What does it take to make us wealthy? What does it take to make us happy?
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.
Focussing 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.
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?
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.
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.
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.
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