Do I have enough to start a life in Aus

[dme]

Hi,

I have a 189 permanent residency visa which expires in 2018. My sister who lives in Australia is trying to convince me to make the move. I am a single 34 year old, and am currently enjoying my life style in South Africa as a Software Development Manager. My concern at the moment is that if I were to move to Australia today, I would only have around AUD$250k in total savings.

This is enough to buy me a nice house in South Africa, but obviously would not get me very far in Australia. Would it be worth moving to Aus and basically starting from scratch? Really was hoping to retire young, but this would probably set me back to working my whole life.

Thoughts?

[RedPanda]

The younger you go, the better it'll be for you.

And you really have to keep the bigger picture in mind with this one, and be honest with yourself. What do you really think South Africa will be like in 15 years time? That's round about the time that you will be 50. Do you want to live in that picture? They can't even keep the power on now, and load shedding is not just the next small inconvenience, it's because the infrastructure is failing. All of the infrastructure is slowly decaying due to lack of maintenance. Consider what the Rand value is doing, and has been doing for the past 20 years. What do you think your savings will buy you overseas then?

For many people the current moment is not the problem, it's still comfortable right now, even if we are a bit worried. It's the future that's scary.

With those savings you should be able to land in Aus just dandy, look for and find a job. Then put down a bond on a house (if you want to buy, some people are in favour of renting), and if you are going to stay single, or if you get a companion that also earns a decent salary, you should be able to live just fine.

Be very careful of how you calculate "retiring young". People live into their 80s, that's a long time. And prices go up all over the world. Most people seriously misjudge just how much money they really need in order to maintain their living standards if they are going to stop working all together.

[EmNew]

@RedPanda - that was a very diplomatic answer. Am also with you on looking forwards to 15 years time rather than today. That was our deciding factor. We just could not see ourselves being retired here and wanted to move while we still had the working years left to build up again.

@DME - you will find that a lot of emigrants left / are leaving with a lot less money ( as in drop the 'k' behind the figures altogether type scenarios ) , are older and with children to support and have made a good life for themselves. Remember , in emigrating you are starting your life from scratch, not matter how much money you have in the bank. Yes, more money will make those initial months easier in terms of security of food and accommodation and a deposit on a house but no amount of money is going to give you a sense of history with a place that you have no history in.

What made you apply for the 189 in the first place? Perhaps revisit your reasoning at the time - what made Australia attractive to you in 2013 that now that you are half way to the expiry of the visa, you are wondering if it's worth it? You won't be able to cut and paste your current lifestyle. You will have to scale back initially- the exchange rate and higher cost of living in Australia will ensure that. It does not mean that you can't still have goals to work towards. Also bear in mind that official retirement in Australia is at age 70 - so again echoing what RedPanda said - what do you mean by 'retiring young'?

[dme]

Thanks for taking the time to share your thoughts. Really appreciate it!

Retiring young for me, was going to be 55. I have worked my way into a position of being able to invest half my monthly income.

I obviously worry about South Africa, which is why I had applied for the visa at the time (as well as the pressure from my sister in Aus to join her). I guess I just have a unrealistic glimmer of hope that South Africa can still right itself. Alternatively I am scared of hoping the grass will be greener on the other side, only to realise to late what I had here was pretty good.

I am shocked by how expensive property/rent is in Australia in return for the quality of accommodation. Maybe when you earning Aus $ it doesn't seem so bad?

[monsta]

Hey DME,

The real question is, what would you need to do in Aussie to retire at 55?

Get into the property game young. Buy a shoebox sized bachelor pad in the inner city. You will have pressure to make repayments which will force you to cut back on partying. Save up a good deposit and buy at the right time in the property cycle!

Pay a bit more than the minimum into your superfund each month. A superfund is a compulsory pension fund. Doing a "salary sacrifice" from your salary into the fund saves on tax.

Keep your grandparents around. Day care, after school care, etc..is insanely expensive. Grandparents could save you $1000s each year.

Live far away from work. Live next door to the guy who cleans the toilets at work. It could mean you will own a place in a suburb that will see a spike in property prices as your city expands.

Learn how to invest in shares. Giving your savigs to your bank will return less than 5%. Buying shares in your bank could return over 8% mostly tax free. Once your superfund is big enough, consider managing it yourself (ie pick your own shares). But at least shop around regularly and find a fund with low fees and low insurance costs.

Learn how to beat the recruitment system here. Get the right kind of experience on your CV and always hear recruiters out. Often changing jobs every 2 years will help your salary grow.

Edited August 11, 2015 by monsta

[Mara]

DME, the cards for South Africa have been dealt... and overall I think everyone who believes that "things will still come right" may have ended up with only the Joker in their hand!

I honestly think that, in your position, you will end up with no regrets in moving to Australia!

Surely if you are in software development, when you turn 55, perhaps you could look at contracting instead of full time employment, that way you would be able to take off around the world, and work from anywhere!

[Donovan83]

Retiring young for me, was going to be 55. I have worked my way into a position of being able to invest half my monthly income.

I am shocked by how expensive property/rent is in Australia in return for the quality of accommodation. Maybe when you earning Aus $ it doesn't seem so bad?

You'll be very surprised at how things work out here. There is a unique situation in Australia that is open to be exploited if you want to, it is entirely possible to have a huge gap between what you earn and what you have to pay while still having a good quality of life. You just need to pay a lot more attention to what you're spending money on than in SA.

I am currently in a position where I can save just under 2/3rds of my income. I could retire in my mid-40s, but I am faced with a decision where I might need to work until I am at least 55 if i want to bring my parents over to Australia within the next 5 years and still have enough for my own retirement, which I am probably going to try and do. The reason for this is probably that I don't have any dream killers children and live relatively frugally. I rent an apartment close to work, don't own a car and limit wasteful/fruitless costs. I have a spending money budget each month, eat at nice restaurants 3 to 4 times a month, go to the movies once or twice a month, and I have my annual duty trips to South Africa, and even the odd holiday to other australian cities thrown in here and there.

I disagree with the concept of buying property as the main or best way to build wealth. While it may have been the way to get wealthy previously, that doesn't necessarily mean it'll continue that way. Buying an inner city apartment is particularly bad advice - rent is dropping in these areas due to oversupply, while prices have only just started to drop. Best case scenario is that you will end up stagnating in value for 15+ years - only buy an apartment if you're planning to live in it for that long. Property ownership is extremely overrated in Australia - would you invest in a share that cost a lot to buy, a lot to sell, gave very poor yield, and had all its risk concentrated in one area?

The reason for this potential gap between income and costs is partly due to the cost of buying a property vs renting a property. Rent has not increased more than inflation despite increases in property values. Property has been subject to massive speculation by investors and bubble fuel in the form of first homeowner grants, access to cheap credit, etc. Renting is the answer right now, never forget (like I did - I've burned my fingers a little bit on this) that real estate is just one of many assets that you can buy for capital growth. In the long term, property keeps pace with inflation, plus a little bit. When it deviates a lot from that (like it has in Australia), eventually something is going to give and bring it back to normal.

It is also partly because of the choices available. Do you want to eat fillet mignon for dinner every night? Only eat quinoa? Eat dinner at restaurants 6 nights a week? You can. But you will end up with $200 at the end of the month because those things are luxuries. You can buy a mattress for over $20,000, and a fridge for $26,000 if you want to - I don't remember seeing those options in SA. People here, especially Aussies that grew up here, will take a taxi 2km home and pay $15 for that privilege - why not just walk? I've also noticed that they tend to do things like running their ducted heating 24/7 - costing $400 a month.

On the other hand, you can eat well, having porterhouse or scotch fillet (a much nicer cut in Aus than in SA for some reason), chicken breasts and home cooked meals with fresh veggies and fruits, home made lunches etc. You can buy a samsung "good enough" fridge, even if you buy it new, for $1,000. You can choose a nice, affordable mattress. Buy a second hand "good enough" car and skip on financing a brand new flash vehicle. Things like only running heating when you need it. It is unbelievable how much of a difference these changes make in the long run.

Honestly, if you live reasonably frugally, are employed in a similar role to SA, you could still retire at 55 or even earlier.

If you'd told me this would be my position before I moved a few years ago, I wouldn't have believed you... because it felt so impossible when I visited here with my Rands, went to the supermarket and saw that an avocado was R50.

[zamunda]

The situation, needs, definition of "comfortable", etc depends on the individual.

Here is my take on this:

I made my move to Aus two years back. I am in my mid 40s.

Back in RSA, had an established business, steady income, played golf at least twice a week, went on holiday at least twice a year.

Having moved to Oz, we are still trying to get settled in. The savings we brought along (at the exchange rate) did not go too far. Pretty much starting from scratch.

My only regret, wish I had made the move 25 years back. 25 years of lost opportunities. 25 years more quality of life my wife and I could have had.

Starting life in a new country gets more and more difficult as one gets older to make the move. In the same token, life living in a country where chaos reigns gets more and more difficult as one gets older.

Africa is where I am from and I sincerely hope that things will improve for the better, not only in RSA, but in the entire continent. But unfortunately we only live one life (a short one at that) and it does not make sense to live in hope that things will improve.

[Gerhardk]

Great answers above. Yes you probably have enough savings to make the move and most likely more than the majority of people with families that are here already and making it work. I also think renting is the way to go financially.

Australia seems a good place to retire in, so much support for older people. Assuming you retire / semi-retire at 55 even if in Australia, personally I would rather tour for 20 years around Australia like most retirees; it is save and geared towards tourists. South Africa is beautiful with all the animals but Australia has its own beauty - with the spiders! I am sure South Africa is very comfortable for you at this stage and hence some people move back after a short stay in Australia, not everyone thinks it is great over here.

I also found that single people struggle more to adapt vs couples and families with young children seems to adapt the easiest (general comment).

[monsta]

@Gerhardk I like your thinking. Kick the kids out when they are 24 and go touring

@Donovan83 property is a good investment for young people because it forces them to save money and take out less credit card debt. And yes, the real key is not buying a particular share or apartment, its saving regularly from a young age.

Edited August 12, 2015 by monsta

[dme]

@Donovan83, thanks for your advice. Given me a lot to think about there!

@Zamunda, you sound like you were/are stuck between a rock and a hard place. Hoping the Aus Dream works out for you!

[zamunda]

@dme I am loving it here though. Enjoy the finer things in life. For instance, my wife and I regularly go into the city (we take the bus so don't have to worry about drinking above the limit) and then walk home (about 5km) home in the middle of the night. No worries at all.

It is these things, I wish I had done 25 years earlier

[Shellfish]

The reason for this is probably that I don't have any dream killers children and live relatively frugally.

[elleneo]

We moved over 6 years ago, hubby turns 40 this year, he is Head of IT for an insurance company.

After 6 years in aus we are living a better lifestyle than we did I South Africa..looking to buy a home and taking our "dream killer" on a 3 week USA holiday.

We never went on holiday in SA, yes we had our own home but we were on a tight budget.

There is plenty of opportunity in Australia for hard working immigrants. 250k is a nice deposit for a 1million home..

Dive in, you won't regret it.

[monsta]

Or you could buy some Aussie shares. They have been going quite cheaply this week

Whether there is a good reason the stock market is down is up to you to speculate

[ottg]

... 250k is a nice deposit for a 1million home..

You mean 4 properties with max gearing if your borrowing capacity allows!!

[Donovan83]

You mean 4 properties with max gearing if your borrowing capacity allows!!

Please tell me you're being sarcastic?

[ottg]

@Donovan: Not at all - obviously it requires a strategy, planning and timing.

[Donovan83]

@Donovan: Not at all - obviously it requires a strategy, planning and timing.

Phew!

I only asked because someone I work with actually said this to me, and I laughed as if they were joking... turns out they were being serious. This guy, who earns less than I do (not that I am exactly rolling in it) and who has dependents (a child and a wife), decided that it would be a good idea to go and leverage himself up to the hilt to buy into the church of property ownership... 3 times, now 4.

All the best to him.. that is too much risk for my appetite for such a low yield/return.

It was mentioned earlier in the thread that it's possible to save a nice $250,000 for a deposit... something that I find to be such a pleasant oxymoron about Australia is that this is possible for some reason. The cost of living is high, but salaries are quite high too in some industries. This part is more important though - you have the option not to have a car, you have the option to rent in an area that has an oversupply so that it is relatively cheap (especially if you negotiate your rent down after demonstrating that you're a good, reliable tenant), you can choose to stick to a budget that allows you to eat out or go to the movies or theatre but not to excess, you don't need to pay for ADT or security things (or household insurance, especially if you live in an apartment), etc.

Australia provides the option where you can live the same lifestyle you had in SA (a car each, more bedrooms than you need, eating out 3 to 5 times a week, buying lunch and coffee every day), but then you'll be closer to living paycheque to paycheque and not saving much. But it also provides the option where you can be a bit more frugal (go out once or twice a week, buy coffee once a week, take lunch to work, etc) but save a lot more.

[ottg]

Been through this discussion before - what can I say. While thinking about it the markets moved on and your "friend" slept well and still has a job and wait for it....

See here: http://business.nab.com.au/nab-property-market-update-august-12587/

(To simplify things let's assume he bought with 5% deposit on $600k in Melbourbe) .........he just creamed $66k7 all thanks to the tenant and the taxman while the market was volatile, uncertain, a big bubble, risky........

[Donovan83]

And of course, this will definitely continue forever, and property values could never possibly go down