Millionaire Challenge

guitarman001

lessonlearned wrote: »

However, and this is my point, and this is why I was so shocked that you openly admit to wanting to see the market collapse completely.

There would be hundreds of thousands of people - maybe millions - I have no idea how many - whose lives would be completely ruined.
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I haven't read the rest of your post yet but I had to answer this bit. I was thinking about what I wrote this morning and why somebody would take such offence when I think it's a normal thing to say (well, for my age group at least). I think it's just like saying 'I want banks to pay back tax-payers money' or 'I want those in debt to pay off their loans'. Having a mortgage is just another big debt and unless people bought to live in rather than invest, then they shouldn't have too many problems. If they lose their job, or they did buy to invest - THEN they will have problems. But if they bought at the peak of the market or to make money then I'm sorry, but that was their choice. We've all got brains and I've no sympathy for people who don't do their homework (ok, I've some) regarding the biggest financial purchase of their lives. I think it would be GOOD for many as they would finally stand back and say 'what was I thinking....' and will take a healthier attitude to debt and analysing the big picture in future. This is CERTAINLY true for two of my friends who bought at peak in 2007.

guitarman001

lessonlearned wrote: »

Set against such a catastrophic scenario your wish does seem both unwise and unfair to a lot of innocent people. Would you really want this on your conscience. I would really like to think you were just joking to make a point but you sound so angry and bitter that I'm rather afraid you meant it.

Plummeting prices aren't really the answer. The likelihood is those same property values would only rise again in the longer term. Personally I would prefer to see a steady "stagflation" to give people like yourself a breathing space and a chance to catch up.

Of course I understand your predicament - my sons are exactly in your position. One had to leave his flat because he couldn't afford the rent on his own. Luckily he has had the good fortune to find someone to do a house share with, the other has come back home to live with me because he cannot afford to rent anywhere.

I let him pay me the princely sum of £50 a week so he can try and save a bit. (Wish someone would keep me for £50 a week:rotfl::rotfl:).

I will say again I've seen this cycle repeat itself several times over the last 40 years. Maybe this time the cycle will take longer - who knows - but I'm pretty sure property values will increase eventually.

I didn't say I thought it was fair, I didn't say I thought it was advisable - in fact I'm of the opinion that it may well have a destabilising effect on society.

I don't have answers as to how you could stop the cycles. I can only assume that if more properties were available then prices would come down. Rather like the price of wheat, coffee or cocoa beans, oil or any other commodity. I could be wrong of course. Maybe a different kind of political and economic system will evolve - who knows.

Guitarman your solution to the problem is just too draconian - that is why I questioned your "moral compass". I was just so shocked to hear someone wish for such a thing.

You know the old saying "Be careful what you wish for". If such a thing were to happen - it would be Armageddon out there.

One final thing about BTL - Landlords do pay taxes. Tax on the rental income and Capital Gains Tax when they sell at a profit.

As to being morally reprehensible - well some maybe. There's good and bad in any profession or business undertaking. There are some lousy landlords and there are some lousy tenants.

Until Local Authorities are prepared to start building council houses again, apart from a few housing associations, without the private sector landlord, there would be no-one else to plug the gap.

No easy answers I'm afraid.

Unfortunately many people my age are pretty bitter about it - look at the increasing number of articles pitting this generation vs the 'boomers' - just another by-product of this whole mess.

Property stagflating isn't the answer when wages are still way too low. You're suggesting this gives me time to save money to buy, which it does! But if wages don't increase then the property:wage ratio stays the same, i/e/ unaffordable for the generation after me. I'd take a 90% hit if I owned and it meant my little sister could get a nice little house without plunging her into massive debt.

The digs you let your son pay are very generous indeed - many kudos to you on that front! It's just unfortunate that for many, they have to move away from home to work, so they'll have little chance to make the savings required.

I've no doubt at some time values will go up again, but personally... I think we'll see at least 5-8 years of stagnating prices. I don't see how they're going up any time soon with record unemployment, student debts hitting £50k+, mortgage lending down etc. Just like people complain when petrol or food prices go up, so should they be complaining when house prices go up.

I'd almost be willing to lose my entire life savings through inflation if it meant affordable housing for all. Perhaps draconian but if a hard reset will get us back to normal then I say the sooner the better - this may be shocking to you but I assure you it's not just me - so many youngsters I know are very much for this.

BTL is taxed but it is far more tax-efficient with ways of getting around paying a lot of it. So if you're capital rich then it pays to rent out BTL rather than do a day's work, as such. I don't think that's right.

Sorry

guitarman001

The_G wrote: »

Guitarman

I agree with your point about the £1m one bedroom flat, Its just not good for a healthy society. A lot of so called intelligent people just don’t get the fact that just because property has doubled in the last 10 years that it is certain to do so again in the next 10 but unless we see huge wage inflation or 100yr cross generational mortgages this simply wont happen. House prices doubled/tripled on the back of cheap credit, pure and simple and the source of that cheap credit is drying up. Do people not see that it is the reckless lending (not just in mortgages) is what has taken our global financial system to the brink of collapse!?

I believe in heavily taxing the biggest gainers from the property boom, BTL landlords and 2nd homeowners but do you think this will happen? I won’t hold my breath because those same Landlords and 2nd home owners provide the most votes.

I’m not sure we will see big crash that you are hoping for because the UK banking system has become almost too big to fail (hence near zero rates) I also think we will start to see some gradual wage inflation.

As for my figures I doubt I’m one in a million, in addition to my previous post all I can say is I never set out or had a vision to achieve that I just built a business from a young age and worked incredibly hard. I take it you are currently employed? In what field do you work?

The G

Wow, agree with with everything you've said!
I work in electronics, designing integrated circuits. I think I see a ceiling of £45k in the UK (not on that now lol) and more abroad. Starting a business in it? Tough, I think...

Please... what area was your business in (and job before that)? I'm very interested to know!!

guitarman001

GSMAnon, good luck with your PhD. I tried one at one point but found out research wasn't for me, so deferred to the MSc.

Your post rings true with what I think. Also come from working-class background and am proud of what I've achieved so far, but realise it wont make me rich, as such. Right now saving £8-10k per year but that's while staying at home on a good salary, so would likely be skint moving out. So in 10 years when I'm 37 that'll be ~£100k saved. Not enough, too slow!

I've read many, many business and investing books and have taken the path of investing my savings. I chose a high risk path and it's not been a good year, but finally I see a glimmer of hope that could net me £70k from a £10k investment. I HOPE!!

I don't know if this is going to be useful long-term. I'd need the capital for the investing and property gets in the way, so I need a big dose now to get the whole mortgage thing out of the way.

Have you thought about going into finance? I did but don't fancy London, plus I know people who do the job and my life seems like bliss compared to theirs, even if they have lots of money lol! I don't know.. something has to happen - I'm trying!!

geoffky

GSMAnon wrote: »

Hi guys - thought I'd join the thread and accept the challenge.

A bit of information about me:

I'm a 22 year old male, currently pursuing a PhD in Space Systems Engineering (which I started in October 2011), and only recently really beginning to think seriously about money and how to get more of it, and how I intend to live out the rest of my life.

I've quickly realised that my previously assumed path (education, education, education, education -> job) is not the route to riches, and most people who take my route end up in sub-40k jobs, with the biggest earners topping out at £80k. Unfortunately that path was drilled into me from an early age by my well-meaning working class parents who assumed that an education is the thing that they were missing - the missing jigsaw piece that was contraining their earning potential, and convinced me that if I got that missing piece and became well-educated, then I'd make a mint out of my CV. But, as I'm finding out, that's just not the reality.

I enjoy education, it's a big part of my life, and I thoroughly enjoy academic research. But I'm realising that I'd rather be a financially independent individual who does academic research as a passion and life-pursuit, and not a financially depending individual who spends their life doing academic research (or something else related to my qualifications) for the simple reason that I NEED it to sustain myself, and being susceptible to redundancy, industrial decline, etc.

Financially, at the moment, I'm in a decent position (relative to before!). I get a tax-free PhD stipend of £1132.5 pcm, and only spend between 50 and 60% of that. I'm still in my interest-free overdraft from my undergraduate days where I ran a very slight but rather protracted deficit which left me at my £2,500 limit by September 2011. I haven't quite paid it all off yet, but I should be clear of it by March 2012. I have student debt of around £10,000, but the interest rate on that is less than or equal to the rate of inflation at any given time, so the cost of borrowing is nil, and it's not something I'm too worried about.

Apart from that, I'm debt-free. No credit card balances, no loans, no mortgage, etc.

I intend to get my PhD, which I should complete between Summer and Autumn 2014, aged 24/25. This gives my 3 years to think long and hard about how to spend my life in such a way that I'll be a financially independent millionaire by the time I'm 40.

I'm doing a lot of independent studying to become as financially literate as possible. Money is not something I've thought about a let prior to this stage of my life. Before I started University "money" was just something that my family didn't have enough of. During university "money" was just a free hand-out from the government to sustain me. NOW, however, I'm at the beginning of my adult life and I'm beginning to think about money and what it should be able to do for me from now on, and how I can make my money work for me.

Anyway. That's it for now!

Use those contacts you make at uni. And if you can get a few of you together to start up a small biz with help from your professors..Thats the way i would be thinking. you will be surrounded by some brilliant minds,use them.

GSMAnon

geoffky wrote: »

Use those contacts you make at uni. And if you can get a few of you together to start up a small biz with help from your professors..Thats the way i would be thinking. you will be surrounded by some brilliant minds,use them.

This is something I have considered, and my subject area actually puts me in a very strong position to go for that.

I'm working in a research group that focusses on frontier-style research in space systems engineering. Our work is very blue-skies, but it is strongly linked with a very up-and-coming industry - companies specialising in small satellites are popping up all over the UK (ClydeSpace in Glasgow, SSTL in Surrey, many of which are spin-off companies from university research groups, etc) and we work with many of them.

To boot, the space industry stands at an estimated £8 billion in annual productivity and is estimated and targeted to grow to £40 billion by 2030, with much of that growth in small private biz. If I can find a way to ride that wave of growth, then I'll do very well out of it.

Then again, doing a PhD in my field opens up thousands of other areas of potential business.

MarcoM

For those who think that the financial crisis is just "bottoming out" of the 2008 crisis and that things are on the up wait till iran gets attacked and the straight of Hormuz is shut down. Oil prices will double overnight and no mervin king, d cameron or the socialist white knights will be able to save the boat.
Just have a look at the news and what is going on in the ME. And this is not counting any nuclear mushroom that may go up in the region should a war break out between israel and iran.

MarcoM

GSMAnon wrote: »

This is something I have considered, and my subject area actually puts me in a very strong position to go for that.

I'm working in a research group that focusses on frontier-style research in space systems engineering. Our work is very blue-skies, but it is strongly linked with a very up-and-coming industry - companies specialising in small satellites are popping up all over the UK (ClydeSpace in Glasgow, SSTL in Surrey, many of which are spin-off companies from university research groups, etc) and we work with many of them.

To boot, the space industry stands at an estimated £8 billion in annual productivity and is estimated and targeted to grow to £40 billion by 2030, with much of that growth in small private biz. If I can find a way to ride that wave of growth, then I'll do very well out of it.

Then again, doing a PhD in my field opens up thousands of other areas of potential business.

if i were you with that phd i would emigrate to the US / CANADA.
Forget this country, if you are middle class you are screwed. No welfare will help you and you won't be rich enough to pay for complex tax avoiding scams.

GSMAnon

guitarman001 wrote: »

GSMAnon, good luck with your PhD. I tried one at one point but found out research wasn't for me, so deferred to the MSc.

Your post rings true with what I think. Also come from working-class background and am proud of what I've achieved so far, but realise it wont make me rich, as such.

Absolutely. I think, if I did go down the route of getting an industrial job after my PhD, then I could be "rich" in 20 years time... and when I say "rich", I mean what my parents idea of rich is... i.e. instead of earning a top salary of £30k, I'll earn a top salary of £80k. £30k tops is all my parents have ever known, so I don't think they really realise that £80k isn't that much better off than them. In fact there's probably a lot of people on £80k in their own neighbourhood who are a lot worse off than they are financially, because for many people, as their wages increase, so does the size of their mortgage, the size of their car costs, and their general level of spending and debt.

But that's not the kind of "rich" I want to be. In a way, going down the education path has been a good idea because it has kept me out of the jobs market for the past 5 years and will keep me out of the jobs market for at least another 3 with the PhD, and that'll give me a lot of time to consider my future moves before getting bogged down and trapped with with a 9-5.

Right now saving £8-10k per year but that's while staying at home on a good salary, so would likely be skint moving out. So in 10 years when I'm 37 that'll be ~£100k saved. Not enough, too slow!

I'm renting with my girlfriend, but currently only spend about 55-65% of my £13,590 annual stipend, so I should be able to save somewhere in the region of £4.5k-£5k per year. But in the future I'll also have additional income from teaching/tutoring duties and plan to take on private tuition work in the evenings. Not too bad... if my girlfriend can save her student loan (which she doesn't spend) then we could have about £16k-£18k saved by the time we graduate. Not a massive amount, but not bad for two people coming out of the education system...

I've read many, many business and investing books and have taken the path of investing my savings. I chose a high risk path and it's not been a good year, but finally I see a glimmer of hope that could net me £70k from a £10k investment. I HOPE!!

I don't know if this is going to be useful long-term. I'd need the capital for the investing and property gets in the way, so I need a big dose now to get the whole mortgage thing out of the way.

Well this is what I'm starting to do now - become financially literate through self-study. Seems a bit slow going though, and I know I'd be much better off learning by doing. I just don't have any capital to invest yet!

Have you thought about going into finance? I did but don't fancy London, plus I know people who do the job and my life seems like bliss compared to theirs, even if they have lots of money lol! I don't know.. something has to happen - I'm trying!!

I did consider it... a lot of Engineering PhD graduates end up there and are highly sought after. There can be a lot of money in it, but I don't know how much I'd enjoy it. I certainly don't like London, and at the end of the day you're still a wage-slave... a very highly paid wage-slave, but a wage-slave nonetheless. My goal is to be financially independent through passive income. I don't want to have to go to the office everyday and put in 8-12 hours or grind to pay my way.

Ideally, my goal would be to be able to go for a lovely meal in a fancy restaurant, spend £200 on the food and £100 on the wine, and leave the restaurant 2 hours later having made more money than I'd spent through passive income.

GSMAnon

MarcoM wrote: »

if i were you with that phd i would emigrate to the US / CANADA.
Forget this country, if you are middle class you are screwed. No welfare will help you and you won't be rich enough to pay for complex tax avoiding scams.

Well I don't intend on being middle class... not financially at least.