- Money Morning Australia

Super Fund Results: Whoopdeedoo

Written on 05 November 2012 by Nick Hubble

Numbers don’t lie. Until an economist gets their hands on them. Then they sing any story you want them to. Here’s the latest story they’ll have you believe, from the Age:

‘Far from being squeezed, working Australians are better off than ever, the latest figures show, with lower costs from interest rates counteracting the higher costs imposed by the carbon tax.’

We’d wager that your latest figures matter more to you than economists‘. And you know whether you’re being squeezed or not better than they do. The sad thing is, it’s the people who can’t fight back that are paying for ‘working Australians’ being better off…

The Age article continues:

‘The stunningly low cost-of-living increase – half the official inflation rate – is because the Bureau of Statistics’ cost-of-living measure incorporates household mortgage interest costs, which have slid 6.7 per cent over the year to September and 2.5 per cent in the past three months. It also gives a high weight to motoring costs, which have slid 0.8 per cent in the past three months as a result of lower petrol prices.

‘[…] households for which mortgage charges and petrol prices are less important were harder hit. The Bureau of Statistics says the living costs faced by pensioners and households relying on Newstart climbed 2 per cent. The costs faced by self-funded retirees climbed 1.5 per cent.’

If you’ve given up work and rely on savings, falling interest rates are a big problem. It’s probably not the best idea to go into debt or buy a gas guzzler so that you can be in the ‘far from being squeezed’ group.

What about the retirement investments that these people made to provision for their future? How are they faring?

Nothing to Get Super Excited About

The Age reported that ‘finally, [super fund] contributors are back to the balances they held before the financial crisis.’ Whoopdeedoo.

If you’ve been reading Money Morning for a while, you’ll know we blame the central bankers for the boom and bust of the stock market. Not only are central bankers reducing income for savers, they’re playing yoyo with your shares.

By the way, the same Age article also helpfully points out that you would have been better off with a term deposit than a balanced super fund over the last 10 years. Well, it doesn’t admit that directly, but a 6.3% a year average return for the median super fund is about what you could have gotten from term deposits. Minus the worry.

If all this seems like pointless number fiddling, you’re onto something. After tax and inflation, are you really achieving much with any of these investments?

Just like anything in life, you don’t get paid for doing nothing. It just doesn’t make sense. There is one exception though. You can get paid for doing nothing if you own something that does the work for you. And pays you the income it earns.

We’ll be releasing a report on how you can build up a sizeable income for your retirement soon. In the meantime, there is another way you can go about this. One that allows you to stop caring about reports like the two from the Age we just told you about. One that puts you outside their system of measurement.

In what might be our favourite Daily Reckoning article yet, Bill Bonner outlines how to live a life that gives economists nightmares and yourself a good night’s sleep…

Nick Hubble
Editor, Money Morning

From the Port Phillip Publishing Library

Special Report: After the Bust

Daily Reckoning:
A Deflationary Conclusion to China’s Bubble

Money Morning:
How the Aussie Dollar is Caught in a Worldwide Game of Currency Chess

Pursuit of Happiness:
Political Parasites Never Die

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