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Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm

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Speaker 1: James Kirkby, the Wealth editor at the Australian. Welcome aboard everybody.

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Speaker 1: Someone I've wanted to have on the show for some

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Speaker 1: time is Nathan Fradley. He's a leading financial advisor. He's

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Speaker 1: unusual to the degree that he is a entirely independent

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Speaker 1: operator and as such is both good advisor and a

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Speaker 1: voice for the financial advice sector. And it's an ideal

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Speaker 1: week to have him on because you probably know there's

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Speaker 1: been some alleged changes to Super put through Parliament, some

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Speaker 1: simplification of financial advice bureaucracy if you like, which is

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Speaker 1: supposed to cost us all less in the end, which

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Speaker 1: would be good if it comes to pass. Importantly, big

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Speaker 1: change with Super. You know, the big super funds wanted

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Speaker 1: to expand their advice offering and Big Super gets what

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Speaker 1: it wants normally, and they got what it wanted again

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Speaker 1: this week because they're now allowed to expand advice. But

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Speaker 1: not only that, they're allowed to charge for advice in

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Speaker 1: the manner that they charge for most things, that is

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Speaker 1: in a pooled fashion. So if you've got five million

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Speaker 1: in Super or you've got fifty dollars in super you're

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Speaker 1: probably going to pay the same fee with your big

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Speaker 1: super fund that's got all sorts of issues. But it

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Speaker 1: look maybe it will widen financial advice for mass market

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Speaker 1: and that would be useful if it's good advice, If

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Speaker 1: it's advice that pays off for the people who use it.

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Speaker 1: Will see And I want to talk to Nathan about

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Speaker 1: a whole bunch of things which are on the table

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Speaker 1: which would help you. I hope find advice, find the

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Speaker 1: best advice and the optimum way of engaging if you like,

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Speaker 1: with financial advice, because every single listener on this show,

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Speaker 1: I would say needs good advice, including myself.

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Speaker 2: How are you, Nathan, I'm good, James, thanks for having me.

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Speaker 1: Now, Nathan Fradley, is you operate under the corporate empire

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Speaker 1: of Nathan Fradley advice? That's unusual, isn't it just to

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Speaker 1: be there by yourself, pay all your own fees, your

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Speaker 1: own license fee, I expect, et cetera. That must be

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Speaker 1: quite difficult. There's very few tell me how many what

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Speaker 1: percentage do you reckon? Of all financial advisors in Australia,

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Speaker 1: fifteen thousand of them are independent in the sense that

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Speaker 1: people might understand what that word means.

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Speaker 3: So I think that the current number is about two hundred.

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Speaker 3: So and that's sort of meeting the definition which is

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Speaker 3: labeled in the Corporations Act. And to be independent, you're

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Speaker 3: receiving no commissions of any sort, which there's only insurance

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Speaker 3: commissions now all investment commissions have been banned. But also

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Speaker 3: no volume based or any benefits that could influence your advice,

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Speaker 3: which is some that's sort of the questionable bit sometimes.

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Speaker 1: Yeah, I mean someone came on to me recently, torrent

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Speaker 1: of strongly held views, let's put it that way about

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Speaker 1: our own lists, the top advisor's list, and was mentioning that, okay,

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Speaker 1: there's no commission, but there's all these investment platforms now

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Speaker 1: they're really big and they dominate the space, and that

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Speaker 1: the advisors get fees from these platforms, and so they

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Speaker 1: heard people into those platforms. Is that fair?

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Speaker 3: No, there is no fees paid to the advisor or

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Speaker 3: the convice company from a platform provider. What you might

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Speaker 3: find is that they've been banned. What you might find

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Speaker 3: is that they will have discounted cards, so rate cards,

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Speaker 3: so if your clients will pay less to be on there,

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Speaker 3: which can be a sticking point because if I leave.

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Speaker 2: This advisor, my account becomes more expensive.

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Speaker 3: So that's all that they run their fee through the

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Speaker 3: account itself. But that fee is a normal it's money

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Speaker 3: out of an account paid to them. There's no behind

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Speaker 3: the scenes fees with platforms anymore.

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Speaker 1: Okay, So it's about two hundred independent advice was out

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Speaker 1: of fifteen thousand. Those two hundred they cost do they

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Speaker 1: cost more? Necessarily?

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Speaker 2: This is a tricky part.

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Speaker 3: So as much as I am an independent advisor myself,

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Speaker 3: don't they don't think it makes me better than anyone else.

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Speaker 3: And I think it depends on who you serve and

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Speaker 3: what advice you provide. And so if you're providing a

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Speaker 3: lot of risk or insurance advice, it's really hard to

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Speaker 3: make that work on a fee basis.

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Speaker 2: I've tried in the past.

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Speaker 3: They get a discount on their insurance because you write

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Speaker 3: the commission out and then three years later they come

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Speaker 3: back and need to just tweak a bit of a

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Speaker 3: policy and you've got to charge your fee. It's like, oh,

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Speaker 3: I just realize I have to pay because they're not used.

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Speaker 3: It's not something you're used to paying for, so it

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Speaker 3: would be like getting a mortgage broker, charging a fee

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Speaker 3: there and then turning and having to pay another fee

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Speaker 3: in two years.

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Speaker 2: It's just not normal.

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Speaker 3: So I think that people who run businesses who have

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Speaker 3: got a lot of clients that built up every years

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Speaker 3: with insurance products, it's very hard to become independent because

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Speaker 3: you have to get rid of all of that revenue,

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Speaker 3: which is quite difficult. So I think it does play

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Speaker 3: to the markets that you exist in and who you

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Speaker 3: serve in your business.

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Speaker 1: Okay, so the big news this week obviously is about

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Speaker 1: the big super funds being given wider powers legislations in

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Speaker 1: Parliament by Stephen Jones, the Minister to offer financial advice.

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Speaker 1: Interesting this is happening, of course, just as Cebus the

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Speaker 1: super fund is being what can we say, the embattled

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Speaker 1: superfund which has regulatory investigations going on in parallel. I

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Speaker 1: can name three three different investigations going on at the

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Speaker 1: same time at Cebus over all sorts of issues. The

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Speaker 1: most spectacular I suppose being ACIC taking them to court

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Speaker 1: for delaying payments on death benefits and that sort of thing.

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Speaker 1: But we won't tire them all with the same brush.

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Speaker 1: The different big super funds, do you think for our

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Speaker 1: listeners who don't want to face five thousand dollars a year, well,

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Speaker 1: will it be a good thing and what sort of

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Speaker 1: caveat would you add to that.

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Speaker 3: I'm probably not the most sensational advice when it comes

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Speaker 3: to the stuff.

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Speaker 2: I like to be pretty moderate.

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Speaker 3: What I don't like is the broad base pricing that

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Speaker 3: everyone pays for the advice to access by few. I've

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Speaker 3: never been advocate for that. They get the values what's

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Speaker 3: been given, and it also means, you know, those who

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Speaker 3: don't use the services, who generally won't need to use

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Speaker 3: the services we're paying for those that don't lack a

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Speaker 3: lot of insurances and things like that. But what I

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Speaker 3: would say is, I think there's something I remember reading

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Speaker 3: something recently. It's about half of all over sixty five

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Speaker 3: year old super fund holders aren't in pension phase. So

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Speaker 3: that's pension phase being the tax free part. There's an

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Speaker 3: enormous amount of people who maybe just needed a conversation

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Speaker 3: that could be saving huge amounts in tax And by

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Speaker 3: way of reference, I think it's about ten or twelve

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Speaker 3: percent for cmsfs. People have a bit more engaged, So

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Speaker 3: I think there's a lot of room here where people

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Speaker 3: just need small transactional benefits that can be beneficial. I

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Speaker 3: think where we're going to go wrong with this is

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Speaker 3: around the messaging and around what's done around it, and

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Speaker 3: around some of the controls. So if you go to

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Speaker 3: McDonald's you expect a big back, you're not going to

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Speaker 3: get a whopp up. And that should be made very

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Speaker 3: evident if you're getting advice from your superfund that they're

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Speaker 3: only going to give you advice on what they have.

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Speaker 3: And for the most part that's fine. But there is

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Speaker 3: things like these retirement income products that will come to

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Speaker 3: market very soon which can't be broken very easily once

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Speaker 3: set up, and that could be areas where I see problems.

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Speaker 1: I mean, surely two things here. Surely the funds could

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Speaker 1: simply send a letter to someone when they get to

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Speaker 1: the age and say, hey, by the way, you should

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Speaker 1: know at this stage, you know a tax fity future

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Speaker 1: is ahead of you because you've just passed preservation edge.

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Speaker 1: They don't even do that. No, they do, Actually they do,

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Speaker 1: they do that happens nobody reads them.

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Speaker 3: So yeah, I mean this is I remember chatting to

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Speaker 3: someone at one of the big super funds back in

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Speaker 3: just before twenty twenty and something like ninety two percent

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Speaker 3: of money left the fund when someone turned sixty five,

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Speaker 3: so they had a big retention issue.

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Speaker 2: It was a hospitality sort of sided group.

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Speaker 3: The bounces weren't enormous. People either pulled it out and

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Speaker 3: paid off their mortgage or they just didn't understand their super.

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Speaker 3: They didn't understand what was there, and they didn't have

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Speaker 3: a great advice component to keep people in neither. So

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Speaker 3: I think they've got a huge challenge on that engaging

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Speaker 3: people in their super.

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Speaker 2: I think people are a lot.

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Speaker 3: More disengaged than we think, and they do actually do

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Speaker 3: some of this. I think this is just an added

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Speaker 3: benefit because like, hey, do you know you could do this?

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Speaker 3: But it costs money? Is friction and if it's like

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Speaker 3: it won't cost anything, might encourage people to take advantage.

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Speaker 2: Of this a bit more.

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Speaker 1: And the other thing, of course, is if I go

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Speaker 1: to you and you're independent, I'm assuming you've got to

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Speaker 1: tell you you or anyone like you, the two hundred

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Speaker 1: like you that and let's add more than that, because

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Speaker 1: there would be advisers. We'd like to think you have

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Speaker 1: people's best interests in mind and think in a holistic way.

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Speaker 1: But if I go into a super fund and I see,

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Speaker 1: you know, I'd like to put most of my money

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Speaker 1: in gold. Or I'd like to put a third of

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Speaker 1: my money in gold and a third in cash, and

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Speaker 1: a third and something speculative. There's no way that fund

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Speaker 1: is going to say yes to that, I expect. Or

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Speaker 1: I'd like to take half my money out and put

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Speaker 1: it into an investment property, which I've got my eye on,

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Speaker 1: and I'm an expert property investor and I really know

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Speaker 1: how to do it. I'm going to prejudge them here,

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Speaker 1: but I fall off my chair of a big super

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Speaker 1: fund is going to suggest anything other than stay with

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Speaker 1: the fund?

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Speaker 3: Yes, So I mean, firstly, I hope they don't suggest

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Speaker 3: anything other than stay with the fund, because that's outside

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Speaker 3: of the scope of their work and licensing. I would

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Speaker 3: like it to be really obvious that we can only

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Speaker 3: do this. And I think if that's the case and

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Speaker 3: people are fully aware of that, which is in different levels,

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Speaker 3: I think that's great. I think then there should be

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Speaker 3: a channel which says, okay, you need a greater level

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Speaker 3: of service. A lot of the funds will have internal

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Speaker 3: advice capability, but they should also recognize around limitations and

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Speaker 3: refer out as well, and I think that's probably an

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Speaker 3: area we're going to see some challenging who to refer to.

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Speaker 3: In some sense, some of the funds do have some

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Speaker 3: good processes in place on that already, but ultimately I

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Speaker 3: think that's going to be the biggest challenge in this

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Speaker 3: is people who needed more who didn't get what they

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Speaker 3: actually needed, which is often the case when people seek

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Speaker 3: advice now, and it's something we see in some of

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Speaker 3: the AFCA determinations and things, is people go in for

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Speaker 3: one thing and that person the advisor in front of them,

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Speaker 3: sets them up in a way that they understand or

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Speaker 3: and it's something they're familiar with, but it may not

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Speaker 3: have been something that could have been available to them

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Speaker 3: outside of that, depending on the school of the advisor.

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Speaker 3: But I will say that that's a minority advisor these days.

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Speaker 2: It's vastly improved over the last year.

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Speaker 1: And what about the obvious issue of competence or credibility

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Speaker 1: or qualification. I'm tempted to the awful, the awful, but

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Speaker 1: the awful old joke, but it's got something in it

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Speaker 1: which says, you know, financial product marketing is people who

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Speaker 1: don't know what they're buying dealing with people who don't

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Speaker 1: know what they're selling. Now, you know, if you think

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Speaker 1: about a big super fund and a call center, won't

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Speaker 1: that be a danger that these people and they can't

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Speaker 1: even give them a name yet, who work in the funds,

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Speaker 1: we'll just know this tiny area this script. Basically the

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Speaker 1: person they're dealing with knows even less. Can we even

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Speaker 1: call it advice?

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Speaker 3: I mean, that's one step away from some automated and

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Speaker 3: robo based advice that already exists. And some of the

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Speaker 3: retail funds have rolled this out. One of the large

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Speaker 3: retail funds rolled it out of eighty eight dollars a

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Speaker 3: year recently. So I think there's a couple of parts

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Speaker 3: of this. I think if you can get the scoping

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Speaker 3: right who you're dealing with, is there anything else can

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Speaker 3: we actually give advice and follow the rules that are

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Speaker 3: currently in place, then I don't think that's necessarily going

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Speaker 3: to be an issue. I also think this is a

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Speaker 3: great opportunity to backfill. You know, we've got fifteen thousand

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Speaker 3: advisors that's halfed in the last five years. We cannot

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Speaker 3: at the current position. We won't have advisors in fifteen

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Speaker 3: twenty years. They won't exist anymore, and so we need

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Speaker 3: to find a way to get people experience. And the

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Speaker 3: current pathway in is you go for administrative assistant to

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Speaker 3: all of a sudden full fledged advisor. And there's a

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Speaker 3: big gap in that too. There's a lot of challenges

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Speaker 3: that come around that as well.

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Speaker 1: Very good point, very good point. I know they're so

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Speaker 1: desperate they are recruiting of receives for financial advisors. I

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Speaker 1: know that the association is actively underground in India, for instance,

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Speaker 1: trying to get people to become financial in Australia financial

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Speaker 1: advisers in Australia, and as you see, there was thirty thousand,

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Speaker 1: then there was fifteen thousand, and the issue there's no

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Speaker 1: one coming through.

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Speaker 3: And the ones that are a lot of them leave.

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Speaker 3: So they get into the job and they go, this

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Speaker 3: is not what I want to do. You know, it

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Speaker 3: took me so long to get here, and yeah, now

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Speaker 3: what do I do next?

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Speaker 1: Okay, so then maybe come training camps, I think in

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Speaker 1: a good way, Yeah, I think so.

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Speaker 3: I think obviously this comes with any of the issues

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Speaker 3: that we see with large institutions trying to do anything

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Speaker 3: at scale. You're going to you have to have a

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Speaker 3: lot of controls in place. No different to the bank's

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Speaker 3: doing exactly the same thing prior. Hopefully we've learned from

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Speaker 3: our previous mistakes. But it's a different area of large

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Speaker 3: business doing something at scale.

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Speaker 2: This could go really well, it could go really poorly.

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Speaker 2: I just hope we keep an eye on it.

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Speaker 1: Okay, very balanced view. All right, we'll take a short

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Speaker 1: break back in a moment. Hello, and welcome back to

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Speaker 1: the money Puzzle. I'm James Kirby, and I'm talking to

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Speaker 1: Nathan Fradley, Financial advisor, independent financial advisor. Okay, Nathan, in

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Speaker 1: terms of how someone optimizes their dealings with an advisor,

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Speaker 1: if they can find one, a b if they can

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Speaker 1: find a good one, see if they can get in

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Speaker 1: the door on the basis that there's a shortage, chrolic

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Speaker 1: shortage really and we haven't seen anything like this in

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Speaker 1: any other areas. It's not like the number of lawyers

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Speaker 1: have been cut in half, or dentists or anything else.

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Speaker 1: How does someone optimize their meeting with an advisor?

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Speaker 3: I think the first thing I'd say this We just

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Speaker 3: had our cou big conference and I said I think

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Speaker 3: I said this one hundred times chatting to people financially

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Speaker 3: that you can find a financial advisor that can solve

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Speaker 3: your problems, but you should also find one.

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Speaker 2: That believes what you believe.

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Speaker 3: I think if you can have chat with them over

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Speaker 3: the phone or in a zoom and get a really

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Speaker 3: good feel about who they are, you know, google them,

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Speaker 3: see what your podcasts would have being on, articles have

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Speaker 3: been quoted in whatever that might be social media they

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Speaker 3: put out there. You can self select a lot better

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Speaker 3: because even though there's only fifteen thousand of us, the

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Speaker 3: divergence in the way we operate as enymous. So if

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Speaker 3: you want someone just to build a portfolio complex with

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Speaker 3: shares and golden all sorts of fun stuff, it's going

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Speaker 3: to be vastly different than if you come to see me,

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Speaker 3: for example, where I do a lot more lifestyle based,

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Speaker 3: strategic based, and I suppose hard moments of allse age

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Speaker 3: care that kind of thing.

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Speaker 2: So there's a real.

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Speaker 3: Diversity in who you're dealing with, and you've got to

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Speaker 3: like them and ideally you're going to work with them

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Speaker 3: for a very long time, so you better get along.

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Speaker 3: And so I think you know, having that alignment, particularly

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Speaker 3: if you're a couple trying to find an advisor that

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Speaker 3: can be also a balance there and then being prepared

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Speaker 3: them all you can give them. The more time you

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Speaker 3: spend with them on valuable things, less time you spend

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Speaker 3: with them running through your balance sheet, there's better bang

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Speaker 3: for bucket that and I'm sure they'll appreciate that. A

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Speaker 3: client that is easy to work with as a client

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Speaker 3: you work with more so those two things if you're

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Speaker 3: a bit more organized, but also you found someone that

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Speaker 3: is your kind of person.

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Speaker 2: I think they're really the best ways to find an advisor.

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Speaker 1: Well, you've got a page time you check them out,

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Speaker 1: don't you really?

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Speaker 3: It depends the Most advisors will offer some form of

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Speaker 3: initial contact free charge. I do a fifteen minute call,

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Speaker 3: which you know, if anyone can figured out yet always

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Speaker 3: goes to half an hour because I'd like to talk.

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Speaker 3: But you know, generally you have that as a bit

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Speaker 3: of a vetting. They want to vet, you want to

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Speaker 3: vet them. I think that's really important.

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Speaker 1: Do you think it's important to meet the person in person?

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Speaker 2: If that's important to you, So.

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Speaker 1: Nathan, what a percentage would you think of your client

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Speaker 1: base likes actually insists on meeting you person to person.

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Speaker 3: I don't think they necessarily insist. I think it's a

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Speaker 3: lot lower than you'd think. I like to meet them

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Speaker 3: at least once. I think that's really important. If I

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Speaker 3: could meet everyone multiple times, I would.

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Speaker 1: Yeah, but once at least just once to make the connection,

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Speaker 1: is it, or to just too you can.

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Speaker 2: Get tow withstand them.

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Speaker 3: Yeah, you can understand someone much better with physical presence.

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Speaker 2: It's just a factor.

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Speaker 3: There's a disconnection that comes with you know, being on

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Speaker 3: a camera across from someone, and so I think that's important.

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Speaker 3: There's also the aspect of, you know, we've got responsibilities

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Speaker 3: around our doing our clients.

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Speaker 2: So that's a big part of it too.

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Speaker 3: Are they who they say they are?

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Speaker 2: Yeah, exactly, Yeah, Yeah, so that's a bit part of

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Speaker 2: it as well. But I just I would prefer, you

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Speaker 2: know that to be with all clients.

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Speaker 3: You know. But because this is that we operate on

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Speaker 3: a national level, work with people over the country, sometimes

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Speaker 3: it's not realistic as well.

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Speaker 1: Is it delineated in religion to demographics and age?

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Speaker 3: Yeah, I speaking to other advisors to work with a

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Speaker 3: lot younger clients than I do, I'd say there's a

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Speaker 3: lot more zoom and that's not just because they're used

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Speaker 3: to the technology.

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Speaker 2: It also is lifestyle.

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Speaker 3: You know, they've got an hour, well the kids are

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Speaker 3: putting the kids down before they're going to need to

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Speaker 3: do this, and they're trying to get multiple professionals in

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Speaker 3: the same room at the same time.

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Speaker 2: It's very difficult.

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Speaker 3: Demographic guy tends to work with is a little bit easier,

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Speaker 3: and they also prefer it when you suggest and look,

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Speaker 3: I really want to meet in person. Oh absolutely please,

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Speaker 3: we want to do that. So yeah, I think it's

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Speaker 3: definitely demographic based.

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Speaker 1: Okay, I want to ask you one other thing before

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Speaker 1: we go to the break, which is entirely different subject matter,

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Speaker 1: but I know it's something that we said we talk

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Speaker 1: about and you are interested in ESG investing environmental, social

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Speaker 1: and governance issues, which were so dominant for a couple

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Speaker 1: of years there by that when I say they're dominant,

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Speaker 1: I mean the concept was dominant of ESG, and slowly

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Speaker 1: but surely it's sort of percolated through the investment system

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Speaker 1: to the advisor base where clients were saying, we want

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Speaker 1: to invest in an ESG fashion where we're happy with

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Speaker 1: those issues environmental, social and governance issue of the investments

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Speaker 1: we make. Now it seems to me just as differential

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Speaker 1: advisor regime had grappled to it at all and had

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Speaker 1: a sense of it. There's a blowback on ESG, mostly

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Speaker 1: coming out of the US, but also coming out of

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Speaker 1: places that ESG started, like the EU, on the basis

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Speaker 1: that had lacked definition, on the basis that it was abused,

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Speaker 1: and some of it was an entire charade. We had greenwashing,

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Speaker 1: if you know what I mean. So we're are advisors

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Speaker 1: and their clients on that whole ESG issue. Now.

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Speaker 3: I think there's multiple parts that form this. It's a

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Speaker 3: complex answer. One of them is that I think you're

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Speaker 3: seeing a decrease in demand from you know, if you're

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Speaker 3: breaking people into the pragmatists versus the believers versus people

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Speaker 3: that aren't going to do it at all, the believers

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Speaker 3: are still going to be really invested in this. I

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Speaker 3: think that the pragmatists are looking at their budgets. They're

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Speaker 3: looking at their interest rates and their mortgages and their

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Speaker 3: were payments, and they're going, I need to take care

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Speaker 3: of myself before I think outside of myself. And so

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Speaker 3: we really saw that as rates ramped up, that's starting

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Speaker 3: to change. We're seeing a shift in demand again back

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Speaker 3: and whether that's a broader political concern as well, but

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Speaker 3: that's definitely shifting. But then the other side, we had

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Speaker 3: every fund and their dog was running some form of

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Speaker 3: ESGRI strategy because it was marketable a lot of funds.

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Speaker 3: You can understand ESG itself is just.

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Speaker 2: A risk metric.

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Speaker 3: It's looking at more data points that could have you know,

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Speaker 3: material impact on decisions, you know, But that became a

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Speaker 3: marketable point and if we weren't marketing it and they were,

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Speaker 3: you know, what are we going to do? So everyone

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Speaker 3: started talking about it, and even in recent weeks we've

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Speaker 3: seen some of the bigger funds that did some of

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Speaker 3: the most promotion pulling their more ESG products or just

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Speaker 3: renaming them. They're still doing all of the same stuff

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Speaker 3: behind the scenes, they're just not marketing it anymore. And

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Speaker 3: I think that speaks to the maturity of the industry

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Speaker 3: as well. I think it's less of a shiny object

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Speaker 3: now and it's just to become normalized, which is what

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Speaker 3: a lot of us are saying was going to happen

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Speaker 3: eventually anyway. So I think those are the aspects. The

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Speaker 3: greenwashing thing is really interesting. When you've got a lot

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Speaker 3: of large companies that said they were going to do

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Speaker 3: a lot but haven't and they're just pulling their statements,

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Speaker 3: pulling there. And sometimes it's because they're physically impossible to

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Speaker 3: meet what they were talking about, and that's a factor

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Speaker 3: as well. So it's more complex than that, but it's

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Speaker 3: probably as simple as I can bring it in.

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Speaker 1: Yeah, Okay, it's interesting. I love, I would say I love,

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Speaker 1: but I'm absolutely intrigued by the theory about defense spending.

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Speaker 1: The defense spending fits with the ESG be cause onto

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Speaker 1: a peaceful nation, I can defend itself, So you never

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Speaker 1: know which way that argument goes. One other thing that

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Speaker 1: just struck me. There is you mentioned about, and I

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Speaker 1: imagine this is relevant that people do get more focused

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Speaker 1: on hard numbers and returns when the cost of living

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Speaker 1: goes up, and they do behave differently and they probably

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Speaker 1: judge in a more severe fashion all the variables around investing.

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Speaker 1: It's just interesting. I just noticed yesterday that we did

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Speaker 1: something on that the forty year mortgage has arrived, and

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Speaker 1: the forty year mortgage whatever as it means, it's actually

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Speaker 1: a response to people pushing out their mortgages because of

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Speaker 1: cost of living and finding ways to keep going, so

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Speaker 1: you see how behavior changes when cost of living lifts.

438
00:20:44,480 --> 00:20:46,920
Speaker 1: And I imagine I don't want to be so facetious

439
00:20:46,920 --> 00:20:49,600
Speaker 1: as to say ESG is something that you are more

440
00:20:50,160 --> 00:20:53,760
Speaker 1: willing to do when you're richer, but when you have

441
00:20:53,880 --> 00:20:56,120
Speaker 1: less money, I imagine you get a little bit more

442
00:20:56,160 --> 00:21:01,439
Speaker 1: sober and demanding on ESG definition and what exactly you're getting.

443
00:21:01,520 --> 00:21:04,080
Speaker 1: And I'm more suspicious about grinwashing.

444
00:21:04,920 --> 00:21:07,520
Speaker 3: I would say it's more related to I think it's

445
00:21:07,600 --> 00:21:10,800
Speaker 3: more it's detailed than that. I think it's behaviorally, it's

446
00:21:10,800 --> 00:21:13,280
Speaker 3: the old mass loves hierarchy of needs. Until you've taken

447
00:21:13,359 --> 00:21:16,400
Speaker 3: care of where you are, your security, your safety, your family,

448
00:21:16,480 --> 00:21:18,800
Speaker 3: your social need, it's harder to think of others.

449
00:21:19,560 --> 00:21:21,639
Speaker 1: Yeah, but you might never get there. I mean the

450
00:21:21,680 --> 00:21:24,359
Speaker 1: flip side of that is you know at what point

451
00:21:25,800 --> 00:21:28,000
Speaker 1: you know, so it doesn't happen at twenty, it doesn't

452
00:21:28,040 --> 00:21:29,360
Speaker 1: happen at thirty, doesn't.

453
00:21:29,800 --> 00:21:33,360
Speaker 3: It doesn't have to happen. It's the thought process of Yeah.

454
00:21:33,440 --> 00:21:36,120
Speaker 3: If you look at say during COVID, post COVID, people

455
00:21:36,160 --> 00:21:38,720
Speaker 3: were saving more than they ever had rates below. They

456
00:21:38,760 --> 00:21:41,760
Speaker 3: weren't necessarily safe or better off, they just felt safe

457
00:21:41,760 --> 00:21:44,080
Speaker 3: for a better off the messaging that they were receiving

458
00:21:44,200 --> 00:21:46,280
Speaker 3: was that. And if you tie that back in healthcare

459
00:21:46,280 --> 00:21:48,840
Speaker 3: stocks and tech was doing really well, both overrepresented in

460
00:21:48,960 --> 00:21:52,280
Speaker 3: responsible than any of SG portfolios, then you see, you know,

461
00:21:53,080 --> 00:21:55,960
Speaker 3: energy crisis for multiple reasons, but you know, obviously some

462
00:21:56,040 --> 00:21:59,639
Speaker 3: geopolitical ones, and all of a sudden that shifted and

463
00:22:00,160 --> 00:22:02,040
Speaker 3: people who were in it for the you know, for

464
00:22:02,119 --> 00:22:04,199
Speaker 3: the nump for the returns, not just for the ethics

465
00:22:04,320 --> 00:22:07,159
Speaker 3: or the morals or whatever sits behind it moved because

466
00:22:07,560 --> 00:22:10,280
Speaker 3: they were tested. And that's I think there's always going

467
00:22:10,320 --> 00:22:12,000
Speaker 3: to be an aspect of that that's cycliqu with people

468
00:22:12,040 --> 00:22:13,800
Speaker 3: that are going if everyone's into this, I'm into it

469
00:22:13,840 --> 00:22:16,080
Speaker 3: because I can see money here. As people going or

470
00:22:16,080 --> 00:22:17,960
Speaker 3: maybe I should think about it. I've changed my mind,

471
00:22:17,960 --> 00:22:19,200
Speaker 3: and there's people that are just going to be like,

472
00:22:19,440 --> 00:22:22,080
Speaker 3: I still stand by. I'd have nothing to do with this.

473
00:22:22,560 --> 00:22:25,200
Speaker 3: And what this is differs. It could be difference between

474
00:22:25,240 --> 00:22:27,000
Speaker 3: nuclear and no nuclear. It could be weapons or not

475
00:22:27,080 --> 00:22:28,960
Speaker 3: weapons because of the exact reasons you've said, which is

476
00:22:29,000 --> 00:22:30,200
Speaker 3: always the challenge in the space.

477
00:22:30,680 --> 00:22:34,520
Speaker 1: Okay, very interesting, very interesting, interesting too, But you mentioned nuclear,

478
00:22:35,359 --> 00:22:39,480
Speaker 1: which actually for money fits into the environmental because it's

479
00:22:39,480 --> 00:22:43,480
Speaker 1: the least forest option, et cetera, and argument for another day. Okay,

480
00:22:43,640 --> 00:22:45,840
Speaker 1: back in the morment, folks, some really interesting questions coming

481
00:22:45,920 --> 00:22:48,480
Speaker 1: up and Nathan is ideally pleased. I hope to answer

482
00:22:48,520 --> 00:23:01,680
Speaker 1: them all right back in a minute. Hello, Welcome back

483
00:23:01,680 --> 00:23:04,520
Speaker 1: to the Australians Money Puzzle. I'm James Kirby and I'm

484
00:23:04,560 --> 00:23:08,680
Speaker 1: talking to Nathan Fradley, financial advisor and well known voice

485
00:23:08,760 --> 00:23:14,760
Speaker 1: on financial advice matters and the industry issues and how

486
00:23:14,840 --> 00:23:19,200
Speaker 1: this financial advice industry is represented in the public eye.

487
00:23:19,400 --> 00:23:21,880
Speaker 1: As he mentioned, and he's the first person to say

488
00:23:21,960 --> 00:23:24,520
Speaker 1: this that if it keeps going the way it's going,

489
00:23:24,560 --> 00:23:28,160
Speaker 1: there won't be any financial advisors. There's about as many

490
00:23:28,280 --> 00:23:31,760
Speaker 1: being recruited. I'm being facetious, but the numbers are something

491
00:23:31,920 --> 00:23:35,520
Speaker 1: like that. There's something like priests, that is, there is

492
00:23:35,600 --> 00:23:38,280
Speaker 1: so few being recruited that they're all getting older. They

493
00:23:38,359 --> 00:23:41,399
Speaker 1: better get some young people in there, and maybe the

494
00:23:41,520 --> 00:23:47,000
Speaker 1: super funds coming in will allow the industry to replenish

495
00:23:47,160 --> 00:23:50,080
Speaker 1: in a fashion that people will start in those big funds,

496
00:23:50,600 --> 00:23:54,320
Speaker 1: start to know what they're talking about, grow become advisors

497
00:23:54,520 --> 00:23:56,800
Speaker 1: that used to be how it worked, and a lot

498
00:23:56,840 --> 00:23:59,560
Speaker 1: of the advisors you know today that are on our

499
00:23:59,640 --> 00:24:03,000
Speaker 1: top five one hundred and fifty list. They started in

500
00:24:03,119 --> 00:24:06,760
Speaker 1: big banks and insurers in the days before those big

501
00:24:06,840 --> 00:24:10,879
Speaker 1: banks and insurers blew it basically by by advocating a

502
00:24:10,920 --> 00:24:13,840
Speaker 1: sales culture which absolutely blew up and ended up with

503
00:24:13,880 --> 00:24:17,639
Speaker 1: their Royal Commission once upon a time. Okay, Now, first question, Andrew,

504
00:24:17,960 --> 00:24:21,000
Speaker 1: if I understand correctly, when your super is converted to

505
00:24:21,040 --> 00:24:24,800
Speaker 1: a retirement phase, you no longer pay tax on earnings

506
00:24:24,880 --> 00:24:27,880
Speaker 1: are capital gains tax for a total super balance below

507
00:24:27,960 --> 00:24:31,640
Speaker 1: one point nine Bang on, Andrew. So why wouldn't every

508
00:24:31,680 --> 00:24:35,840
Speaker 1: person once they reach preservation age that that's okay, that's

509
00:24:35,880 --> 00:24:39,520
Speaker 1: when you can get to when you can retire. Everybody,

510
00:24:40,280 --> 00:24:42,200
Speaker 1: why would't they transfer all their super into a pension

511
00:24:42,200 --> 00:24:45,480
Speaker 1: phase and open up a second super account in accumulation

512
00:24:46,280 --> 00:24:49,159
Speaker 1: if they are still working, come to some agreement with

513
00:24:49,240 --> 00:24:52,240
Speaker 1: their employer to stop full time and work say thirty

514
00:24:52,359 --> 00:24:55,560
Speaker 1: five hours a we come about thirty nine instead of forty,

515
00:24:56,320 --> 00:24:59,800
Speaker 1: and then carry on contributing to the fund. The benefits

516
00:25:00,440 --> 00:25:03,240
Speaker 1: would be that your super in retirement phase is tax free.

517
00:25:05,359 --> 00:25:07,960
Speaker 1: The four to five percent minimum withdrawal from the super

518
00:25:08,000 --> 00:25:11,600
Speaker 1: accountant pension phase could be redirected straight back into your

519
00:25:11,720 --> 00:25:19,000
Speaker 1: super accumulation phase. All very elaborate, and to my first glance,

520
00:25:19,080 --> 00:25:23,920
Speaker 1: all entirely legal and possibly sensible. Andrew, this is never

521
00:25:24,080 --> 00:25:27,119
Speaker 1: advice information only Nathan, what do you think of that

522
00:25:27,400 --> 00:25:28,600
Speaker 1: particular construction?

523
00:25:29,520 --> 00:25:31,960
Speaker 2: I missed one detail? Ah, what is that?

524
00:25:32,240 --> 00:25:32,280
Speaker 3: So?

525
00:25:32,520 --> 00:25:33,800
Speaker 2: Spot on? Spot on?

526
00:25:33,920 --> 00:25:38,520
Speaker 3: Accept once you are sixty to access your super you

527
00:25:38,600 --> 00:25:42,879
Speaker 3: have to finish an employment and employment you can't just

528
00:25:42,960 --> 00:25:45,680
Speaker 3: drop hours, you can't go part time. You have to

529
00:25:45,840 --> 00:25:51,000
Speaker 3: finish unemployment. So that means just decreasing your hours doesn't

530
00:25:51,080 --> 00:25:53,840
Speaker 3: meet that definition. And there's a pretty good argument to

531
00:25:53,920 --> 00:25:56,439
Speaker 3: say leaving your employer and then being hired again two

532
00:25:56,480 --> 00:25:59,919
Speaker 3: weeks later is probably early access of superannuation issues.

533
00:26:00,440 --> 00:26:03,600
Speaker 1: Has anyone ever been sorry, has anyone ever been fined?

534
00:26:04,359 --> 00:26:05,200
Speaker 1: Or stop doing that?

535
00:26:05,920 --> 00:26:07,600
Speaker 3: I don't know the answer to that, But what I

536
00:26:07,720 --> 00:26:10,280
Speaker 3: do know is there is a really high number of

537
00:26:10,440 --> 00:26:16,560
Speaker 3: people over sixty operating at the voting boots that only

538
00:26:16,600 --> 00:26:17,240
Speaker 3: work for a day.

539
00:26:19,840 --> 00:26:22,920
Speaker 1: So sorry, elaborate, what do you mean? What do you

540
00:26:22,960 --> 00:26:23,440
Speaker 1: try to say that?

541
00:26:23,600 --> 00:26:25,720
Speaker 3: Well, if they had an employment and then they cease

542
00:26:25,760 --> 00:26:27,840
Speaker 3: that employment, then they've made a.

543
00:26:27,880 --> 00:26:28,639
Speaker 2: Condition of release.

544
00:26:28,840 --> 00:26:30,960
Speaker 1: Oh yeah, yeah, I see, Okay, yeah.

545
00:26:30,840 --> 00:26:32,679
Speaker 3: So that's the bit that he missed. Once you're sixty five,

546
00:26:32,680 --> 00:26:34,639
Speaker 3: it doesn't matter. You can do it straight away. But

547
00:26:34,720 --> 00:26:37,800
Speaker 3: as we spoke about earlier, fifty percent of people don't still,

548
00:26:38,200 --> 00:26:40,119
Speaker 3: so you were sent him as one hundred percent. Bang on,

549
00:26:40,160 --> 00:26:42,639
Speaker 3: Andrew just missed one little detail, all right.

550
00:26:42,720 --> 00:26:46,240
Speaker 1: Sounds like a good advisor could help someone like that

551
00:26:46,800 --> 00:26:50,919
Speaker 1: navigate how to do this if it was legitimate.

552
00:26:53,119 --> 00:26:55,720
Speaker 3: I had someone literally two weeks ago who had an

553
00:26:55,760 --> 00:26:57,920
Speaker 3: advisor for a very long time sixty seven and was

554
00:26:57,920 --> 00:27:01,960
Speaker 3: an inpension phase. So sometimes things are just missed.

555
00:27:01,920 --> 00:27:02,880
Speaker 2: Unfortunately as well.

556
00:27:03,000 --> 00:27:04,879
Speaker 1: Yeah, okay, well it sounds like Andrew isn't going to

557
00:27:04,920 --> 00:27:08,200
Speaker 1: miss it or all the Andrews out there. All right, Okay, now,

558
00:27:08,720 --> 00:27:13,080
Speaker 1: very good Steve. I've been enjoying and learning good Steve.

559
00:27:13,800 --> 00:27:17,800
Speaker 1: One thing I see is advertising all the time for platforms.

560
00:27:18,840 --> 00:27:21,719
Speaker 1: I think he means trading platforms. I'm interested in trading

561
00:27:21,760 --> 00:27:24,960
Speaker 1: a little myself for diversification, and is often said on

562
00:27:25,119 --> 00:27:28,560
Speaker 1: your podcast to spice it up. I don't say that

563
00:27:28,720 --> 00:27:31,600
Speaker 1: that sounds I changed your heart by having an angle

564
00:27:31,680 --> 00:27:34,960
Speaker 1: where I am directly involved. However, there are many scams

565
00:27:35,040 --> 00:27:39,480
Speaker 1: out there. Having some solid and trusted recommendations would be

566
00:27:39,520 --> 00:27:43,840
Speaker 1: a good start to begin and understand and practice theories

567
00:27:43,920 --> 00:27:46,880
Speaker 1: and approach safety. I wanted to try something without real risk,

568
00:27:46,960 --> 00:27:49,480
Speaker 1: and I'm ready to take the plunge to see if

569
00:27:49,520 --> 00:27:52,959
Speaker 1: it's for me. Thoughts on this, Okay, Steve and all

570
00:27:52,960 --> 00:27:56,760
Speaker 1: the Steve's out there. Trading is an early different game

571
00:27:57,480 --> 00:28:03,240
Speaker 1: than investing, and I see the I see people who trade,

572
00:28:03,280 --> 00:28:05,560
Speaker 1: and I've talked to people who trade, and I find

573
00:28:05,600 --> 00:28:09,600
Speaker 1: them very interesting, and I find that they're not particularly

574
00:28:09,760 --> 00:28:12,560
Speaker 1: interested in I'll give you. I can tell you a story.

575
00:28:12,720 --> 00:28:15,840
Speaker 1: I met a guy one time who traded BHP. This

576
00:28:16,040 --> 00:28:18,720
Speaker 1: was his thing. He traded BHP day and night. And

577
00:28:18,840 --> 00:28:20,679
Speaker 1: I said, Wow, this guy's going to be really interesting.

578
00:28:20,720 --> 00:28:22,440
Speaker 1: He's going to he's going to know all about BHP.

579
00:28:22,600 --> 00:28:24,560
Speaker 1: And I started talking about BHP at the time, who

580
00:28:24,680 --> 00:28:27,399
Speaker 1: was the CEO, what they were doing, their policies, you know,

581
00:28:27,720 --> 00:28:30,440
Speaker 1: different commodities and the balance between our and ore and

582
00:28:30,640 --> 00:28:33,800
Speaker 1: copper and everything else. And he wasn't remotely interested in

583
00:28:33,880 --> 00:28:36,760
Speaker 1: all that. He was just interested in the trading passions.

584
00:28:36,960 --> 00:28:38,520
Speaker 1: There was the head and shoulders forming the.

585
00:28:38,640 --> 00:28:39,280
Speaker 2: Was this, that was that?

586
00:28:39,720 --> 00:28:44,240
Speaker 1: And it struck me that it's just completely different. So

587
00:28:44,920 --> 00:28:50,320
Speaker 1: difficult question Nathan Fradley. Is there a safe, sensible way

588
00:28:50,400 --> 00:28:54,600
Speaker 1: into trading for someone who's never done it.

589
00:28:56,120 --> 00:28:57,920
Speaker 3: I mean, I think you're bang on, and thank you

590
00:28:57,960 --> 00:28:59,480
Speaker 3: for taking a little words out of my mouth with

591
00:28:59,560 --> 00:29:01,600
Speaker 3: it difference here I thought I would do that.

592
00:29:01,920 --> 00:29:03,560
Speaker 2: No, it's no, it's great. I'm glad that i'd have

593
00:29:03,600 --> 00:29:05,200
Speaker 2: to say it. I feel like I'm a downer.

594
00:29:05,400 --> 00:29:08,040
Speaker 3: I think you know, if you if your retirement is

595
00:29:08,360 --> 00:29:11,560
Speaker 3: otherwise locked in for ninety ninety five percent of your money,

596
00:29:12,080 --> 00:29:15,320
Speaker 3: and this brings you personal satisfaction, then it's a hobby

597
00:29:15,600 --> 00:29:17,360
Speaker 3: and see it that way. If you get a bit

598
00:29:17,400 --> 00:29:18,880
Speaker 3: extra money out of it, great, you can rather that

599
00:29:18,920 --> 00:29:20,560
Speaker 3: if you lose it, it doesn't derail everything.

600
00:29:20,680 --> 00:29:20,920
Speaker 2: Great.

601
00:29:21,280 --> 00:29:24,080
Speaker 3: I'd like to note firstly, if you're seeing Instagram ads

602
00:29:24,520 --> 00:29:27,320
Speaker 3: for trading platforms and fun things that seem sexy, the

603
00:29:27,400 --> 00:29:30,320
Speaker 3: sexier it is probably the least you should's likely you

604
00:29:30,360 --> 00:29:32,640
Speaker 3: should be taking part in it. Trading is not sexy.

605
00:29:32,680 --> 00:29:35,320
Speaker 3: It's boring. It's it might be fun for certain people,

606
00:29:35,400 --> 00:29:37,720
Speaker 3: but it's not a sexy thing. But I would also

607
00:29:37,800 --> 00:29:40,120
Speaker 3: say that, you know, if you're looking for diversification, it's

608
00:29:40,120 --> 00:29:43,280
Speaker 3: also not necessarily speculative stocks. It could be you could

609
00:29:43,320 --> 00:29:46,560
Speaker 3: have an index fund for the majority of your Australian holdings,

610
00:29:47,000 --> 00:29:49,440
Speaker 3: and note that half of it is ten stocks, so

611
00:29:49,560 --> 00:29:52,200
Speaker 3: you buy some other companies that you like to rebalance.

612
00:29:52,440 --> 00:29:55,720
Speaker 3: It's a very different thing to try to find speculative microcaps.

613
00:29:56,160 --> 00:29:59,120
Speaker 3: So I think there's a lot of good information out there,

614
00:29:59,560 --> 00:30:01,720
Speaker 3: but generally if it's the old two good to be

615
00:30:01,800 --> 00:30:04,040
Speaker 3: true saying probably rings true with this, and also like

616
00:30:04,120 --> 00:30:04,800
Speaker 3: why are you doing it?

617
00:30:04,880 --> 00:30:06,240
Speaker 2: What are you really looking for here?

618
00:30:07,200 --> 00:30:10,680
Speaker 1: He's looking to make money? I expect, I think just

619
00:30:11,040 --> 00:30:11,800
Speaker 1: in it to make money.

620
00:30:12,080 --> 00:30:14,480
Speaker 3: I don't know if it's the great There's people who

621
00:30:14,520 --> 00:30:17,240
Speaker 3: are paid a lot of money with Bloomberg terminals and

622
00:30:17,280 --> 00:30:20,280
Speaker 3: see if the degrees you aren't able to make more money.

623
00:30:20,360 --> 00:30:22,440
Speaker 3: So yeah, I would question whether it was your self

624
00:30:22,480 --> 00:30:24,320
Speaker 3: attribution that resulted in that outcome.

625
00:30:24,960 --> 00:30:26,960
Speaker 1: Just not to stamp it out entirely, I would say

626
00:30:27,200 --> 00:30:30,760
Speaker 1: to listeners that if you know something very well, I

627
00:30:30,840 --> 00:30:34,200
Speaker 1: don't know hypothetically here, Let's say you were in gold

628
00:30:34,280 --> 00:30:36,880
Speaker 1: mining all your life, and you really know gold mining,

629
00:30:37,280 --> 00:30:39,920
Speaker 1: and you know about gold and you've watched it for years,

630
00:30:40,960 --> 00:30:45,600
Speaker 1: then you know you might, for instance, take out an

631
00:30:45,640 --> 00:30:48,800
Speaker 1: option on a gold miner that you know very well,

632
00:30:48,960 --> 00:30:51,960
Speaker 1: a call option, a put option, you might tiptoe in

633
00:30:52,160 --> 00:30:57,640
Speaker 1: there where you have a reasonable chance of adding value

634
00:30:58,560 --> 00:31:02,280
Speaker 1: or adding something or no something more than the vast majority,

635
00:31:02,720 --> 00:31:06,360
Speaker 1: because by definition, that's what trading implies. And if you

636
00:31:06,400 --> 00:31:10,360
Speaker 1: don't know something other than the vast majority, then you're betting.

637
00:31:10,720 --> 00:31:12,680
Speaker 1: And that's feel feel free to bet. I mean, off

638
00:31:12,720 --> 00:31:14,440
Speaker 1: you go, but I know what you're doing. That you're

639
00:31:14,480 --> 00:31:17,760
Speaker 1: betting out there. That's that's my overarch in common to

640
00:31:17,960 --> 00:31:20,160
Speaker 1: everyone on that one. Okay, we have a few questions.

641
00:31:20,160 --> 00:31:23,280
Speaker 1: I want to keep going, but thank you Steve, thank

642
00:31:23,320 --> 00:31:26,400
Speaker 1: you Andrew Daniel. I have a reasonable amount of equity

643
00:31:26,400 --> 00:31:28,960
Speaker 1: and would like to use my principal place, my principal

644
00:31:29,040 --> 00:31:32,080
Speaker 1: loan to invest in Shairs through borrowed funds. Are you

645
00:31:32,160 --> 00:31:35,800
Speaker 1: able to explain the difference in debt recycling versus just

646
00:31:35,960 --> 00:31:38,960
Speaker 1: increasing the size of the existing loan and splitting the

647
00:31:39,080 --> 00:31:43,680
Speaker 1: increased amount to invest for tax purposes? Complex question? What's

648
00:31:43,720 --> 00:31:44,680
Speaker 1: you really trying to say there?

649
00:31:45,120 --> 00:31:46,600
Speaker 3: Yeah, I think I've got I think I know what

650
00:31:46,680 --> 00:31:49,160
Speaker 3: you're saying. This is really hard to explain without a whiteboard,

651
00:31:49,560 --> 00:31:52,720
Speaker 3: but we're going to We're going to try so gearing

652
00:31:52,880 --> 00:31:54,760
Speaker 3: or borrowing to invest is the first step. Year it's

653
00:31:54,840 --> 00:31:57,760
Speaker 3: very separate from debt recycling itself, and effectively, what we're

654
00:31:57,760 --> 00:32:00,560
Speaker 3: talking about here is when you have a loan and

655
00:32:00,760 --> 00:32:04,040
Speaker 3: you borrow against that loan, or you borrow from that

656
00:32:04,400 --> 00:32:07,200
Speaker 3: facility and you invest. If you're investing a NOD or

657
00:32:07,240 --> 00:32:08,360
Speaker 3: earn an income, then.

658
00:32:08,480 --> 00:32:10,040
Speaker 2: That loan becomes tax deductible.

659
00:32:10,520 --> 00:32:12,760
Speaker 3: It's not what that loan is secured against that met

660
00:32:12,840 --> 00:32:15,760
Speaker 3: defines its deductibility. It's the purpose of where that money goes.

661
00:32:16,640 --> 00:32:18,560
Speaker 3: So that's the first part. So if you're in a

662
00:32:18,640 --> 00:32:21,200
Speaker 3: forty five percent tax bracket and you took out a

663
00:32:21,280 --> 00:32:23,520
Speaker 3: hundred thousand dollars loan and you invested it, you know,

664
00:32:23,600 --> 00:32:26,120
Speaker 3: and that loan was ten percent, it's only it's going

665
00:32:26,200 --> 00:32:28,440
Speaker 3: to cost you five point five percent after tax. So

666
00:32:28,520 --> 00:32:29,640
Speaker 3: that's sort of the way to think about it.

667
00:32:30,280 --> 00:32:31,120
Speaker 2: That's the first part.

668
00:32:31,280 --> 00:32:35,240
Speaker 3: Debt recycling is effectively trying to increase the amount of

669
00:32:35,280 --> 00:32:39,400
Speaker 3: deductible debt and decrease the non deductible debt, but your

670
00:32:39,720 --> 00:32:43,160
Speaker 3: debt position is the same. So a really simple example

671
00:32:43,200 --> 00:32:45,560
Speaker 3: of this might be you've inherited one hundred thousand dollars

672
00:32:45,920 --> 00:32:47,960
Speaker 3: and you want to invest it. So you invest one

673
00:32:48,040 --> 00:32:50,600
Speaker 3: hundred thousand straight away just from your pocket, and you've

674
00:32:50,600 --> 00:32:52,800
Speaker 3: got a mortgage to say half a milk, or you

675
00:32:52,920 --> 00:32:54,960
Speaker 3: put a one hundred on the mortgage, take it out

676
00:32:55,080 --> 00:32:57,960
Speaker 3: and then invest it. So now you've got the same

677
00:32:58,240 --> 00:33:01,080
Speaker 3: amount of investment, the same amount of debt, but you've

678
00:33:01,160 --> 00:33:04,480
Speaker 3: recycled one hundred thousand of it from non deductible to deductible.

679
00:33:04,920 --> 00:33:07,480
Speaker 3: Your overall cash flow position should be better because you're

680
00:33:07,480 --> 00:33:10,840
Speaker 3: paying less interest in and of tax. And what a

681
00:33:10,920 --> 00:33:14,480
Speaker 3: debt recycling strategy then, is all your cash flow, your dividends,

682
00:33:14,800 --> 00:33:17,000
Speaker 3: your normal surplus that you would otherwise invest, goes onto

683
00:33:17,080 --> 00:33:19,200
Speaker 3: your non deductible and then you draw it out of

684
00:33:19,240 --> 00:33:21,760
Speaker 3: the deductible and keep investing. And the argument is you

685
00:33:21,800 --> 00:33:23,920
Speaker 3: would pay off your debt faster because your net cash

686
00:33:23,920 --> 00:33:24,440
Speaker 3: flow is better.

687
00:33:24,680 --> 00:33:26,840
Speaker 2: That's the simplest way I can explain it.

688
00:33:27,240 --> 00:33:29,240
Speaker 1: Yeah, No, it's good. That's a very good explanation. And

689
00:33:29,440 --> 00:33:32,720
Speaker 1: I would say to people, explore that, explore death recycling,

690
00:33:33,160 --> 00:33:36,360
Speaker 1: optimize it. Okay, very good. None of that was advice,

691
00:33:36,400 --> 00:33:39,360
Speaker 1: of course, it's all general. Thank you very much Daniel

692
00:33:39,560 --> 00:33:44,360
Speaker 1: and Andrew and Steve for those very good questions. I

693
00:33:44,440 --> 00:33:46,800
Speaker 1: think We are running out of time, Nathan, so we

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00:33:46,920 --> 00:33:48,640
Speaker 1: might just leave it there. Lovely to have you on.

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00:33:49,000 --> 00:33:52,600
Speaker 1: Thank you very much, Thanks James. That was Nathan Fradley, Folks,

696
00:33:52,720 --> 00:33:56,880
Speaker 1: Nathan Fradley financial Advice. We'll hear from him again, I'm sure.

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00:33:57,880 --> 00:34:01,520
Speaker 1: Let's have some correspondence the Money Puzzle at the Australian

698
00:34:01,640 --> 00:34:08,200
Speaker 1: dot com dot au for all your emails, questions, observations, complaints,

699
00:34:08,960 --> 00:34:12,000
Speaker 1: and thank you very much to Leah Samuel Gloup for

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00:34:12,080 --> 00:34:13,719
Speaker 1: producing today's show. Talk to you soon,