Sunday, 22 June 2014

Asset Theory - dying with zero

Just a rambling blog post as I've been thinking about this topic in the last few weeks...

I'm almost 40... and still trying to get a startup going.  What for?  Mainly because it's something I enjoy and find challenging.  It'll be easy to kick back get a cushy corporate job and just 'do' my job and save up for holidays and then retire at some time in the future.

But the path I'm taking is entrepreneurship (which I still find difficult to spell!  Why do I always want to do a nuer rather than neur?) with the possibility of growing the business to be quite big!  I know the potential is there and I can realise it with lots of hard work and some luck.

At the same time we're building a house so we can enjoy life but at times I wonder if things are running in concert or if they seem like divergent activities?  I'm working harder than ever and having to juggle expectations at home as well as try and give my businesses a good fighting chance by working them well.

We're scrimping on bits and pieces for the house and then get smashed on simple things like a conduit to run cable internet in for $1500.  That's a fair amount of cash when we are nickel and diming on things like taps, light switches etc!

But then I think about what I've been talking about in terms of savings and investments.  I like investing.  I think it's the Asian genes... but then without kids I wonder why we need to invest beyond what we need to live on.  I agree we need to support our old age but surely there is a better system.  It use to be that you had kids so they would be your retirement solution.  Nowadays those who are retiring are helping their kids out to get a start in life which is a bit reverse.  Really our needs in funding start off medium, escalate when we buy a house etc and then decline once the mortgage is paid off.

We haven't paid off our mortgage but I wonder if we really need to.  Not that we're trying to game the system but really why do we have to leave a huge asset when we die.  What we want to do is really die with no assets.  We don't want to be penniless during retirement but we don't want to have left over assets either. Rather like a bell curve for total assets:

Assets down to 0

There is a concept of a reverse mortgage which can help with this concept but I'm not really sure that's what will solve the problem.  We've discussed "adopting" an adult so they can help us in old age (just for simple things as to what we do for our parents) but I wonder if that's even feasible or desirable!

If we assume we'll live to 80... then we are now in the middle of that bell curve ... and really need to start spending down rather than saving.  But still earn at the same time so we should be able to stop the constant 'savings' mode we've been in.

Kinda goes against all economic advice provided these days.