Sydney Maco

Something most people don’t like to think about is getting old, but we’re all heading there.
The aged pension is something that our parent’s generation aspire to, they see that as an achievement and an entitlement for long years of hard labor. The bar has been raised much higher for our generation, the aged pension should not even be contemplated as an option. We’re forced into saving for retirement through superannuation in a user pays system that would cause an outrage with the older generation. We’re forced into a private health system through tax penalties where the corporate world will now be responsible for our health and wellbeing. A world where over servicing and inflated prices swallow up any savings made through reduced government bureaucracy. Take a look at the US for example, medication we take for granted here, costs them an arm and a leg. Is a US-like society something that we all aspire to, or is it something forced upon us unwittingly by our submissive government, buckling under pressure ?

I believe that our generation will suffer the greatest strain financially in retirement since we have parents with one expectation, and a government with another expectation of us. We need to forget all talk about government pension, even public health, it’s here today, but realistically in 30 years time it’s every man for himself. Forget government subsidised medication like pensioners enjoy today, and heavily discounted public transport, these are a legacy of a bygone era. As individuals, even as a community we cannot realistically change this shift. What we can do is plan for these things and make a positive outcome, rather than let things happen, and feel like a victim. Awareness is the seed we need to plant in the whole Macedonian community, ignorance will not get us anywhere.

What can we do about this ? I see three options;

- Ignore, and let things happen
- Take action as individuals
- Take action as a community

I’ll explain why the third option is the most likely to see a positive outcome. Ignorance will get us to a state of minimal superannuation accumulation, maybe a house we own, parents in their 80’s to 90’s needing looking after. A fairly mediocre existence, forget about going on overseas holidays every year.
If we take things into our own hands, maybe invest actively, put some money aside, keep ontop of market trends, we’re likely to have only a slightly better outcome. This may sound surprising to most, especially those that feel they have a good handle on their finances and retirement planning. A little more money obviously helps, but what good is the money to you if the community you enjoyed at one stage no longer exists. Or your siblings, cousins, etc went down the ignorance is bliss path. Only a totally selfish person would say “so what, I worked for my money, tough luck to them all.”
Now hopefully you can already see why the third option is the best possible all round. More money, and people to enjoy it with at the same time. Allow me to illustrate with two extreme scenarios;

1. Community of retired Macedonians, all have a car, living in their own house, able to travel overseas regularly, attend social events, concerts, theater, sporting events, church every Sunday, etc. Enjoy each others company, meet regularly for coffee, dine out with others, etc. Independent of their children, feel free to come and go as they please.

2. Vast majority of retired Macedonians on minimal pension, most without a car, living with one of their children out of necessity, cannot travel overseas unless someone else pays for airfare, meet at the local shopping centre and talk about politics, bring a sandwich from home and wont even buy a coffee from Michell’s Patiserie. On the other hand there’s the handful of really well off retirees who are despised by the majority. They’ll go fishing, travel overseas, have a car to travel, but sadly the company is scarce.

We need to shift from the “entitlement mentality” and “victim mentality” held by most of our parents to one of prosperity. Prosperity we can build up as a community with common values, not as selfish individuals with no regard for others. The freedom we enjoy here in Australia is priceless, but even freedom with ignorance is the same being enslaved. I am hopeful that we can achieve the first scenario described above through open discussion and a forum between key members in the community, leading to a definite action plan.

The old school method of Maco investing is buy property, pay it off as fast as you can, then buy another one. This is a tried and tested method our parents have used to accumulate wealth over the last 30+ years with varying degrees of success. To their credit, they have done a great job given the circumstances and challenges faced. Is our generation shaping up to be just as diligent with money, or will we see a whole generation of ungrateful brats who squander their parents hard earned wealth.

Simple concepts that some of us struggle with these days include;

• Earn more than you spend
• Don’t buy something unless you have the money
• Don’t buy something just because it’s on sale
• If you need to talk to someone for an hour, drive over to see them rather than call them on the mobile

These days there are more sophisticated ways to invest, future and options trading, etc. I’m a firm believer that we still need to get back to basics before we can consider the more exotic investment types. It’s a mindset that needs to be developed before you blindly dive into any investment strategy.

One concept I came across recently was the distinction between Financial Literacy vs Financial Fitness. It’s like the difference between someone who has read a lot of recipe books, etc, and the other person who has actually cooked many different dishes, some of which came from a recipe book. Also the distinction between the objective, and the means to achieve that objective.

Here is an example scenario. For example if we are presented with an opportunity to invest in a high yielding investment (4% per month, for example), we think it’s great then rush out and put all our savings into this investment ($100,000, for example). Once we see the money flowing, we think this is great, I can eat out every night, buy gifts for family and friends, indulge in our fetish for technology and gadgets, etc. Then we may decide, hey, I want more of this, maybe a porche, or a holiday house on the coast, etc. Our objective now becomes more passive income for self indulgence, so we manage to put in another $100,000 and now getting returns of $8000 per month. At this stage we’re on a slightly different social setting, we won’t be caught dead in McDonalds or KFC, but rather go to restaurants where a meal for two would be over $150, eating out at least 2-3 times a week, if not every night. Still this is not enough so we manage to put in another $200,000 and now getting returns of $16,000 per month. At this stage we are so caught up with this lifestyle, that we’d do anything to protect our current arrangement. Things we may have seen as not in our nature, and criticised others for, we’re now contemplating.

What went wrong with the previous story ? There was no strategy or objective to begin with, but rather the money became the objective in the end. My point is, money is the means, not the end. Earning $200,000 per year does not make someone happy in itself, trust me. If you see the dollar signs before you see the effect it has on your heart, then you’re bound to get caught in this trap. A trap that involves working, spending, sleeping, eating, then looking for more of the same, especially if it’s tax deductible. Rather a better strategy would be to forget the money, and think what you want to achieve, realistically, and not some pumped up idea from an infomercial. Also it’s important to get informed of options you have, but don’t get caught up in the detail, enough information to make an informed decision. Goal setting is a topic that’s been over-thrashed in my opinion, but it’s essential, these goals must be realistic and achievable.

• Basic needs obviously come first, and for most foxtel is not a basic need, so list your basic needs, if things came to the crunch.
• Then next, the areas you would like to allocate more towards, for example childrens education, nicer car, etc.
• Finally, the luxury items, like gadgets, foxtel, jewelry, etc.
• Contribution or donation is something most people overlook, but it’s also essential for your own sense of what money really is (an enabler).

Then you can work out a staged approach with milestones of meeting your basic needs, then doing that bit extra, finally the freedom to help others achieve the same. After all, you’re quality of life is only as pleasant as the people in your life, help others, they will help you.