What is a good job or business that does well when everything else is slow?

If this guy is right, things are going to slow down, but is it realistic?
www.news.com.au/finance/economy/australian-economy/entrepreneur-matt-barrie-warns-australia-is-on-the-brink-of-financial-collapse/news-story/82f7f58731d57e045f68acd3cc33c04d

(I find it a bit ironic that this guy's business tends to have a lot of overseas freelancers that compete for local work, and he is talking about too much migration, but I guess the things are separate.)

Where do you "hide out" if there is a slowdown (no need for that 'r' word)? The governments will do what they can to avoid a slowdown anyway, as once people here that 'r' word, it makes things even worse.

Do you take a public service job? Do you become a teacher? Do you move countries?

What businesses are recession proof?

Select to expand quote

FormulaNova said..
What is a good job or business that does well when everything else is slow?

If this guy is right, things are going to slow down, but is it realistic?
www.news.com.au/finance/economy/australian-economy/entrepreneur-matt-barrie-warns-australia-is-on-the-brink-of-financial-collapse/news-story/82f7f58731d57e045f68acd3cc33c04d

(I find it a bit ironic that this guy's business tends to have a lot of overseas freelancers that compete for local work, and he is talking about too much migration, but I guess the things are separate.)

Where do you "hide out" if there is a slowdown (no need for that 'r' word)? The governments will do what they can to avoid a slowdown anyway, as once people here that 'r' word, it makes things even worse.

Do you take a public service job? Do you become a teacher? Do you move countries?

What businesses are recession proof?

Liquor store, sex industry, drug counciling, chocolate retailing, gambling

Select to expand quote

myscreenname said..

FormulaNova said..
What is a good job or business that does well when everything else is slow?

If this guy is right, things are going to slow down, but is it realistic?
www.news.com.au/finance/economy/australian-economy/entrepreneur-matt-barrie-warns-australia-is-on-the-brink-of-financial-collapse/news-story/82f7f58731d57e045f68acd3cc33c04d

(I find it a bit ironic that this guy's business tends to have a lot of overseas freelancers that compete for local work, and he is talking about too much migration, but I guess the things are separate.)

Where do you "hide out" if there is a slowdown (no need for that 'r' word)? The governments will do what they can to avoid a slowdown anyway, as once people here that 'r' word, it makes things even worse.

Do you take a public service job? Do you become a teacher? Do you move countries?

What businesses are recession proof?

Liquor store, sex indusry, drug counciling, chocolate retailing, gambling

Nah, something I don't already do

I would go into making beer, but drinking it all is not the aim.

Retired

Select to expand quote

airsail said..
Retired

It's a good point.

I'm enjoying the high interest rates, It's about time too. When we go into recession - which we will - I'm looking forward to cherry picking some bargains.

Politician

Select to expand quote

myscreenname said..

airsail said..
Retired

It's a good point.

I'm enjoying the high interest rates, It's about time too. When we go into recession - which we will - I'm looking forward to cherry picking some bargains.

As long as you don't need a loan you will be okay. People often forget that when the economy goes down the toilet that banks tighten up lending standards.

This is the thing that will screw a few people now in that they don't qualify anymore for the loan they originally got, so they can't refinance with another bank and get locked into sub-optimal rates.

I was in this sort of position where I was self-employed, and then out of work, so I was locked into paying the higher rates through my current bank. I am pretty sure the banks know that there will be a lot of people in this sort of position and they won't care unless there are defaults.

Select to expand quote

FormulaNova said..
What is a good job or business that does well when everything else is slow?

Bitcoin miner.

myscreenname's butler.

Select to expand quote

TonyAbbott said..
Politician

Yeah, I guess that works until the electorate wakes up and turfs one out.

Select to expand quote

myscreenname said..

airsail said..
Retired

It's a good point.

I'm enjoying the high interest rates, It's about time too. When we go into recession - which we will - I'm looking forward to cherry picking some bargains.

Never understood why retirees like the high interest rates that come with inflation. Sure they earn more interest, but the cost of living has gone up to, so their savings are being eroded, or at best it's costs neutral... except that they are maybe being pushed into a higher tax bracket with investment income so it's an overall loss for them. Just what is supposed to be the advantage of it?

Select to expand quote

Harrow said..
Never understood why retirees like the high interest rates that come with inflation. Sure they earn more interest, but the cost of living has gone up to, so their savings are being eroded, or at best it's costs neutral... except that they are maybe being pushed into a higher tax bracket with investment income so it's an overall loss for them. Just what is supposed to be the advantage of it?

Retirees, don't work and generally live off their savings or investments. These savings can be put into investment funds that are usually tied to shares, put into property or put into the bank.

During a recession shares become more risky, net yeild from residential property is still low, maybe 3% and you have all the issues associated with property. Or you can put it in the bank, a savings account and earn 4.65%.

Please feel free to share, if you have a better idea that is guaranteed to earn more.

Superannuation.

Select to expand quote

Harrow said..

myscreenname said..

airsail said..
Retired

It's a good point.

I'm enjoying the high interest rates, It's about time too. When we go into recession - which we will - I'm looking forward to cherry picking some bargains.

Never understood why retirees like the high interest rates that come with inflation. Sure they earn more interest, but the cost of living has gone up to, so their savings are being eroded, or at best it's costs neutral... except that they are maybe being pushed into a higher tax bracket with investment income so it's an overall loss for them. Just what is supposed to be the advantage of it?

Yes, inflation affects us all but once retired your spends aren't as big, just housekeeping stuff and some petrol. Kids are off your hands so you have more choice of how and where to spend funds. You also have more time to chase cheaper options eg, shop Aldi then Coles/Woolies for the extra bits. Self funded retirees pay no tax and get extra benefits from the government, low income health card and commonwealth seniors card.
Some banks are paying 5% on savings guaranteed, no tax as as you're below the income tax threshold, Very safe and easier than other investments outside super. Funds are also coming from zero tax superannuation environment.

Boomers are living the good life.

Select to expand quote

myscreenname said..
Retirees, don't work and generally live off their savings or investments. These savings can be put into investment funds that are usually tied to shares, put into property or put into the bank.

During a recession shares become more risky, net yeild from residential property is still low, maybe 3% and you have all the issues associated with property. Or you can put it in the bank, a savings account and earn 4.65%.

Please feel free to share, if you have a better idea that is guaranteed to earn more.

What I was meaning was if you have, say $1M invested, and then interest rates and inflation go up by, say 2%, then you get 2% more earnings to cover the cost of living rise, but your $1M is now worth 2% less, so have you gained anything or not by the higher interest rates?

I'm earning over 9% at the moment from peer-to-peer lending.

Select to expand quote

Harrow said..

myscreenname said..

Harrow said..
Never understood why retirees like the high interest rates that come with inflation. Sure they earn more interest, but the cost of living has gone up to, so their savings are being eroded, or at best it's costs neutral... except that they are maybe being pushed into a higher tax bracket with investment income so it's an overall loss for them. Just what is supposed to be the advantage of it?

Retirees, don't work and generally live off their savings or investments. These savings can be put into investment funds that are usually tied to shares, put into property or put into the bank.

During a recession shares become more risky, net yeild from residential property is still low, maybe 3% and you have all the issues associated with property. Or you can put it in the bank, a savings account and earn 4.65%.

Please feel free to share, if you have a better idea that is guaranteed to earn more.

What I was meaning was if you have, say $1M invested, and then interest rates and inflation go up by, say 2%, then you get 2% more earnings to cover the cost of living rise, but your $1M is now worth 2% less, so have you gained anything or not by the higher interest rates?

But you haven't lost, unlike most of the mortgage paying or renting population, those with little savings, they are definitively behind. And interest rates are up by 4%, not 2%.

Select to expand quote

Harrow said..

I'm earning over 9% at the moment from peer-to-peer lending.

Is that net after tax? I put money into an ETF based on the ASX200 just before Trump got elected and have set it to reinvest dividends. It is now worth a bit over 1.8X what I paid. The seventh root is 8.5%, but since the franking usually sits around 25%, the return is closer to 11%.
And if I recalculate to allow for it only being 6 1/2 years worth of quarterly returns, the 6 1/2th root is 9.4%

Select to expand quote

Harrow said...

What I was meaning was if you have, say $1M invested, and then interest rates and inflation go up by, say 2%, then you get 2% more earnings to cover the cost of living rise, but your $1M is now worth 2% less, so have you gained anything or not by the higher interest rates?

I'm earning over 9% at the moment from peer-to-peer lending.

2 percent of a million is $20,000.
2 percent of annual cost of living for a couple is $988.

Select to expand quote

Harrow said..
What I was meaning was if you have, say $1M invested, and then interest rates and inflation go up by, say 2%, then you get 2% more earnings to cover the cost of living rise, but your $1M is now worth 2% less, so have you gained anything or not by the higher interest rates?

I'm earning over 9% at the moment from peer-to-peer lending.

You do understand that retirees are at a different stage of life and are more risk adverse?

As others have pointed out, annual costs of living are far less for retirees than working people who may have kids and mortgage to support. I'd estimate $50k for a single person and $70k for a couple.

Self funded retires are better off now with high interest rates than they were prior to 2020 when rates were almost zero.

I would think peer to peer loans are a really bad idea going into a slowing ecconomy and a likely recession. The risk of default will increase significantly, not to mention regulatory oversight, problems with liquidity and protections for investors.

Harrow, lets assume a retiree had $1m in bank and needed $50k per year living expenses in 2020.

At 0% interest rate, retiree will be broke in 20 years.

In 2023 inflation is 7% higher than 2020 and interest rates are 5%.

Retiree now earns $50k per year in interest from savings and living expenses are $53.5K (7% higher)

In 2023 how long will it take for the retiree to be broke?

Harrow, do the maths!

I went to a superannuation seminar a couple of days ago. Among many things, they mentioned that annuities are a viable option for retirees again given the high interest rates. They also said that $70,000 makes for a comfortable retirement for a couple. Also a drawdownnrste of 11 percent will have a nest egg last 14 years if earning 6 percent.

Select to expand quote

myscreenname said..
Harrow, lets assume a retiree had $1m in bank and needed $50k per year living expenses in 2020.

At 0% interest rate, retiree will be broke in 20 years.

In 2023 inflation is 7% higher than 2020 and interest rates are 5%.

Retiree now earns $50k per year in interest from savings and living expenses are $53.5K (7% higher)

In 2023 how long will it take for the retiree to be broke?

Harrow, do the maths!

I've done the maths. With 7% inflation and 5% interest, the 2023 guy runs out of money in around 18 years.

Sure, he's spending $53.5K one year, but the next years he's spending $57.2K, then $61.3K, etc. After 10 years he's spending $98.4K p.a. Every time this comes up, people seem to just look at the interest earnings and increased cost of living after just 1 year and then draw a conclusion from that, without looking at the impact of the compounding effect over time.

If you assume the same spread between inflation and interest, whether it be 7% CPI & 5% interest, or 4% CPI & 2% interest, there's not much difference between how long the money lasts in each case. Flip it around so that you are earning above CPI and you'll still see that it doesn't matter too much of it's 2% CPI and 4% interest, or 7% CPI and 9% interest. The real difference appears if the spread between inflation rates and interest rates changes.

So, the question becomes this.... do interests rates keep up with inflation (i.e. maintain the same gap between the two)? I'd figure probably not?

Select to expand quote

myscreenname said..

Harrow said..

I've done the maths. With 7% inflation and 5% interest, the 2023 guy runs out of money in around 18 years. Sure, he's spending $53.5K one year, but the next years he's spending $57.2K, then $61.3K, etc.

Basically, if you assume the same spread between inflation and interest, whether it be 7% & 5%, or 4% & 2%, there's not much difference between different cases if you calculate the compounding percentages year by year. This topic comes up from time to time, and people always quote first year costs to me, but put it in a spreadsheet and run it for 20-30 years, and you'll see that what makes a difference is how the spread between inflation and interest rates changes.

So, the question becomes this.... do interests rates keep up with inflation? I'd figure probably not?

So you now agree that interest rates rising do benefit retirees?

Inflation and interest rates are two different things. Currently inflation is moving more rapidly than interest rates. I think inflation is running at 7% and interest rates are close to 5%.

It's a good thing you now accept the error you made in your first post.

No, I'm saying the case with higher interest rates runs out of money faster because, even though things remain pretty even between the two caes if inflation and interest rates go up by the same amount, the more likely case is that interest rates don't rise by the same amount as inflation.

Select to expand quote

Harrow said..

myscreenname said..

Harrow said..

I've done the maths. With 7% inflation and 5% interest, the 2023 guy runs out of money in around 18 years. Sure, he's spending $53.5K one year, but the next years he's spending $57.2K, then $61.3K, etc.

Basically, if you assume the same spread between inflation and interest, whether it be 7% & 5%, or 4% & 2%, there's not much difference between different cases if you calculate the compounding percentages year by year. This topic comes up from time to time, and people always quote first year costs to me, but put it in a spreadsheet and run it for 20-30 years, and you'll see that what makes a difference is how the spread between inflation and interest rates changes.

So, the question becomes this.... do interests rates keep up with inflation? I'd figure probably not?

So you now agree that interest rates rising do benefit retirees?

Inflation and interest rates are two different things. Currently inflation is moving more rapidly than interest rates. I think inflation is running at 7% and interest rates are close to 5%.

It's a good thing you now accept the error you made in your first post.

No, I'm saying the case with higher interest rates runs out of money faster.

I'll need a spreadsheet. In first year guy is only down $3,500 with 5% interest. Guy/Woman/Them is down $50k in first year with zero interest rates

Interest rates are going up at the moment to prevent inflation from going to high.

Select to expand quote

myscreenname said..
I'll need a spreadsheet. In first year guy is only down $3,500 with 5% interest. Guy/Woman/Them is down $50k in first year with zero interest rates

Interest rates are going up at the moment to prevent inflation from going to high.

Yep, that's what people tend to say whenever this comes up..... $3500 loss compared to $50000 loss. However, after 10 years, 2023 guy is making $60K loss, and at 15 years he's making a $119K loss.

You could say the 7% CPI and 5% interest rates won't be around forever. That's okay, just model it for a couple of years and then lower it back to 0%, doesn't change the overall result.

It means the statement "high interest rates are good for retirees" needs to be qualified. Higher interest rates are good for retirees when they aren't accompanied by a rise in inflation. If you're a retiree, you shouldn't be getting that excited about the present high interest rates, you're long term outlook was looking better a few years ago when the cash rate and inflation were a roughly equal even though the interest rate was lower.

Select to expand quote

Harrow said..

Yep, that's what people tend to say whenever this comes up..... $3500 loss compared to $50000 loss. However, after 10 years, 2023 guy is making $60K loss, and at 15 years he's making a $119K loss.

You could say the 7% CPI and 5% interest rates won't be around forever. That's okay, just model it for a couple of years and then lower it back to 0%, doesn't change the overall result.

It means the statement "high interest rates are good for retirees" needs to be qualified. Higher interest rates are good for retirees when they aren't accompanied by a rise in inflation. If you're a retiree, you shouldn't be getting that excited about the present high interest rates, you're long term outlook was looking better a few years ago when the cash rate and inflation were a roughly equal even though the interest rate was lower.

Interest rates are just getting back to their normal position at 5%, which allows me to extends my sabbatical by another year or so. I have no idea what will happen with inflation, it's a different thing.

What was the inflation rate in Australia when interest rates were close to 18% in 1990? Was it 20% or 9%?

I'd be getting out of that peer to peer lending.
A recession means people will be defaulting on loans. But yeah, I reckon you are the expert.

And regarding your hypothetical, bullcrap scenario - that would never happen - with interest rates following inflation in a straight line. You are correct, so I apologise.

See Harrow, not that hard isit?

Select to expand quote

myscreenname said..

Harrow said..
Yep, that's what people tend to say whenever this comes up..... $3500 loss compared to $50000 loss. However, after 10 years, 2023 guy is making $60K loss, and at 15 years he's making a $119K loss.

You could say the 7% CPI and 5% interest rates won't be around forever. That's okay, just model it for a couple of years and then lower it back to 0%, doesn't change the overall result.

It means the statement "high interest rates are good for retirees" needs to be qualified. Higher interest rates are good for retirees when they aren't accompanied by a rise in inflation. If you're a retiree, you shouldn't be getting that excited about the present high interest rates, you're long term outlook was looking better a few years ago when the cash rate and inflation were a roughly equal even though the interest rate was lower.

Interest rates are just getting back to their normal position at 5%, which allows me to extends my sabbatical by another year or so. I have no idea what will happen with inflation, it's a different thing.

What was the inflation rate in Australia when interest rates were close to 18% in 1990? Was it 20% or 9%?

I'd be getting out of that peer to peer lending.
A recession means people will be defaulting on loans. But yeah, I reckon you are the expert.

And regarding your hypothetical, bullcrap scenario - that would never happen - with interest rates following inflation in a straight line. You are correct, so I apologise.

See Harrow, not that hard isit?

Not sure what you're getting so wound up about? I was just making the observation that a rising interest rate might not be as rosy as people make out when it's accompanied by inflation that is rising just as much. Are you upset that I had already done the math?

Should I move the peer-to-peer to something more certain... like Bitcoin? Or do I stick to business loans that are secured by real estate with an LVR of less than 70%? It's all just risk-reward and personal situation. You're happy with your Bitcoin, I'm happy with my private lending.

Select to expand quote

Harrow said..

Not sure what you're getting so wound up about? I was just making the observation that a rising interest rate might not be as rosy as people make out when it's accompanied by inflation that is rising just as much. Are you upset that I had already done the math?

Should I move the peer-to-peer to something more certain... like Bitcoin? Or do I stick to business loans that are secured by real estate with an LVR of less than 70%? It's all just risk-reward and personal situation. You're happy with your Bitcoin, I'm happy with my private lending.

You sound a tad fired up. Its good that you are having a punt. There are similar peer to peer lending schemes in Crypto, but they were proven failures

Let us know how it pans out.

The best place to be financially is on the board of an Aboriginal & Torres Strait Islander corporation.
Biggest gravy train in the country. Money for nothing and your cheques for free.

Select to expand quote

cisco said..
The best place to be financially is on the board of an Aboriginal & Torres Strait Islander corporation.
Biggest gravy train in the country. Money for nothing and your cheques for free.

Probably the same as sitting on the board of any public organisation. Ask for equivalent pay to the private sector but have much better working conditions.

Your comment reminds me of someone years ago assuring me that the aboriginals in the area would dump their cars and just buy another new one as the government gave them cars for free. Sounded like absolute bull**** then and clearly a story that someone started and people repeated it without checking the reality of it.

I guess it then depends on your view on life whether you repeat these things like a drone or think about things.

I have family members who run fairly large businesses. You said not to say the R word but word from those above are saying we are currently in a PSEUDO RECESSION.

All thanks to government overreach in the pandemic. The best business to be in both situations is pharmaceuticals or someone who provides access to those pharmaceuticals that only treat symptoms but never prevent or get rid of illnesses completely.

Yeah we could have reduced government overreach like Sweden did and have only 3,026 more deaths than our current 21,463.

Sounds fine, until you remember that Sweden's population is 10,218,971.

So correcting for population, our deaths might have been 54,752.

That's 33,289 more Australians dead from COVID. Around 3,000 more dead Western Australians.

I have personally met only two unvaccinated people. I haven't met anyone suffering from long COVID. I haven't met anyone suffering from serious side effects from vaccination. I don't personally know anyone who has died from COVID or vaccination.