a 500m2 block built back in 2000. 10 mins walk to the station. 37 minutes on the train to the city.

      It just isn't the do nothing coffee sipping inner city suburb that you can a tiny Victorian era home for $1.5m in Carlton.

      Also consulting jobs that pay stupid amount for doing nothing

      I am trying to put one of these together now spanning London to Melbourne. Got to get in there with the action.

      • techno2000 on 05/07/2023 - 15:21
        -1

        Dallas,Broadmeadows etc are dodgy suburbs full of "interesting" characters.
        I wouldnt even rent there and buying…..Nope.

        • netjock on 05/07/2023 - 15:23
          +6

          So what, same with St Kilda, Fiztroy, Northcote back 20 years ago. Either you get in while you can or you don't get in at all.

    • Frozensage on 06/07/2023 - 14:52
      +2

      girl at work just bought a place in the west side of Melbourne. Small land and house. Think she's in mid 20s, so it's still definitely possible but ppl just want to find any excuse these day (or maybe always) to say it's too hard.

    • mlburnian on 06/07/2023 - 23:46
      +2

      The sooner you shake yourself off this attitude, the better your future will be

  • okei pokie on 04/07/2023 - 15:22

    im noit an expoert but has tro do with money

  • GandalfTheCheap on 05/07/2023 - 10:46

    Never heard boomers accused of wealth hoarding, only billionaires.

    Another forum topic about nothing. You'd think I'd learn not to click on these…

  • ihbh on 05/07/2023 - 12:32
    +2

    Most wealthy individuals have their wealth tied up in productive assets of some sort - direct business or indirect (shares), and property - e.g. Meriton. Some also own expensive property, but nothing wrong with that, someone's got to own harbour property, etc. People who own multiple properties will most likely rent out the ones they don't live it - which is a productive use of their assets.

    • netjock on 05/07/2023 - 15:26
      +1

      Most wealthy individuals have their wealth tied up in productive assets of some sort

      Nobody ever became a billionaire buying up established homes and just sitting on them.

      Next we'll be tracking down the person who won the $100m powerball and try to tax them out of their lucky winnings.

  • johnback3 on 05/07/2023 - 15:55

    Wealth hoarding is a real thing, yes even in Australia, and yes even in middle income earners.
    I am a millennial and have experienced this with my parents, my partner's parents, and many of my friends parents ("boomers").

    The central idea is when you are in retirement or approaching, the wealth and assets you have accumulated throughout your working should not just fund your lifestyle, but should remain with you to pass onto your children. This leads to another term you should be familiar with "generational wealth".
    It's a strange mindset, but it's more prevalent than I even knew.

    I remember arguing with a parent ("boomer") because they didn't want to sell their investment property to pay for extensive medical bills because "that is for the kids after I'm gone" (note: the kids already own their own home, and would never live in the aforementioned investment property).

    This is hoarding, whether it is shares or property or some other asset. It becomes toxic when one believes they are entitled to the same concessions as others in retirement who are not as asset rich. I know a parent who complains their pension payments aren't enough to pay for the standard of living they would like, but also refuses to sell any of their fairly extensive portfolio. Again because they want those to go to their own children.

    Boomers, if you're listening (prove me wrong).. take it from me, we don't care about our inheritance.

    We love you and we want you to enjoy your life. Spend it up while you can :)

    • netjock on 05/07/2023 - 20:35
      +1

      It becomes toxic when one believes they are entitled to the same concessions as others in retirement who are not as asset rich

      If I got close to $3m super balance by the time I retire I wouldn't complain about not getting the government pension.

      I know a parent who complains their pension payments aren't enough to pay for the standard of living they would like, but also refuses to sell any of their fairly extensive portfolio.

      They just didn't plan well enough.

      Boomers, if you're listening (prove me wrong).. take it from me, we don't care about our inheritance.

      I would agree with this. I've got as much as my parents and they are 30 years older than I am. I still got decades to retire. It is like they think it is some kind of compensation for all the missed childhood opportunities.

      But don't forget some boomers feel guilty about working for so long with nothing.

      If parents have nothing, their kids blame the parents. If other people's parents have something and your parents have nothing then lets advocate for taxes.

      It is the lets look around and see who is living large and needs cut down to size again.

      The problem with the country is why people are busy but can't seems to make ends meet (because we only do mining and house building, we're not very good at house building either). Imagine if we had a more balanced economy.

      Politicians like to have the people fight amongst themselves so they can loot the country. Remember lets cancel stage 3 tax cuts because it is tax cuts for politicians and billionaires? Actually there is only about 1k of these people. So that is $9m a year. Easy to pass a law for a surcharge. But they just want to take a coffee a day from the person on $50k because it really adds up.

      That lost revenue for stage 3 from $170bn to $250bn. I think they are getting an additional $300bn in tax. They are eliminating the 37% tax rate so everyone is on 30% so they are losing $7 per $100. $80bn additional lost is about $300bn addition tax collected on 30%. Crazy numbers but they don't want you to know that.

  • pogichinoy on 05/07/2023 - 16:51
    +1

    Nothing wrong about it.

    I'll happily hoard my wealth so I can build a financial foundation for my family and future family.

    • Eeples on 05/07/2023 - 18:12

      …. Until the revolution happens.

      • pogichinoy on 05/07/2023 - 19:01

        Bring it.

      • netjock on 05/07/2023 - 20:25

        That people decide they are going to pick up their act? Because you can't depend on other people giving you a cut of their labour?

        The ultra rich should give a good deal of it back. Unless you don't trust your DNA to enable your kids to build upon your shoulders (give them the tools of a good education and let them build something themselves)

        Funniest thing is these "rich" people government is talking about isn't even that rich. If you invested $200 a month for a new born today in the global stock market index by the time they are 65yo they will have $3m. Contributions will be like 3% of the total, it is all compounding.

        • [Deactivated] on 05/07/2023 - 21:56

          If the past is any guide $3 Mil would be devalued to to $300k in todays money.
          https://www.in2013dollars.com/us/inflation/1958?amount=28500…

          HOWEVER a $3Mil current balance invested now, in a TAX FREE superfund, in the US market for 65 years with no further contributions, other than dividend reinvestment, would grow the balance to $1,975,464,938 - TWO BILLION DOLLARS.

          https://www.calculator.net/investment-calculator.html?ctype=…

          I think that is the point - At least use relative financials to avoid confusion

          • netjock on 06/07/2023 - 01:02

            @[Deactivated]: I think the problem you have here is:

            If the past is any guide $3 Mil would be devalued to to $300k in todays money.

            Average inflation rate 3.69%

            HOWEVER a $3Mil current balance invested now, in a TAX FREE superfund, in the US market for 65 years with no further contributions, other than dividend reinvestment, would grow the balance to $1,975,464,938 - TWO BILLION DOLLARS

            You are assuming returns 10.5%

            To compare apples with

            I think that is the point - At least use relative financials to avoid confusion

            Relative is if you compared same starting balance one is inflation and the other is returns and the difference between the two.

            You are looking at a span of 130 years with first half at inflation, the second half at the market returns. So how much is two billion dollars in 2088 in 1958?

            Anyone got a super balance of $3m and still be alive in 65 years to spend it?

            • [Deactivated] on 06/07/2023 - 04:14

              @netjock:

              You are assuming returns 10.5%

              Of course so should you returns should be based on the largest most liquid and studied market on earth. Yes, I am only quantifying your statement earlier new born today in the global stock market index by the time they are 65yo they will have $3m

              The US market is the appropriate stock market return "Average stock market returns depend on which period you measure and the index used to represent the U.S. market. The index of choice in most cases is the S&P 500. It’s a useful proxy, but it has only been around since 1957. Fortunately, you can use data from Nobel Prize-winning economist Robert Shiller to approximate the S&P 500.
              Using Shiller’s data, since 1971 the S&P 500 has delivered an annualized return of 7.58%—or 10.51% with dividends reinvested."
              https://www.forbes.com/advisor/investing/average-stock-marke….

              Your maths is out or you're disingenuous in your data - the sources and calcs are in my posts.

              apples to apples

              • netjock on 06/07/2023 - 11:59

                @[Deactivated]:

                apples to apples

                You are saying your 10.5% is market returns. That I am not disputing.

                I think you use use 3.69% to discount $3m for 65 years to work out it is worth $300k.

                Compared to $3m now compounded at 10.5% is worth $2bn in 65 years then you are mistaken.

                If you said that you had $300k in 1958 and it went up with inflation it is worth $3m now.
                The alternative being you had $300k in 1958 and invested it in the market at 10.5% you would have $189m which is a difference of $186m

                You are comparing apples and apples the time frame and same dollars just at different interest rates.

                I think you don't know what apples and apples actually means in finance?

                Your example is still 65 years except it spans 130 years. It is like comparing two bridges not side by side but one joined to the other. The inflation is locked historical and locked in. So is the historical returns. But your starting number is not the same. Your end number is not the same.

                You know this chart right? Vanguard All the lines start from the same point in 1992, not one joins at the end of another right? That is relative financial comparisons (relative as in over same time periods)

                • [Deactivated] on 06/07/2023 - 12:34

                  @netjock: Thank you for a very considered reply - appreciated.

                  Yes one is relative purchasing power and the other is compound returns.

                  That is to invest 200/month for a new born over 65 years at 3% is around $3,000,000 but that is only $300,000 in todays purchasing power. So $3,000,000 in 2023 may be 'rich' but $3,000,000 in 2088 certainly is not equivalent.

                  Inflation and the low base affect the wealth whereas a person with $3,000,000 now invested tax free in the S&P500 with dividend reinvestment would be a mult-billionaire in 2088 (65 years). The same would hold true for $3,000,000 invested in 1958 - they would be a multi-billionaire today.

                  I am pointing out the false equivalency of the same dollar amount for different times from your initial post. The likely result if limits are not placed on the unfettered tax free benefits of superannuation for wealthy people - the issue is the compounding tax free base amount - Super is a tax scheme for the rich.

                  • netjock on 06/07/2023 - 16:30

                    @[Deactivated]:

                    That is to invest 200/month for a new born over 65 years at 3% is around $3,000,000 but that is only $300,000 in todays purchasing power. So $3,000,000 in 2023 may be 'rich' but $3,000,000 in 2088 certainly is not equivalent.

                    The question is whether you as a newborn would appreciate $300k or nothing at all?

                    You missed the point.

                    It is also a demonstration model that since they are young and cannot invest for themselves someone did it for them to show them power of compounding.

                    Super is a tax scheme for the rich

                    It depends. If you are on 32.5% tax rate. Get a 50% tax reduction and 50% tax reduction on investment returns and tax free at retirement is a scam. Maybe it is too good to be true.

                    • [Deactivated] on 06/07/2023 - 17:19

                      @netjock: My point still stands $2 Billion tax free or $300K tax free.

                      The richer is subsidised by the poorer.

                      Honestly, I don't know whether you are deluding yourself, trying to delude me, or just selfish.

                      • netjock on 06/07/2023 - 19:21

                        @[Deactivated]:

                        My point still stands $2 Billion tax free

                        You new here? Unobtainable deal because there is no tax free super.

                        $300K tax free

                        This is your $3m now that was $300k 65 years ago?

                        Honestly

                        You're just deluded because for starters you don't know how compare two sets of numbers which differ based on returns vs inflation and plotting it over the same X axis and value on the Y axis.

                        Honestly you fail basic math.

                        • [Deactivated] on 07/07/2023 - 12:50

                          @netjock: YOU:

                          Funniest thing is these "rich" people government is talking about isn't even that rich. If you invested $200 a month for a new born today in the global stock market index by the time they are 65yo they will have $3m

                          ME: (INFLATION) No the $3M will be worth $300K equivalent due to inflation = poor (INFLATION)

                          ME: (RETURN) No compounded return x time in market thus a wealthy person with $3M in super over 65 years untouched would give a 2 Billion dollar balance based on S&P500. This is the reason why limits should be imposed on balances in super funds.

                          ME: It is a tax shelter and your tax rates don't seem correct however I have no interest in pursuing it.

                          Thanks mate, appreciate it - finally got me to spend less time on this platform and pursue more money.

                          A lesson in selfishness learned.

    • [Deactivated] on 05/07/2023 - 19:34

      This what happens when you bring in economic migrants and deride the national interest.
      The boomers coasted on the hard work and deprivations of their forebears.

      • netjock on 05/07/2023 - 20:22

        The boomers coasted on the hard work and deprivations of their forebears

        I am not even a boomer and I know that isn't true.

        Very few people get passed down enough wealth to have to not work a day in their life at all. It is more like they had the luck of not having government squander away all the natural resources of our country.

        Australia vs Norway. One government gives it all away then some, the other have banked it an only use the investment returns.

        • [Deactivated] on 05/07/2023 - 21:35

          Yep, that would do it - I can't argue with the sentiment that investment in Australia's future would lead to an increase the current quality of life extending across generations. Instead of selling the Nation out to debt, internationalists and pacificating social program largess. It would however require a collective interest in the National interest

          I am old enough to remember people born in the 1870's and they remembered stories from 50 years prior - the boomers were the entitled generation where national interest gave way to self interest and the entitlement of today. It just looks normal now but it was not how it once was.

          Nevertheless fiscal restraint and investment, instead of social benefits, would be beneficial to the Commonwealth and for the Common Wealth of us all.

  • Chubbsmcfatflabs on 06/07/2023 - 11:45

    never going to happen..
    someone famous once said ( yes it was PK) 'In the race of life, always back self-interest - at least you know it's trying'.

  • mokorusmania on 06/07/2023 - 14:27

    I wonder if I will ever be able to buy my own property in Sydney without Bank Mom and Dad. If people stop at 1 investment property, may be there will be enough for everyone and property wont be so expensive.

    • pogichinoy on 06/07/2023 - 14:28
      +1

      Did you start saving for a property since either 16 or 21?

      Not all your savings of course, but the majority you tuck away for a deposit?

      • mokorusmania on 06/07/2023 - 14:36

        Been saving since I start work which is like 15 years alrd now. Have a sizeable deposit but because I am not high income earner I cant borrow much. Apartment is Sydney is looking around $750k for decent area, I am not sure how singles can afford this.

        • Frozensage on 06/07/2023 - 14:50

          You mean you can't get a sydney 1 br place in the very outer suburbs for 300k-400k?

        • Eeples on 06/07/2023 - 16:19
          +2

          Some first home owners buy in a cheap area and then move later to a more desirable location. Get into the market as soon as you can.

        • pogichinoy on 12/07/2023 - 21:41

          Sorry dude but despite having a sizeable deposit, due to your income, you can only afford in the areas where your income allows, be it Penrith, Blacktown, Campbelltown, etc.

          I know its Auburn but without knowing much about your circumstances, you can afford this: https://www.domain.com.au/328-95-station-road-auburn-nsw-214…

          It's fair that decent areas are priced accordingly cos well y'know, it's a decent area. People will decent incomes will flock there.

          Keep in mind, Sydney is the highest populated city, with the highest average wage (Canberra doesn't count), city with the largest economy, etc.

          You are competing with a lot of people.

  • Frozensage on 06/07/2023 - 14:48

    Isn't things always gonna get more competitive and harder as population grows? Like I did a Eng course at Melb U getting a 90 on VCE, but I doubt my kids will be able to get into Melb U unless they got a 95+? And I imagine in the 80s you could just walk into a uni with a very low bar? Maybe what we need is a hard reset and ww3?

    • Eeples on 06/07/2023 - 16:22

      I think uni admissions is a poor example.

      Unis can offer more places to fee paying students even to govt supported fee paying students (HELP).

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