If you find the text too small to read on this website, press the CTRL button and,
without taking your finger off, press the + button, which will enlarge the text.
Keep doing it until you have a comfortable reading size.
(Use the - button to reduce the size)

Today's quote:

Tuesday, February 28, 2023

"In the long run we are all dead"

 

This is the kind of chart they show you at those all-knowing Daytrader Seminars, pointing glibly at the $48.50-peak and pontificating, "You simply sell out HERE", and then, running their pointer to the trough at $44.55, "You buy back in HERE."

Unfortunately, I don't have their 20/20 hindsight and in any case, I'm not a daytrader but an investor who lives on his dividends, but it was still gut-wrenching to watch BHP, together with other miners, drop 7.76% in just five days. No need to tell you what that is in real money!

The hemorrhaging may stop today as I've just looked up BHP's overnight American Depositary Receipts which are the equivalent of two shares, and their price is up a tiny 0.03% to US$60.45 which, at an exchange rate of 0.6736, equals AUS$89.74, or $44.87 for one share, up by 32 cents against yesterday's Australian closing price of AUS$44.55.

BHP is the world's biggest miner and shares in it will always pay a good dividend in the long run; however, as wise old John Maynard Keynes also remarked, "In the long run we are all dead." You can read about it here:

 

 

My best mate Noel dabbled in shares, the ones he could afford on an age-pension: so-called penny-dreadfuls.  I would chide him for losing what little money he had on share tips scribbled by some rookie writer in the Daily Telegraph, but his reply always was, "What else is there?" 

And, of course, Noel was right because humans are meant to take risks, to venture out to die with their boots on rather than fade away in bed.  He also proved Keynes right because in the long run he too was dead, with none of his penny-dreadfuls having turned into dollar dazzlers.


Googlemap Riverbend

 

Monday, February 27, 2023

Carl Sagan talks about books

 

What an astonishing thing a book is. It's a flat object made from a tree with flexible parts on which are imprinted lots of funny dark squiggles. But one glance at it and you're inside the mind of another person, maybe somebody dead for thousands of years.

Across the millennia, an author is speaking clearly and silently inside your head, directly to you. Writing is perhaps the greatest of human inventions, binding together people who never knew each other, citizens of distant epochs. Books break the shackles of time. A book is proof that humans are capable of working magic."

Carl Edward Sagan was an American astronomer, planetary scientist, cosmologist, astrophysicist, astrobiologist, author, and communicator. He died in December 1996. His words are as alive today as they were then. Not that I need any convincing but I thought you might.


Googlemap Riverbend

 

This one really sealed it for me!

 

Twenty years from now, you will be more disappointed by the things that you didn’t do, than by the ones you did do. So, throw off the bowlines. Sail away from the safe harbour. Catch the trade winds in your sails. Explore. Dream. Discover."

This quote is often attributed - falsely - to Mark Twain, the writer of "The Adventures of Tom Sawyer" and "Huckleberry Finn" and many others. Regardless of the authenticity of the source, the quote does make one stop and take stock of things and look back on how one has lived one's life. Hindsight is always 20/20 and often tinged with regret.

I sailed away from many a safe harbour and passed up many a career opportunity; instead of climbing the corporate ladder I climbed Table Mountain and the New Guinea Highlands and the clifftop monasteries of Meteora in Greece and Mount Vaea in Samoa to pay homage to Robert Louis Stevenson. Any regrets? A few, but none about my many travels!

The time to enjoy the safety of the harbour is now, but there's still plenty of excitement. Last Saturday we went to the Moruya Markets where we watched this amazing seal in the Moruya River who seemed to enjoy the attention he was getting from the many people on the shore.

The more we clicked our cameras and oohed and aahed, the more he belly-rolled and flip-flapped his flippers and splashed and snorted.

We should be so grateful for being allowed to live in a place which has so many of nature's wonders on offer. This one really sealed it for me!


Googlemap Riverbend

 

Bastards I've met

 

Many years ago, one night when I couldn't sleep, I idly listened to RADIO NATIONAL and a segment called VERBATIM, in which the interviewer talked with a then 92-year-old chap called Bill who has had an obsession with wheels all his long life. Listen to the interview here.

The power of the engine didn't matter; whether it was trucks, bicycles or battered old 2CV Citroens, Bill had travelled Australia from end to end on all of them. Most of his travelling had been done in pursuit of work or girlfriends, and his was the story of a labouring man with a taste for adventure and no desire to settle down.

For Bill, there had always been another river to ford or a python to wrestle or a murderer to evade ... and suddenly I realised that I knew that chap: he was the Bill Skinner whom I had befriended back in 1977 when I lived on Thursday Island. Bill had driven an old truck up to Cape York and, daunted by the prospect of driving down that same rough road again, had come across to Thursday Island to book himself, his three dogs, and his truck onto the barge returning to Cairns in a few days' time. He had missed the boat going back to Bamaga and wandered the main street of Thursday Island aimlessly when we ran into each other. I invited him to stay at my house for the night and we talked and talked (and drank and drank!) well into the night.

We met again in 1979 when I overnighted at the Great Northern Hotel in Cairns on my way to a job interview on Mornington Island. Bill lived in Cairns at the time and I went to his house in Severin Street. His backyard was a junkyard! It was full of old things which Bill had kept or collected under some "it-may-come-in-handy-one-day" compulsion. To make even more room for all the junk, Bill had moved the clothes hoist to the top of the roof! Laundry-day at Bill's must've been quite a thing to behold!

It was almost dark when I got there. He said he was about to get some soil for his garden and told me to jump into his old, unregistered jeep. I was wondering where he would get soil at such late hour when he pulled in at a nearby cemetery and ask me to keep a sharp look-out while he was shovelling soil from a freshly-dug grave into the back of his jeep. He'd forgotten to tell me that we were going to be a couple of grave-robbers just as he hadn't told me that he'd "tarred" his old, unregistered jeep in black paint only a couple of days before. Those black paint spots stayed on my trousers for a long time!

In another twist of fate, while on assignment with FLUOR Engineering in Melbourne in 1981 and staying at the old Majestic Hotel on Fitzroy Street in St Kilda, I bumped into his daughter Roslyn, who was then living in nearby Elsternwick, and her husband, whom he'd described in the radio interview as "that useless man who just sits around the house and won't get a job". I bumped into her again just after I had come back from overseas in 1985 in Picnic Bay on Magnetic Island where I had settled for a few months and where she had moved after Melbourne.

After hearing him on the radio, I wrote a short note to his then current address in Longwarry in Victoria. He replied that his memory was no longer what it used to be but that he did remember his trip to Thursday Island and our meeting and, as he put it, "if I can find Nelligen on the map, I'll drop in some day" and "I could easily drive up there, but thieves are everywhere here now and very cunny [sic]" and "I camp in a caravan every night hoping to catch the thieves - with a 3-inch piece of pipe!!!" It sounded just like the old Bill Skinner!

He either couldn't find Nelligen on the map or was too busy hoping to catch up with those thieves because he never made it to Nelligen despite living well past his hundred-mark (which he celebrated in 2012 with his daughter Roslyn on Magnetic Island where she still lives).

He's finally settled on his own plot in the Belgian Gardens Cemetery. If I ever get back to Townsville, I pop by and look you up, you old bastard!


www.tiny.cc/riverbendmap

 

Sunday, February 26, 2023

I slept in "Melbourne" last night

Is that a huge spider on the wall???

 

The only thing missing was the pitter-patter of rain on the iron roof but everything else was there: the rising smoke from the mosquito coil, the smell from the spluttering kerosene lamps, and the many sounds of nature from the warm night outside.

I spent another peaceful night in "Melbourne", dreaming of many such hot nights spent in Papua New Guinea, the Solomons, and Samoa, and the many dreams I then still had before harsh reality finally intervened.

The radio, tuned in to ABC Radio National, kept me company, as did a possum which kept stomping across the roof - and, as I've only just now discovered, a huge spider on the wall - until the final "Lights out!"

So it's "Good night" from me and from the possum on the roof and from the spider on the wall. See you bright and early tomorrow morning!


Googlemap Riverbend

 

An Island to Oneself

 

In a small op-shop, long since gone, on the shores of Burrill Lake I found a book. Places like this seem to attract abandoned dreams; yet, for a mere dollar I held in my hand the South Pacific dream, not abandoned, but lived out in 255 pages and 17 colour plates.

People, and sometimes nations, fasten themselves to these rare books. "An Island to Oneself" was just such a book. Published in the sixties, with scant advertising support and authored by a man who had no literary reputation, this book has worked its way into the heart of South Pacific legend. The eccentric author was a humble 51-year-old New Zealander, Tom Neale, former navyman, storeman, and world-famous hermit.

Although Tom was an avid reader he had never published anything until he wrote "An Island to Oneself" - nor after, for that matter. This was a singular work of a lifetime. The voice of the author was stark and simple, concentrating on facts of a solo existence on Suvarov Atoll in the Cook Islands. The landscape was a remote, long-forgotten part of the South Pacific. None of this would have been at all popular at the time, nevertheless people discovered this book; they found it on their own, in musty second-hand bookstores and boat book swaps, without the benefit of marketing hype or midnight sales.

For years I kept a copy on my boat. Every so often I would take it off the shelf, slide into my bunk and go back with Tom to his shack perched on Anchorage Island, half a mile long and three hundred yards wide, to the coconut palms and the boom of the surf on the reef and the time he steps ashore for the first time. His story is sketched out in stark sentences and dry chapter headings, beneath which burns a simple dream.

Tom was gloriously out of step with his time, however, he managed to capture a collective revelation in his readers. Not long after "An Island to Oneself" went to print, society was ripe for change. Long-range cruising was beginning to gain popularity and was no longer the realm of a few courageous souls. Amongst these cruising folk Tom and his book found a following.

Getting to Suvarov took thirty years of dreaming, patience and planning by Tom, fueled by a chance meeting with another South Seas legend, Robert Dean Frisbie. Frisbie had inhabited the island in the forties accompanied by his four young children. His experiences of Suvarov produced the classic South Seas adventure "Island of Desire". More important than his book was the fact that Frisbie had shown Tom a glimpse of the possible.

In 1942 Frisbie had been almost wiped off the island by a cyclone, literally lashing himself and his children to a tree to survive the inundation of the sea. It was through this experience and other lesser storms that both these men were to come to know Suvarov intimately, savouring the fragility of the tiny island as both a blessing and a curse. At a maximum ten feet above sea level, existence on Suvarov became more akin to being at sea than on land. With the onset of inclement weather Tom would bury his tools and other items deemed necessary for survival; this was his only form of insurance.

More than the weather it was the fragility of his own existence, which terrified Tom the most. Near the end of Tom's first stint on Suvarov, while on a planting expedition to a nearby island, the simple act of throwing out his dinghy's anchor dislocated his back rendering him near paralyzed and alone. The chance discovery of an emaciated Tom by an American yachtie named Rockefeller who nursed him back to health and spared him a lonely death could only be described as miraculous. This kind of fragility gave Tom a clarity to his existence and to his book.

Trying to describe "An Island to Oneself" to the unread can be difficult. Tom's story is not just a book about living on a desert island. Its essence is larger than that. It's a book about a passion for simplicity; it's about being alone and doing alone. It tells us that life is incomplete without dreams and risk. It teaches the important and hard-to-appreciate truths that the ocean is beautiful and violent, that soil is precious and that there is a use for a bicycle pump on a desert island. It's a book about how to dream and how to live. It is a book that has become a place.

"An Island to Oneself" leaves us in 1963 with Tom quitting the island. As Tom put it "the time had come to wake up from an exquisite dream before it turned into a nightmare". Tom's dream never quite released its powerful grip and in 1967 he returned to Suvarov for his final stint of ten years. The place and the man had become fused.

For a man who lived so well, the obvious question is how did he go? It wasn't loneliness or even a cyclone that drove Tom from Suvarov; it was the cold grip of cancer that saw him on his way. Returning to Rarotonga he was treated by the notorious Dr Milan Brych, died and was buried in the RSA cemetery next to the airport. Tom's end could almost have been written by himself, with only the stark facts to console us.

In a dark twist Suvarov's own future moved into darkness, with the atoll marked as the head quarters for a black pearl fishery. Tom's hut was going to be removed to make way for up to one hundred workers and the associated complexity of satellite TV and steak dinners.

At the eleventh hour, just before the black pearl fishers turned up, something changed the view of the Cook Island's government on the value of Suvarov. Perhaps it was the political clout of his yachtie friends, or perhaps Tom's old book? For whatever reason, the atoll now remains as Tom found it, as the only National Park in the Cook Islands.

We should all be so lucky to love our place in the world so much.

Now sit back and read the book: click here or here.


Googlemap Riverbend

 

P.S. My German yachting hero Rollo Gebhard visited Tom Neale twice. Read more about it here.

 

Selamat ulang tahun, Ernie!

 

Ernie, as you approach the age when the candles cost more than the cake, you may wish to contact the New South Wales Rural Fire Service on 1800 679 737 before you strike the match.

I wanted to send you a strip-a-gram but why should you get anything better than this YouTube clip which Padma dumps on me every year?

"Selamat ulan tahun" means "Happy Birthday", to which I can only add in my best German accent, "Selamat panjang umur kita kan doakan; Selamat sejahtera sehat sentosa; Selamat panjang umur dan bahagia".


Googlemap Riverbend

 

Saturday, February 25, 2023

"I shall be telling this with a sigh somewhere ages and ages hence"

 

You don't have to be too widely-read to recognise this line from Robert Frost's most ubiquitous poem, "The Road Not Taken". Back in 1996 I looked down one as far as I could to where it bent in the undergrowth, and then took the other, just as fair, and having perhaps the better claim.

 

 

Years earlier I had computerised two colleges on the ANU Campus, Ursula College and John XXIII College, when the latter, having heard of my previous background as management consultant overseas, called me in late 1996 for an urgent consultation. What I found was a college in a state of disrepair, with millions of dollars in debt, with declining student numbers, and an overstaffed and demoralised workforce who had outsourced all essential services to grossly profiteering contractors.

For most of my working life I have leaped out of bed each morning to embrace a new challenge, and here I saw both a new challenge and an opportunity to leave my mark on the world, and, yes, since this was a religious college, to give something back at the end of a fortunate life, and so I took on this almost impossible task for an almost 'pro bono' fee.

I still had my own Canberra Computer Accounting Systems to run, but soon realised that to keep John XXIII College afloat, let alone turn it around, would take all my waking hours and become a "live-in" job.

As in any failing organisation, what good staff there may have been before had already jumped ship, leaving me with a handful of idle staff whom I sacked together with all the profiteering contractors. I then hired a very small and very dedicated team of people with whose help I was able to fully refurbish the run-down college, pay off all its debts within three years, and make it one of the ANU's colleges of choice.

 

 

Thank God that I'm an atheist, or I would've been even more disgusted by the way the Dominicans treated me when the job was done. Even the reference was given most grudgingly. VERITAS VI VERITATIS indeed!

"I shall be telling this with a sigh somewhere ages and ages hence: Two roads diverged in a wood, and I - I took the one less travelled by" - which has left me totally disgusted with all men of the cloth.


Googlemap Riverbend

 

Doing a Packer

 

The 'super wars' are heating up, and Labor is well on its way of confiscating more of your superannuation nest egg by taxing it at a higher rate, or forcing you to withdraw it from your super altogether, but there will be unintended consequences.

Remember the Treasurer's Orwellian double-speak? "When I think about how best we can use the budget to support Australians towards a better retirement — one fact stands out. Right now, we’re on track to spend more on super tax concessions than the age pension by around 2050. I'm not convinced that's a sustainable way to get to our destination — good retirement incomes for more Australians, now and into the future."

Super tax concessions are not spent money. It's the people’s money which has not yet been taken away by the government. Welfare and keeping your own money are two completely different things. And why does the greater 'spending' on super than the age pension in 2050 mean super is unsustainable? Wasn’t the whole point of super that it lightened the load on the age pension by encouraging people to take responsibility for their own retirement? Isn’t the huge super system relative to the age pension a sign that the policy worked rather than failed? It certainly isn’t a sign that the super system is unsustainable. How can a retirement savings system be unsustainable by being too big? It can only be unsustainable by being too small. Perhaps the Treasurer means that his budget is unsustainable without a raid on superannuation funds?

You may not be as rich as Packer or be able to employ as many tax lawyers and accountants to minimise your tax as he does, but you don't need to be an Einstein to know where to put all that ex-super money: back into real estate, either into more investment properties cleverly structured to take advantage of negative gearing, or by upgrading into an ever-bigger home which is exempt from both capital gains tax and the pension's assets test, to become one of those "poor" age-pensioners who live on the government pension in a multi-million-dollar mansion.

Kerry Packer, we're hearing you!


Googlemap Riverbend

 

P.S. See also Labor's shell game.

 

Friday, February 24, 2023

This discovery sealed it for me

Click on Watch on YouTube to watch the movie

 

The Seventh Seal" - which is a reference to the Book of Revelation - is one of the greatest movies of all time which established Ingmar Bergman as a world-renowned director. Set in Sweden during the Black Death, it tells of the journey of Antonius, a medieval knight, who challenges Death to a game of chess, with his life as the prize.

A regular movie-goer watching this movie may pick up on a few things: the terror, the suspense, the artful composition of the shots. A chess player, though - and that includes me - sees only one thing: that the chess board that decides Antonius’s fate is set up totally backwards.

Here is a correctly set up chess board ...

... .. and here is the (still) correctly set up board early in the movie:

But then things begin to go wrong. You see, when you set up the board, you're supposed to orient it so that the square nearest to each player's right side is light-coloured - the mnemonic "right is light" might help.

The next rule: when you array the pieces, the white queen always goes on the white square, and the black queen always on the black square.

So what do you see halfway through the movie? A black square nearest to each player's right side which changes the game completely!

It also positions the queen on the wrong side of each player's king at the start of the game (always provided the white-queen-on-white-square and black-queen-on-black-square rule is still correctly followed)

And to think that Antonius may have lost his life due to an incorrectly set up chessboard ...


Googlemap Riverbend

 

P.S. Now let me see if Disney got it right in "The Queen of Katwe".

 

Wednesday, February 22, 2023

I've been to the dentist before, so I know the drill

 

Reading "Islands of Angry Chosts - The Story of the BATAVIA" by Hugh Edwards helped me ignore the sound of the drill as it was applied to someone else's teeth, knowing that as soon as the sound had stopped, I would hear, "Peter, you're next!"

And so I was and, frankly, I didn't mind, as these days the dentist is just about the only place I'm still allowed to open my mouth. Actually, the only pain I felt was not from the drill but from the news that BHP had reported a fall in profits of 32% and a drop in interim dividends to 90 US cents which prompted its shares to drop by more than a dollar. By the time my treatment was done, the shares had recovered - and so had I.

Anyway, to let me go gently into toothlessness, I bribe the dentist with Christmas presents and the occasional bottle of wine, and just now with thirteen books by Enid Blyton which should give his two little daughters, aged just five and six, enough to read until they enter dental college.

 

 

I grew up with Struwwelpeter and never read any Enid Blyton books. If I had, I might've noticed some subtle changes; for example, in the Magic Faraway Tree series, Fanny is now Frannie and cousin Dick is now cousin Rick, and Dame Slap, a teacher who used corporal punishment, was updated to Dame Snap, a teacher who would only yell at children.

Enid Blyton's books have been far more extensively edited: "mother and father" have become "parents" (presumably to allow for same-sex "parents"); the word “fat” has been cut from every new edition of relevant books as has the word “ugly”; Augustus Gloop in Charlie and the Chocolate Factory who used to be "enormously fat" is now just "enormous"; in The Twits, Mrs Twit is no longer "ugly and beastly" but just "beastly"; in The Witches who are bald beneath their wigs, this paragraph has been added: "There are plenty of other reasons why women might wear wigs and there is certainly nothing wrong with that".

References to "female" characters have disappeared, with Miss Trunchbull in Matilda, once a "most formidable female", now described as a "most formidable woman"; Charlie and the Chocolate Factory’s Oompa Loompas who were once "small men" are now "small people"; the Cloud-Men in James and the Giant Peach have become Cloud-People; and the word "black" has been removed from the description of the terrible tractors in 1970s "The Fabulous Mr. Fox" - the machines are now simply "murderous, brutal-looking monsters". To paraphrase Henry Ford about his Model T, you can mention any colour as long as it isn't black!

By the time we've sorted out our new politically-correct language and how many genders there are and which toilet each of them will be using, we will be so f#*&ed up, no enemy will bother to invade us and we can all safely sit on our beaches and lick the good ol' Gaytime icecream which, unlike the COON cheese and thanks to lengthy consultations with the LGBTQIA+ community, could keep its name. If I had enough teeth left, you'd see me smiling through clenched ones.

 

The smiling cow with perfect teeth, displayed on my dentist's front desk

 

But back to books: I also lashed out on a copy of "The Righteous Mind - Why Good People are divided by Politics and Religion" and "Fields of Blood - Religion and the History of Violence" (both of which are on archive.org - is there anything left that's not on archive.org? - but you know me: I need to hold the book in my hand, feel its texture, turn the pages, smell the ink) and Sean Dorney's "Papua New Guinea - People, Politics and History since 1975", by which time I had already left.

And while I still had my hands in my pocket, I also bought "The Lives of Others" and the National Geographic Channel documentary "Secret Life of Pearls - Journey of the Australian South Sea Pearl" which is about the Paspaley pearl farms off the Western Australian coast but could just as easily be of Paspaley's pearl farms in the Torres Strait where I lived and worked in 1976. I've just found this shorter version on YouTube:

 

 

If you're watching this, Victor Aung, I hope it brings back memories!


Googlemap Riverbend

 

The Shiralee

 

I'm amazed at how many Australians have not heard of - or perhaps forgotten - some of the most quintessential Australian movies - or have I become more Australian than the quintessential Australian?

"The Shiralee", based on D'Arcy Niland's book by the same name, is one such movie. It's the story of the itinerant rural worker Macauley - sometimes described as a 'swagman' or 'swaggie' - who suddenly finds himself taking responsibility for his child. Having returned from 'walkabout', he finds his wife entwined in the arms of another, and so he takes his four-year-old daughter, Buster, with him. The child is the 'shiralee', an Aboriginal word meaning 'burden'. In their time together, father and daughter explore new depths of understanding and bonding. The barren landscapes of the outback are central to the swagman's love for his country and provide a backdrop to the richness of his developing relationship with Buster.

Of course, there's nothing like curling up with D'Arcy Niland's book ...

To read the book online, click here

 

... but if you're more visually than cerebrally inclined, you'll find both the 1957 movie version with Peter Finch and the 1987 remake with Bryan Brown faithful screen adaptations of this wonderful book.

 

The original black-and-white movie from 1957 starring Peter Finch

 

D'Arcy Niland wrote another masterpiece, "Dead Men Running", which was made into a TV mini series in 1971. I wasn't in Australia then and so I missed it. If you can find it on YouTube or on DVD, please let me know.


Googlemap Riverbend

 

I'm super angry

Chris Bowen outlining Labor's policy on franking credits on Q&A four years ago.

 

Remember Labor's Chris Bowen wanting to abolish franking credit refunds four years ago? Retirees were outraged. He replied, "If you don't like our policies, don't vote for us". We took his advice and we kept our franking credit refunds.

Despite the franking credit debate being at the forefront of Labor's election loss, it's amazing how many people didn't understand what it was all about. Even my dermatologist didn't understand. After I had explained it to him, he went and invested in shares paying fully franked dividends. I am happy for him - although not so happy that he charged for the time it took me to explain it - and I'm happy to explain it again to the cabinetmaker in the pool and anyone else who wants to listen.

Here we go: Let's assume a very simplistic example whereby you hold shares in a company which pays company tax of 30% on its earnings. The remaining 70% are distributed as dividends. So if you receive (say) $10,000 in dividends, then this amount is "grossed up" again to its pre-company tax level of a 100% (remember that the $10,000 you receive represents only 70% of the company's pre-tax profit!) or $14,285.71.

Therefore, you are being taxed on an income of $14,285 even though you only receive $10,000 in cash. So how much tax do you pay on an income of $14,285? (assuming you have no other income) $1,408.45, that's how much. However - and this is where the franking credit kicks in - you receive a credit for the tax the company paid, namely $4,285.71 which is offset against your tax assessment which in this particular example means that you receive a tax refund of $2,877.26.

So, whenever your own tax rate is below the company's tax rate of 30%, you will receive a refund. If your investment is in a superfund which pays only 15% income tax, you have half the franking credit refunded to you. If your superfund is in pension phase, you have ALL the franking credit refunded to you. Three cheers for franking credit refunds!!!

 

From the DAILY TELEGRAPH of 22 February 2022
As they write, "If the Albanese government were something you bought in the shops rather than voted for at the polls, regulators would be circling with writs for misleading and deceptive conduct."
 

Labor went into the last election without any policies, least of all one as controversial as abolishing franking credit refunds; in fact, on the election campaign trail last year, the then not-yet Prime Minister Anthony Albanese insisted changes would not occur under a Labor government. "We've said we have no intention to make any super changes", he said in May last year. He has once again provided the answer to the perennial question "How do you know when a politician is lying?" The answer is, of course, "When his lips are moving".

One thing you must never do is to trust Labor because, like a dog with a bone it can't leave it alone, they are at it again and anyone hoping superannuation regulations will remain unchanged again in the next Federal Budget on 9 May 2023 is likely to be disappointed. They've done enough jawboning to indicate they're ready to target high balances in super. This is despite the superannuation system introduced by Labor thirty years ago in 1992 encourages savers to use the wonders of compounding to build up such large amounts.

There's been a lot of talk of introducing a cap of $5 million. Labor needs some political wins to rein in the budget deficit and the 11,000 Australians with more than $5 million in superannuation are an easy target. That was in 2018 and it’s more likely 20,000 or 30,000 now.

When Chris Jordan, the Commissioner of Taxation, was asked at a conference how members had accumulated such large amounts in their Self-Managed Superfunds (SMSFs), he said balances were usually accumulated for over thirty years or funds held one or two investments that had done extremely well. He called the large SMSFs "accidents of history" and added, "Don’t design the system for the last worst person.”

You don’t need to be Einstein (who never actually said that compound interest is the Eighth Wonder of the World, but let’s go with it) to use a calculator and work out the dramatic impact of compounding. Anyone with a good income and spare savings who decides to invest in equities in superannuation for decades will accumulate large amounts of money. Every kid should be taught the power of compounding at school.

 

The Power of Compound Interest and the Rule of 72

The Rule of 72 is a quick, useful formula that is popularly used to estimate the number of years required to double the invested money at a given annual rate of return.

Simply divide the annual rate of return into 72 to give you the approximate number of years it takes to double the investment. Alternatively, divide the number of years into 72 to give you the required annual rate of return.

The Rule of 72 dates back to 1494 when Luca Pacioli referenced the rule in his comprehensive mathematics book called Summa de Arithmetica. Pacioli makes no derivation or explanation of why the rule may work, so some suspect the rule pre-dates Pacioli.

 

Sure, $5 million is a lot of money but it does not take vast wealth to accumulate such an amount with consistent investment over long periods. Consider how many working-class people now own $3 million homes in the western suburbs of Sydney by committing to a long-term savings pattern over thirty years called – wait for it ... it’s a devious scheme that should be capped – 'paying off your home'. And many also qualify for the age pension!

I haven't heard Labor repeat the same arrogant line "If you don't like our policies, don't vote for us", but I hope their invitation still stands!


Googlemap Riverbend