Australians are the world’s richest people, but we’re not the happiest

I’m a voracious reader and where should I come across a handy little article in the January issue of Zest magazine (well, it takes a long while for stuff to reach East Timor, and reading material is very limited…).

The article explained the three simple steps we need to undertake in order to be happy, those being:

  1. Stop self-criticism
  2. Look forward not back
  3. Make time for fun!

Well, that certainly sounds easy enough!

It’s undeniable that we would all be well served to abide by Rule (1), although avoiding self-criticism is undoubtedly easier to say than it is to do.

Focusing on mainly looking forwards in life rather than backwards must also be a great nugget of advice and is a character trait of many successful people.

This is a particularly useful recommendation for people like me who have spent an ill-advised portion of their past fulfilling a role as an obnoxious twit.

As for making time for fun, it doesn’t seem to be quite as easy as it used to be, does it?

This is particularly true as some Australians work such long hours that when they leave the workplace all they can find the time and energy to do is slump in front of the television.

 

The world’s richest people

A recent survey by Credit Suisse reported that Australians are now comfortably the richest population in the world with a median wealth per adult of US$194,000 as compared to second-placed Switzerland with US$87,000 and Norway with US$79,000.

[sam id=35 codes=’true’]The report stated that Australians comprised some 1,571,000 people in the top 1% of the planet’s wealthiest persons, and no fewer than 905,000 millionaires.

In order to be in the world’s top 1% you need a net wealth of US$710,000, and if you have net assets of over US$71,000, you are in the richest 10% of global wealth holders.

Not only are Aussies the richest folk in the world, the median wealth per adult is more than double that of the next wealthiest country.

This is a fairly extraordinary finding, especially when it seems that Australians are perhaps unhappier than ever before with their lot. What is that we are hoping for? To be three times richer than every other country in the world? Six times richer? What is actually going on?

 

Happiness Index

In a previous blog post I discussed the concept of Gross National Happiness which suggests that the richer we become as nations, the less happy on average we become.

It is true that compared to most of the planet, Australians are phenomenally wealthy, but this cuts no ice with us. Why? Because in developed world, consumer-driven countries people tend to compare themselves to their peers and concern themselves with what they do not have rather than what they do. And we certainly don’t seem care all that much of the world lives in comparative abject poverty – it is deemed largely irrelevant to our own concerns.

Once we move above the poverty line, we should in theory get happier as we get wealthier, yet it rarely seems to work that way. There is more to being happy than having money, as identified by Maslow in his famous hierarchy of needs.

 

Why are we the world’s richest people?

Contrary to popular belief we are not the richest country by median net wealth solely due to the strength of Australia’s property markets (people in other countries own houses too, after all), although this phenomena has certainly played its part.

The Credit Suisse findings are also partly skewed by the extraordinary strength of the Australian dollar (and the corresponding weakness of the US dollar in which the report is denominated).

The principal reason for our net worth being so much higher than the rest of the world is that Paul Keating had the good foresight to understand the shifting demographics of Australia and introduced the Superannuation Guarantee system in 1992.

Thanks to compulsory contributions, Australian workers have well over $1.5 trillion in superannuation assets. Australians have more money invested in managed funds per capita than any other economy.

 

No guarantees

The original problem with the name “Superannuation Guarantee” was that too many people took it literally to mean that their financial health in retirement would be guaranteed, which was not the intention (the terminology rather related to the guaranteed nature of contributions).

With employer contributions guaranteed at 9% since 2002 (and set to be raised in incrementally to 12% by 2019-2020), Australians have profited handsomely from their funds being invested in some great companies as the stock market has recovered nicely over the past 9 months.

Those who elect to self-manage their super may also now elect to invest in property with an SMSF.

The important thing to remember is that while superannuation is an important part of a retirement plan, it should not be the retirement plan, and you need to invest in addition to your contributions.

 

[post_ender]



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Pete Wargent

About

Pete Wargent is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. He’s achieved financial freedom at the age of 33 - as detailed in his book ‘Get a Financial Grip – A Simple Plan for Financial Freedom’. Pete now manages his investment portfolio, travels and works as a consultant in the finance industry from time to time. Visit his blog


'Australians are the world’s richest people, but we’re not the happiest' have 2 comments

  1. October 22, 2013 @ 10:47 am Roger

    Very interesting article Peter, thank you. It seems the more we have the more we want, probably a universal human failing. However that doesn`t explain the pessimism that abounds in Australia regarding our financial situation and our outlook on the future. I recall reading recently that Australians are more pessimistic than the Greeks are in relation to their financial future. I find that bizarre. Does the blame for this lie with our politicians trying to score points over the opposition or our media with the ” If it bleeds it reads ” mantra ? Or do you see other factors at play here ?

    Reply

  2. Pete Wargent

    October 22, 2013 @ 11:03 am Pete Wargent

    Hi Roger, I guess everyone has an opinion on this and it’s shaped by experiences etc.

    The Australian economy does face some challenges, but then that’s practically always the case. And in this age of 24/7 media I expect there will always be people talking down the economy, so we’d better get used to that. Similarly, the internet has given a voice to many who previously had little say, so as inequality persists, we’ll probably hear more about that issue too – regardless of Australia’s relative position in the world.

    My experiences in London since 2007 have (perversely) shown me that a recession can alter the outlook on life for many people for the better – we focus way too much in Australia on what we don’t have, and nowhere near enough on what we do.

    I’m also sure everyone who goes to live in a Third World country for a couple of years says this too (but nevertheless it IS true!) – we are extremely fortunate to live in Australia.

    Reply


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