How house hold wealth is in the wrong places

How would you feel if someone told you that you’re hard earned money was sitting in the wrong places?

Would you want to tell them to mind their own business or, would you be curious to know where your money could work better for you?

If your answer is to mind my own business well here is the public information.

If you’re curious to know how to make your money work, then read on.

In Mid-July the ABS released its survey of Income and Housing and the results provide insight not only about household wealth but where people are potentially missing out.

Related: Why you can’t buy back your time … yet.

The ABS broke down the household wealth into five segments called quintiles and before you try to find out which segment you fit into and curse those in ‘higher segments’ there is one prime factor that determines which sector you belong to.

And that is; Superannuation. More so, how much you have in it.

ABS report

Just taking a quick look at the info graphics, the ‘least wealthy’ only have $17,200 in Super while the wealthiest have $646,600. Less wealthy have $75,500, average has $112,900 and the wealthier bracket has $216,100, respectively.

Because Superannuation builds over time mainly from employer contributions and growth, the value of Super in each of these brackets can lead to a conclusion that the bracket you’re in depends on how long you’ve been working for and hence (roughly) … your age.

Not enough in shares, too much in the banks.

So with that being said, the younger you are, the lower you are on the pecking order (according to this survey) so don’t stress out, but let’s go ahead with the analysis.

The bottom 80% (Least, Less, Average & Wealthier – Even the Wealthiest) are missing out on a massive opportunity to boost chances of creating wealth passively (Making money and not having to work for it).

I’m just going to say it – Banks are not where you want to keep large amounts of money. Why? Quite simply because they don’t perform. 2% per annum quite simply is not what you should be satisfied with, and that does not factor in fees.

Banks is where liquid money can be held, but if growth and wealth is what you’re after, then the stock market represents a highly liquid place where much better performance can be found, in the order of 2-4% per month, and still allows you to access your money quickly should you need it.

Way too much in the Owner occupied Home (Proportionally)

Saying there is too much invested in your house is a pretty silly comment.

But at the higher end of the wealth scale this is exactly what we can see by proportional breakdown.

As early as the second quintile (less wealthy) the Owner Occupied Home represents the biggest proportion of house hold wealth, but when we include the aspect of time into the analysis (as we increase wealth with time) the owner occupied home represents too much wealth for the wealthier sections of the survey.

Please … Let me explain.

The ‘Good’ Ticking time bomb.

If you’re in a position to get into the property market, there’s nothing else to say – do the research and go! Get in! As soon as you can. Prices will rise.

Today it may mean having a mortgage. However time is a powerful thing.

That mortgage you have today is going to turn into a powerful ticking time bomb ready for you to make use of later.

With a 10% growth rate, the value of your property will double in 8 years.

This means equity, and equity (according to the infographics) is something that is heavily underused.

When looking at the value of the ‘average’ Owner occupied home at $435,800 with a mortgage of $191,900, there is equity already available to invest further and start making the money you have work for you.

At the top end of town, where the home is worth $1.2 Million, and the Mortgage is only (Only he says) $270,000 the available equity is worth massive buying power.

However what we can see across the analysis is that ‘Other property’ represents a fraction of the value of house hold wealth compared to the ‘Owner Occupied Home.’

This means that a huge number of people who have their home already are missing the chance to invest further into property and generate more wealth (Equity and potential cash flow) for themselves. And Missing out has massive impacts on what your future can look like.

Related: Wilful Ignorance and why you must read this


Everyone’s situation is different and saying that money is in the wrong places is an extremely bold statement to make.

What we can see from the analysis is not far-fetched. People live in their biggest asset and don’t even know the buying power it gives them later to achieve bigger and better things for their futures.

The ‘Liquid’ money people have is desperately tucked away into under-performing bank accounts while bigger potential liquid growth is under-used. And it all comes down to education and knowing what can be done with what you have.

But what we can see is this. Wealth comes later in life, particularly when asset values rise, and the buying power they gain can be tapped.

For younger people out there who either don’t have any assets, or liquid cash available to them, immediate cash-flow is the only answer and that simply means going to work or hunting for a better pay packet at the end of each fortnight.

For the younger players out there who genuinely want to achieve wealth and financial independence earlier the answer is not in your job or the hours you work, but about tapping your most valuable asset and manufacturing cash-flow directly from that.

It starts with a change in mindset, learning about what is available and taking the first steps.

Related: The Mindset Shift to being your own boss

#wealth #financialindependence

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