Thread: Here’s an interesting side effect of savings and in…
Thread: Here’s an interesting side effect of savings and investing.
For the last 20 years Australia has had a forced savings plan called “Superannuation”. Employers have to pay 9% into an investment account on top of your wage.
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The cumulative effect has been to create a behemoth if an investment industry in Australia, with plenty of upsides and downsides. But one curious phenomenon has been that a decent percentage of that wealth has been invested off-shore.
This is why I like BitCoin so much. Despite detractors claiming its deflationary nature is a handbrake to an economy, by encouraging saving it also encourages investing those savings into income-earning assets, which creates long term wealth accumulation.
This might pose a problem for our central bank in the future if it wants to devalue our currency because the Aussie Dollar will become a more desirable currency to hold. But IMO it’s amazing what saving and investing does for a nation’s wealth long term
Now dividend income from the investments is reaching a point where it’s having a material impact on Australia’s trade deficit/surplus (difference between net imports and exports). We haven’t run a surplus since our $ floated and it appears we soon may.