1 00:00:10,160 --> 00:00:13,000 Speaker 1: Hello and welcome to The Australian's Money Puzzle podcast. I'm 2 00:00:13,080 --> 00:00:16,840 Speaker 1: James Kirby. Welcome aboard everybody. I want to put one big, 3 00:00:17,000 --> 00:00:20,680 Speaker 1: fat question to you today. Should you put money in 4 00:00:20,840 --> 00:00:24,680 Speaker 1: super or should you put that money towards buying your 5 00:00:24,720 --> 00:00:27,480 Speaker 1: own home? And it doesn't matter what stage you are. 6 00:00:27,520 --> 00:00:29,680 Speaker 1: You might be buying your first home, you may have 7 00:00:30,040 --> 00:00:34,960 Speaker 1: a mortgage for eighteen years. The question is core to 8 00:00:35,080 --> 00:00:39,000 Speaker 1: wealth building in Australia and the answer I expect you 9 00:00:39,040 --> 00:00:43,639 Speaker 1: will find is embedded not in actual rational deduction as 10 00:00:43,680 --> 00:00:46,519 Speaker 1: you might guess from economics or whatever. It's actually got 11 00:00:46,520 --> 00:00:49,320 Speaker 1: an awful lot to do with the tax system and 12 00:00:49,400 --> 00:00:53,279 Speaker 1: how that actually works. My guest today is James Gerard 13 00:00:53,440 --> 00:00:56,520 Speaker 1: of Financial Advisor dot com dot au. We often talk 14 00:00:56,600 --> 00:00:59,360 Speaker 1: about this issue. I can't remember where you come from 15 00:00:59,400 --> 00:01:01,320 Speaker 1: on this issue, games, but it's nice to talk about 16 00:01:01,360 --> 00:01:03,959 Speaker 1: it on air to get the listeners basically to come 17 00:01:03,960 --> 00:01:04,280 Speaker 1: in on this. 18 00:01:04,319 --> 00:01:06,920 Speaker 2: How are you Yeah, I'm doing really well and looking 19 00:01:06,920 --> 00:01:08,360 Speaker 2: forward to our bus discussion today. 20 00:01:08,400 --> 00:01:09,479 Speaker 3: It's a really interesting topic. 21 00:01:10,200 --> 00:01:13,120 Speaker 1: It's an interesting topic because the truth of the matter 22 00:01:13,280 --> 00:01:16,080 Speaker 1: is that houses. I'm looking at a graph and it's 23 00:01:16,080 --> 00:01:20,720 Speaker 1: from AMP. Interestingly, AMP We had AMP guests only a 24 00:01:20,720 --> 00:01:24,959 Speaker 1: few weeks ago, where we talked about their long term approach, 25 00:01:25,000 --> 00:01:28,679 Speaker 1: how people should retire a little bit older than they 26 00:01:28,680 --> 00:01:30,679 Speaker 1: are at the moment, how people should have higher risk 27 00:01:30,959 --> 00:01:32,720 Speaker 1: in their portfolios than they should have. But one thing 28 00:01:32,760 --> 00:01:35,600 Speaker 1: that didn't come up was an AMP graphich goes back 29 00:01:35,600 --> 00:01:38,759 Speaker 1: to nineteen twenty eight and it shows that residential property 30 00:01:39,160 --> 00:01:43,600 Speaker 1: in Australia is outstanding. It basically runs at about eleven percent. 31 00:01:43,640 --> 00:01:46,120 Speaker 1: If you go back to nineteen twenty six, shares go 32 00:01:46,200 --> 00:01:49,960 Speaker 1: back almost similarly about eleven percent, bonds do about six, 33 00:01:50,760 --> 00:01:53,320 Speaker 1: and cash does about five. So let's say, let's put 34 00:01:53,320 --> 00:01:55,160 Speaker 1: it out there. First of all that shares more or 35 00:01:55,240 --> 00:01:58,800 Speaker 1: less return the same amount as a residential property over 36 00:01:58,800 --> 00:02:03,880 Speaker 1: a very long period of time, but also the homes 37 00:02:03,960 --> 00:02:07,800 Speaker 1: that underpin our system. You might just explain to listeners, 38 00:02:07,840 --> 00:02:11,040 Speaker 1: first of all, well before we have this conversation, the 39 00:02:11,120 --> 00:02:14,200 Speaker 1: tax advantages of both assets. Right, So, if I don't 40 00:02:14,240 --> 00:02:17,840 Speaker 1: know anything about super or houses or home ownership, and 41 00:02:17,840 --> 00:02:20,760 Speaker 1: I'm trying to make a decision here, what's the tax 42 00:02:20,760 --> 00:02:23,320 Speaker 1: deal on super very simply? And what's the tax deal 43 00:02:23,360 --> 00:02:26,040 Speaker 1: on owning at home? Very simply? Just a headline issue. 44 00:02:26,200 --> 00:02:29,960 Speaker 2: Yeah, in a nutshell, the biggest attraction to supernuation is 45 00:02:30,000 --> 00:02:32,919 Speaker 2: that after you've reached the age of sixty and after 46 00:02:32,960 --> 00:02:35,600 Speaker 2: you stop working up to two million dollars which will 47 00:02:35,600 --> 00:02:38,040 Speaker 2: increase the two point one million dollars shortly, you can 48 00:02:38,080 --> 00:02:41,920 Speaker 2: have tax free super, so no capital gains tax, no 49 00:02:42,120 --> 00:02:45,960 Speaker 2: income tax. Superannuation is the most tax effective structure up 50 00:02:45,960 --> 00:02:48,160 Speaker 2: to two million dollars for people to hold their wealth 51 00:02:48,360 --> 00:02:52,920 Speaker 2: in retirement. So that's the basic attraction of superinnuation and 52 00:02:53,040 --> 00:02:55,359 Speaker 2: the government encouraged this because they don't want to pay 53 00:02:55,360 --> 00:02:57,920 Speaker 2: the age pension every fortnite to millions of Australians. 54 00:02:57,960 --> 00:02:59,320 Speaker 3: They want people to be self funded. 55 00:02:59,360 --> 00:03:01,560 Speaker 2: So what they do is they say, for you to 56 00:03:02,280 --> 00:03:04,679 Speaker 2: not rely on us in retirement, we'll give you these 57 00:03:04,760 --> 00:03:08,320 Speaker 2: tax concessions to help you build your superannuation account. So 58 00:03:08,680 --> 00:03:10,880 Speaker 2: every year people have the ability to put it in 59 00:03:10,919 --> 00:03:13,880 Speaker 2: up to thirty thousand dollars into their super account and 60 00:03:13,919 --> 00:03:15,680 Speaker 2: that's called concessional contribution. 61 00:03:15,840 --> 00:03:16,880 Speaker 3: That's pre tax. 62 00:03:17,280 --> 00:03:20,239 Speaker 2: You need to enclound include your employer contribution which is 63 00:03:20,280 --> 00:03:22,760 Speaker 2: twelve percent of your salary, and then you some people 64 00:03:22,760 --> 00:03:24,280 Speaker 2: have a voluntary noil that they can put it in, 65 00:03:24,360 --> 00:03:27,880 Speaker 2: so there's tax breaks to do that. So the government 66 00:03:27,880 --> 00:03:30,519 Speaker 2: will help you with tax breaks put money into SUPER. 67 00:03:30,800 --> 00:03:32,600 Speaker 2: They'll also give you allows as well. If you've sold 68 00:03:32,600 --> 00:03:35,240 Speaker 2: an investment property or you have an inheritance, you can 69 00:03:35,240 --> 00:03:36,800 Speaker 2: put it in up to one hundred and twenty thousand 70 00:03:36,840 --> 00:03:39,120 Speaker 2: dollars a year and in some cases up to three 71 00:03:39,240 --> 00:03:42,440 Speaker 2: hundred and sixty thousand as well. So in short, SUPER 72 00:03:42,560 --> 00:03:44,680 Speaker 2: is tax free in retirement and the government will give 73 00:03:44,680 --> 00:03:46,280 Speaker 2: you tax breaks along the way. 74 00:03:46,080 --> 00:03:47,360 Speaker 3: To help you build your superbalance. 75 00:03:47,760 --> 00:03:51,480 Speaker 1: Okay, and so the thinking of this was that reduced 76 00:03:51,480 --> 00:03:55,720 Speaker 1: a number of people on the pension on that dependent 77 00:03:55,800 --> 00:04:00,160 Speaker 1: of that. Now, on homes, what's the big what's the 78 00:04:00,200 --> 00:04:02,280 Speaker 1: tax deal on home ownership? 79 00:04:03,600 --> 00:04:06,760 Speaker 2: The great thing in Australia about owning your own home 80 00:04:07,000 --> 00:04:09,960 Speaker 2: is that there's no capital gains tax. If you were 81 00:04:10,120 --> 00:04:12,080 Speaker 2: lucky enough to have bought it your home back in 82 00:04:12,080 --> 00:04:16,000 Speaker 2: the nineteen eighties for twenty thirty forty thousand dollars and 83 00:04:16,040 --> 00:04:20,240 Speaker 2: it's worth two million dollars today. If you decide to downsize, upsize, 84 00:04:20,360 --> 00:04:22,240 Speaker 2: do whatever you want, sell the property, there's not a 85 00:04:22,279 --> 00:04:23,440 Speaker 2: set of capital gains tax. 86 00:04:23,480 --> 00:04:24,880 Speaker 3: If that place was your. 87 00:04:24,680 --> 00:04:27,919 Speaker 2: Home throughout the whole period, there's a slight tax implication 88 00:04:28,040 --> 00:04:31,279 Speaker 2: if you had rented it out for a period of time, 89 00:04:31,440 --> 00:04:34,120 Speaker 2: so the tax office will look at, well, how long 90 00:04:34,160 --> 00:04:35,920 Speaker 2: did you rent it out versus how long is it 91 00:04:36,040 --> 00:04:38,520 Speaker 2: your home? And there's some nuances with those rules as well, 92 00:04:38,600 --> 00:04:41,040 Speaker 2: such as a six year former residence exemption, but we 93 00:04:41,040 --> 00:04:43,600 Speaker 2: won't go down that rabbit hole. But in short, if 94 00:04:43,640 --> 00:04:45,800 Speaker 2: you've bought a home that you live in as your 95 00:04:45,800 --> 00:04:49,719 Speaker 2: primary residence, there's no capital gains tax, which is quite 96 00:04:49,760 --> 00:04:52,279 Speaker 2: unique because we've investment properties. You do have to pay 97 00:04:52,320 --> 00:04:55,080 Speaker 2: capital gains tax, and it's very topical at the moment 98 00:04:55,120 --> 00:04:57,440 Speaker 2: because the government's looking at increasing the amount of capital 99 00:04:57,480 --> 00:05:00,160 Speaker 2: gains tax that you paid on any investment property, which 100 00:05:00,160 --> 00:05:02,600 Speaker 2: actually way back into some arguments later. But okay, so 101 00:05:02,680 --> 00:05:05,880 Speaker 2: there are very simply the headline tax breaks, folks. But 102 00:05:06,000 --> 00:05:07,920 Speaker 2: the thing is which what you don't hear. 103 00:05:07,880 --> 00:05:11,200 Speaker 1: And James's answers are bang on, and he hasn't had 104 00:05:11,240 --> 00:05:13,200 Speaker 1: time to put the rest of it in place, But 105 00:05:13,480 --> 00:05:16,480 Speaker 1: there is enormous differences once you sort of borrow under 106 00:05:16,560 --> 00:05:20,799 Speaker 1: this headline tax attraction, and the huge thing is about 107 00:05:20,839 --> 00:05:24,159 Speaker 1: whether you own your own home or not. So for instance, 108 00:05:24,240 --> 00:05:26,400 Speaker 1: I we'll just go back to SUPER for a moment. 109 00:05:26,720 --> 00:05:30,400 Speaker 1: If you own your own home, it is exempt basically 110 00:05:30,440 --> 00:05:35,159 Speaker 1: from all rules around pension and Super. It doesn't really 111 00:05:35,200 --> 00:05:37,320 Speaker 1: make much difference. It's not to dealt with to any 112 00:05:37,360 --> 00:05:40,960 Speaker 1: great degree. And what that means is if I am 113 00:05:41,040 --> 00:05:44,880 Speaker 1: sitting in one house and I rent that house, and 114 00:05:45,000 --> 00:05:48,160 Speaker 1: someone else across the road owns their own home, they 115 00:05:48,160 --> 00:05:54,640 Speaker 1: have enormous advantages. Because even on SUPER it sounded good 116 00:05:54,640 --> 00:05:56,839 Speaker 1: at the start, it sounded terrific that you could have 117 00:05:56,920 --> 00:06:00,120 Speaker 1: this amount in SUPER. But if I'm sitting in a 118 00:06:00,160 --> 00:06:05,560 Speaker 1: rented house and I must pay rent each week and 119 00:06:05,640 --> 00:06:08,919 Speaker 1: I have that, basically that drag on my capacity to earn, 120 00:06:09,400 --> 00:06:11,839 Speaker 1: and someone across the world is in the same position, 121 00:06:12,240 --> 00:06:15,560 Speaker 1: except that they own their house, they would be much 122 00:06:15,560 --> 00:06:18,080 Speaker 1: better off in the tax system. James, could you explain 123 00:06:18,440 --> 00:06:20,880 Speaker 1: how they are? And I think it's worth mentioning you 124 00:06:20,920 --> 00:06:24,359 Speaker 1: know the fact that pension payments, for instance, are oblivious 125 00:06:24,360 --> 00:06:25,680 Speaker 1: to whether you're on your own home, and a lot 126 00:06:25,720 --> 00:06:29,320 Speaker 1: of SUPER tax rules are as well. 127 00:06:29,839 --> 00:06:33,240 Speaker 3: That's right, I'll come back to that. It's sorry. 128 00:06:33,320 --> 00:06:35,440 Speaker 2: The second one just came to my mind was sens 129 00:06:35,480 --> 00:06:37,400 Speaker 2: a link with regards to home ownership at a non 130 00:06:37,440 --> 00:06:38,599 Speaker 2: home ownership. 131 00:06:38,200 --> 00:06:41,120 Speaker 3: Because that does make a really big difference there. 132 00:06:41,160 --> 00:06:43,640 Speaker 2: So what my light bulb was that if you're someone 133 00:06:43,680 --> 00:06:46,080 Speaker 2: who just wants to retire on the full age pension, 134 00:06:46,080 --> 00:06:48,440 Speaker 2: which is forty thousand dollars a year for a couple, 135 00:06:49,000 --> 00:06:51,960 Speaker 2: that the best financial strategy that you could possibly undertake 136 00:06:52,080 --> 00:06:54,760 Speaker 2: is to buy the most expensive house that you can 137 00:06:54,839 --> 00:06:58,000 Speaker 2: afford and centralize all of your assets inside of that 138 00:06:58,040 --> 00:07:02,400 Speaker 2: family home. That's something that most people don't consider because 139 00:07:02,839 --> 00:07:04,640 Speaker 2: the family home is exempt. 140 00:07:04,200 --> 00:07:05,720 Speaker 3: From center links means test. 141 00:07:06,120 --> 00:07:08,479 Speaker 2: So a retirement strategy that a few of my clients 142 00:07:08,480 --> 00:07:11,560 Speaker 2: have undertaken has been to they've built up super by 143 00:07:11,640 --> 00:07:15,200 Speaker 2: default throughout their working career, and the employer puts money in. 144 00:07:15,240 --> 00:07:17,680 Speaker 2: But then when they retire and for sent lase age 145 00:07:17,720 --> 00:07:20,240 Speaker 2: sixty seven to be totaled to the age pension, they said, 146 00:07:20,400 --> 00:07:21,880 Speaker 2: we really want that age pension. 147 00:07:21,880 --> 00:07:24,200 Speaker 3: We've paid so much tax to the government over the years. 148 00:07:24,400 --> 00:07:25,520 Speaker 3: We want that forty thousand. 149 00:07:26,040 --> 00:07:28,680 Speaker 1: Yes, it's worth the million a year. Basically you'd have 150 00:07:28,720 --> 00:07:31,040 Speaker 1: to have a million a year somewhere else to get 151 00:07:31,080 --> 00:07:33,520 Speaker 1: that payment in conservative returns. 152 00:07:33,600 --> 00:07:36,120 Speaker 2: Yeah, okay, that's right. So what they've done is they've gone, 153 00:07:36,200 --> 00:07:37,880 Speaker 2: all right, well, let's have a look at the caps. 154 00:07:38,040 --> 00:07:41,360 Speaker 2: So if you're a couple and you have your own 155 00:07:41,400 --> 00:07:43,240 Speaker 2: home that you live in, you can have up to 156 00:07:43,320 --> 00:07:45,600 Speaker 2: four hundred and eighty one thousand, five hundred dollars in 157 00:07:45,680 --> 00:07:48,680 Speaker 2: assets and still get that full forty thousand dollars per 158 00:07:48,760 --> 00:07:51,600 Speaker 2: year pension. So what they've done is, there's take a 159 00:07:51,720 --> 00:07:54,520 Speaker 2: theoretical example, They've had a million dollars in SUPER. So 160 00:07:54,600 --> 00:07:56,640 Speaker 2: what they've done is have taken half a million dollars 161 00:07:56,720 --> 00:07:59,320 Speaker 2: out at Super. They've sold their home, They've added an 162 00:07:59,360 --> 00:08:01,720 Speaker 2: extra fiveundred thousand dollars to the next home, so all 163 00:08:01,720 --> 00:08:04,400 Speaker 2: they're left with is five hundred thousand in SUPER, which 164 00:08:04,440 --> 00:08:06,720 Speaker 2: is about the threshold for that full forty thousand dollars 165 00:08:06,720 --> 00:08:07,440 Speaker 2: per year pension. 166 00:08:07,640 --> 00:08:09,800 Speaker 3: And they're living in a nicer property. 167 00:08:09,880 --> 00:08:13,800 Speaker 2: So that's another advantage of going for the buy your 168 00:08:13,840 --> 00:08:16,720 Speaker 2: home and focus on that versus the SUPER strategy. 169 00:08:16,760 --> 00:08:19,360 Speaker 3: Is that exemption from the age age test. 170 00:08:19,560 --> 00:08:22,880 Speaker 1: I mean, I don't think it's gaming. I think it's logical, 171 00:08:23,000 --> 00:08:26,120 Speaker 1: rational making the best of the system you are in. 172 00:08:26,720 --> 00:08:29,440 Speaker 1: And so you actually have people who had money and Super, 173 00:08:30,360 --> 00:08:33,960 Speaker 1: and rather than having that in SUPER, they're reverted as 174 00:08:34,000 --> 00:08:37,880 Speaker 1: such to more comfort in having their home knowing that 175 00:08:37,920 --> 00:08:41,360 Speaker 1: they could get a better pension basically through the system. 176 00:08:41,440 --> 00:08:43,359 Speaker 1: Is that the essence of that strategy. 177 00:08:43,559 --> 00:08:44,800 Speaker 3: That's the essence of it. 178 00:08:44,880 --> 00:08:48,000 Speaker 2: And also if they wanted more than forty thousand dollars 179 00:08:48,040 --> 00:08:50,280 Speaker 2: per year, they could go through that Central Link loan 180 00:08:50,320 --> 00:08:53,120 Speaker 2: scheme as well. In tobocharge their pension payment by fifty 181 00:08:53,120 --> 00:08:55,840 Speaker 2: percent as well, they get sixty thousand per year. 182 00:08:55,960 --> 00:08:58,760 Speaker 1: That's right before we just talk about that, we talked 183 00:08:58,760 --> 00:09:01,000 Speaker 1: about that's a pension. What about this super in super? 184 00:09:01,240 --> 00:09:03,640 Speaker 1: What's the difference whether I own my own home or not? 185 00:09:03,720 --> 00:09:06,240 Speaker 1: Do I get my two million tax free? Either way? 186 00:09:06,640 --> 00:09:06,959 Speaker 3: You do? 187 00:09:07,120 --> 00:09:10,080 Speaker 2: Yeah, so sorry, that's the question that there's definitely no 188 00:09:10,160 --> 00:09:13,400 Speaker 2: difference if to superannuation laws if you own a home 189 00:09:13,600 --> 00:09:16,040 Speaker 2: or you don't own a home. It's only for sensially 190 00:09:16,160 --> 00:09:18,520 Speaker 2: planning that owning a home makes a difference of superannuation, 191 00:09:18,800 --> 00:09:19,400 Speaker 2: no difference. 192 00:09:19,679 --> 00:09:21,600 Speaker 1: What we're looking at here, folks, is whether you know 193 00:09:21,960 --> 00:09:24,280 Speaker 1: which is better? Where are we at the start here? 194 00:09:24,440 --> 00:09:26,199 Speaker 1: We said, is it better to put the money into 195 00:09:26,520 --> 00:09:29,880 Speaker 1: your super or into your home? Well, one of the 196 00:09:29,920 --> 00:09:32,600 Speaker 1: things we're sort of developing here is the fact that 197 00:09:33,040 --> 00:09:37,200 Speaker 1: in relation to your home is is treasured basically within 198 00:09:37,240 --> 00:09:40,680 Speaker 1: the tax system. Renchers certainly are not treasured in any fashion, 199 00:09:40,880 --> 00:09:43,240 Speaker 1: and renting gets very difficult at any time over a 200 00:09:43,280 --> 00:09:45,000 Speaker 1: long period of time. But obviously if you're older in 201 00:09:45,040 --> 00:09:47,520 Speaker 1: retirement it must be very difficult. And the number of 202 00:09:47,559 --> 00:09:50,520 Speaker 1: people retiring, you know, who don't own their own home 203 00:09:50,640 --> 00:09:54,040 Speaker 1: is increasing each year, two levels we have never seen before. 204 00:09:54,120 --> 00:09:56,959 Speaker 1: But the essential point is that, as James outline, the 205 00:09:56,960 --> 00:10:00,360 Speaker 1: biggest tax break in the system is that the family 206 00:10:00,400 --> 00:10:03,640 Speaker 1: home is exempt from CGT and if you don't own 207 00:10:03,679 --> 00:10:05,600 Speaker 1: a home then you will never get to use that 208 00:10:06,520 --> 00:10:08,720 Speaker 1: tax break. I think that's the first point to put 209 00:10:08,720 --> 00:10:13,400 Speaker 1: on the table, James. And then also natural run on 210 00:10:13,480 --> 00:10:17,640 Speaker 1: from that is then all these housing issues are linked 211 00:10:17,640 --> 00:10:20,720 Speaker 1: with the fact that the home is a very special place. 212 00:10:20,760 --> 00:10:23,360 Speaker 1: Because you mentioned the CGT exemption and then you mentioned 213 00:10:23,360 --> 00:10:26,640 Speaker 1: the other really important exemption, which is that if you 214 00:10:26,720 --> 00:10:32,040 Speaker 1: were looking for a pension, and you know, folks of majority, 215 00:10:32,360 --> 00:10:36,920 Speaker 1: the majority of older Australians receive a pension or at 216 00:10:37,000 --> 00:10:39,839 Speaker 1: least access to a pension. That's a mathematical fact. So 217 00:10:39,920 --> 00:10:42,080 Speaker 1: let's take it that half the listeners are serious about this. 218 00:10:43,800 --> 00:10:50,080 Speaker 1: You're if you own your own home, you have a 219 00:10:50,080 --> 00:10:53,080 Speaker 1: real advantage, don't you when you're in that system, which 220 00:10:53,120 --> 00:10:56,400 Speaker 1: isn't there for the renter. So do you think it's 221 00:10:56,440 --> 00:10:59,520 Speaker 1: more difficult to not own a home as you get older? 222 00:10:59,520 --> 00:11:02,520 Speaker 1: In our tech systems in. 223 00:11:02,440 --> 00:11:05,960 Speaker 2: All difficult not to own a home years because although 224 00:11:06,120 --> 00:11:09,640 Speaker 2: you get a higher assets test threshold for sense a 225 00:11:09,679 --> 00:11:12,080 Speaker 2: link if you don't own a home when I have 226 00:11:12,120 --> 00:11:12,800 Speaker 2: a look at it. 227 00:11:12,880 --> 00:11:14,120 Speaker 3: So if you do own a home. 228 00:11:13,920 --> 00:11:16,040 Speaker 2: You get four hundred and eighty one thousand, five hundred 229 00:11:16,200 --> 00:11:18,600 Speaker 2: in assets before they penalize you. If you don't have 230 00:11:18,640 --> 00:11:20,480 Speaker 2: a home and you're a couple, it's seven hundred and 231 00:11:20,520 --> 00:11:23,920 Speaker 2: thirty nine thousand, five hundred. And my argument is that 232 00:11:24,040 --> 00:11:26,360 Speaker 2: extra threshold of a few hundred thousand dollars that they 233 00:11:26,400 --> 00:11:29,559 Speaker 2: give you earning interest on that at five or six percent. 234 00:11:29,520 --> 00:11:31,120 Speaker 3: That's not going to be enough to pay your rent. 235 00:11:31,400 --> 00:11:33,400 Speaker 2: So you're going to have to use some of your 236 00:11:33,520 --> 00:11:36,400 Speaker 2: super that you would have used for your living expenditure 237 00:11:36,559 --> 00:11:39,800 Speaker 2: to actually pay your rent in retirement. So from a 238 00:11:39,840 --> 00:11:43,040 Speaker 2: financial perspective, in most cases, it'll work out better for 239 00:11:43,080 --> 00:11:45,240 Speaker 2: you to own a home then it will be in 240 00:11:45,400 --> 00:11:49,080 Speaker 2: to rent. But also there's all those lost dole implications 241 00:11:49,240 --> 00:11:52,520 Speaker 2: as well about tight rental markets, rising rents. 242 00:11:53,200 --> 00:11:55,480 Speaker 1: Of course, we'll talk about that one minute. But so 243 00:11:55,800 --> 00:11:59,640 Speaker 1: the person who rents is disadvantaged compared to the person 244 00:12:00,160 --> 00:12:03,080 Speaker 1: who owned a home. This is what we're getting at. 245 00:12:03,120 --> 00:12:06,000 Speaker 1: And I think this is basically putting it on that. 246 00:12:06,080 --> 00:12:10,520 Speaker 1: I don't think James the tax system because it has 247 00:12:10,559 --> 00:12:13,000 Speaker 1: these in bill penalties for the person who doesn't own 248 00:12:13,040 --> 00:12:15,200 Speaker 1: a home. I think that's huge. And I know SUPER 249 00:12:15,200 --> 00:12:19,600 Speaker 1: returns can be very reliable long term, and super has 250 00:12:19,640 --> 00:12:22,560 Speaker 1: a tax benefit, of course it does, But I think 251 00:12:22,640 --> 00:12:25,960 Speaker 1: the home ownership is crucial. Now, we didn't even this 252 00:12:26,120 --> 00:12:28,600 Speaker 1: was just that was really just the financial side of this. 253 00:12:28,800 --> 00:12:31,560 Speaker 1: There's very obvious parts which we don't even have to 254 00:12:31,559 --> 00:12:34,000 Speaker 1: tell you folks. Short term rental is difficult. There is 255 00:12:34,040 --> 00:12:38,280 Speaker 1: no long term rental arrangements in Australia. People have terrible 256 00:12:38,320 --> 00:12:41,600 Speaker 1: difficulty trying to rent for long. It's exceptionally difficult to 257 00:12:41,600 --> 00:12:43,720 Speaker 1: rent anything. Right now. We have a rental vacancy rate 258 00:12:43,800 --> 00:12:46,400 Speaker 1: which is running for years, for years at less than 259 00:12:46,440 --> 00:12:48,760 Speaker 1: two percent, but it's a terrible I don't think we 260 00:12:48,800 --> 00:12:50,520 Speaker 1: can put have you seen anyone trying to put a 261 00:12:50,520 --> 00:12:54,320 Speaker 1: price on that. The pressure of that on people who 262 00:12:55,120 --> 00:12:58,840 Speaker 1: didn't get to own a home or didn't try hard perhaps, 263 00:12:58,960 --> 00:13:01,400 Speaker 1: and we're busily building their super do you think they 264 00:13:01,480 --> 00:13:07,920 Speaker 1: may it cot? And there's a price to pay in that. 265 00:13:06,400 --> 00:13:10,080 Speaker 2: There is, particularly with the pace of growth of the 266 00:13:10,120 --> 00:13:14,160 Speaker 2: Australian property market, it's been very steady and stable, and 267 00:13:14,720 --> 00:13:17,800 Speaker 2: generally you fall behind and it almost becomes a two 268 00:13:17,840 --> 00:13:20,800 Speaker 2: class economy. People that have purchased a home and their 269 00:13:20,920 --> 00:13:24,320 Speaker 2: networth goes higher and people who haven't, and unfortunately, in 270 00:13:24,360 --> 00:13:26,800 Speaker 2: most cases in my experience over the past twenty years. 271 00:13:26,760 --> 00:13:28,280 Speaker 3: Their net worthy is lower. 272 00:13:28,720 --> 00:13:30,800 Speaker 2: One other thing which I forgot to mention with regards 273 00:13:30,800 --> 00:13:33,439 Speaker 2: to the benefits of owning a home versus. 274 00:13:33,120 --> 00:13:34,960 Speaker 3: Not is when it comes to age care. 275 00:13:35,240 --> 00:13:37,680 Speaker 2: So I've come across clients who are moving into age 276 00:13:37,760 --> 00:13:41,320 Speaker 2: care facilities and your home that you lived in is 277 00:13:41,360 --> 00:13:43,960 Speaker 2: exempt as an assets when they're working out their daily 278 00:13:44,000 --> 00:13:47,079 Speaker 2: fees and you're sentlling pensions for two years. But if 279 00:13:47,120 --> 00:13:48,760 Speaker 2: you have rented a home or you don't have that 280 00:13:48,800 --> 00:13:51,000 Speaker 2: exemption and your home could be worth a lot. 281 00:13:51,240 --> 00:13:56,320 Speaker 1: It's another inbuilt it's another in built bias basically against 282 00:13:56,400 --> 00:14:00,280 Speaker 1: the non hormowner because there's such the taxes. It was 283 00:14:00,360 --> 00:14:02,840 Speaker 1: entirely skewed in favor of the homeowner, and it was 284 00:14:02,880 --> 00:14:06,599 Speaker 1: never probably thought through that how much bias would be 285 00:14:06,640 --> 00:14:10,360 Speaker 1: built up against the renter. Basically in this instance and 286 00:14:10,400 --> 00:14:12,079 Speaker 1: the other thing, I just wanted to put on the record. 287 00:14:12,720 --> 00:14:14,400 Speaker 1: And I hope folks that at this stage when I 288 00:14:14,400 --> 00:14:16,079 Speaker 1: say what I'm going to say, you can see where 289 00:14:16,080 --> 00:14:20,160 Speaker 1: I'm coming from. All these surveys, ASPA, ETCETERA. Comfortable retirement. 290 00:14:20,200 --> 00:14:22,360 Speaker 1: You know, how much did you have in retirements? The 291 00:14:22,360 --> 00:14:24,880 Speaker 1: great old chestnut of all financial journalis in Australia, the 292 00:14:24,960 --> 00:14:28,560 Speaker 1: unanswerable question. It doesn't matter what the survey is, it 293 00:14:28,560 --> 00:14:31,080 Speaker 1: doesn't matter who's saying it. They always assume your own 294 00:14:31,120 --> 00:14:34,120 Speaker 1: your own home. All those ASPA figures, for instance, which 295 00:14:34,120 --> 00:14:36,440 Speaker 1: would be very reliable as to how much you should 296 00:14:36,440 --> 00:14:38,880 Speaker 1: have in retirement and which is updated regularly, it assumes 297 00:14:38,920 --> 00:14:41,160 Speaker 1: you own your own home. So I think the whole 298 00:14:41,200 --> 00:14:43,280 Speaker 1: sort of system's got out of date, while the number 299 00:14:43,320 --> 00:14:45,640 Speaker 1: of people who don't own their home is piling up, 300 00:14:45,800 --> 00:14:47,880 Speaker 1: which brings me to I don't know where you come 301 00:14:47,880 --> 00:14:51,280 Speaker 1: from this. I haven't asked you, but to me that 302 00:14:51,560 --> 00:14:55,080 Speaker 1: if it's the case, unfortunately, and I'm not saying this, 303 00:14:55,200 --> 00:14:58,960 Speaker 1: I'm not happy to say this because it doesn't stack 304 00:14:59,080 --> 00:15:01,560 Speaker 1: up immediately if you think about it, and if you 305 00:15:01,600 --> 00:15:03,640 Speaker 1: didn't know much about it, you'd say, well, I think 306 00:15:03,640 --> 00:15:05,640 Speaker 1: it's obviously much better to have SUPER than put money 307 00:15:05,680 --> 00:15:07,960 Speaker 1: in your family home because you need money for retirement, 308 00:15:07,960 --> 00:15:10,240 Speaker 1: et cetera. But when you find out that the system 309 00:15:10,320 --> 00:15:13,920 Speaker 1: is as biased against you if you don't own your home, 310 00:15:14,920 --> 00:15:18,360 Speaker 1: then I feel dollar for dollar that the home ownership 311 00:15:18,520 --> 00:15:21,920 Speaker 1: is more important than SUPER. I didn't really want to 312 00:15:21,920 --> 00:15:24,400 Speaker 1: say that, but you know, that's the issue of that's 313 00:15:24,440 --> 00:15:27,280 Speaker 1: the end result of a tax system which is overwhelmingly 314 00:15:27,360 --> 00:15:30,200 Speaker 1: biased against the rencher. That's where I'm coming from. It's 315 00:15:30,240 --> 00:15:32,600 Speaker 1: interesting I can back this up. The IMF this morning 316 00:15:32,680 --> 00:15:34,360 Speaker 1: came up with something I have to say. Where do 317 00:15:34,400 --> 00:15:35,840 Speaker 1: you come from on it? James? Is that a bit 318 00:15:36,080 --> 00:15:38,600 Speaker 1: too cotton thrust? Is it a bit too black and white? 319 00:15:38,600 --> 00:15:40,240 Speaker 1: Do you think it's not? 320 00:15:40,600 --> 00:15:44,000 Speaker 2: But there are some considerations as well, so maybe best 321 00:15:44,000 --> 00:15:46,480 Speaker 2: to answer it through what I did. So I'm forty two. 322 00:15:47,160 --> 00:15:50,960 Speaker 2: I've just started building my super fun aggressively now. For 323 00:15:51,000 --> 00:15:54,000 Speaker 2: the past twenty years I focused on home ownership. My 324 00:15:54,280 --> 00:15:56,080 Speaker 2: first property was when I got married at twenty three. 325 00:15:56,200 --> 00:15:57,840 Speaker 2: My wife we bought a two bit of an apartment in 326 00:15:57,880 --> 00:15:59,480 Speaker 2: the low off shore of Sydney. That was all we 327 00:15:59,520 --> 00:16:02,280 Speaker 2: could afford. That went up in value. We sold it 328 00:16:02,560 --> 00:16:05,600 Speaker 2: capital gain SAX. We moved on to three. 329 00:16:05,640 --> 00:16:09,560 Speaker 1: That was a great idea financially, financially at least I 330 00:16:09,560 --> 00:16:12,360 Speaker 1: would I would recommend it to anybody, but yes, keep going. 331 00:16:13,200 --> 00:16:16,880 Speaker 2: So sold the department, moved to a house, cheapest house 332 00:16:16,920 --> 00:16:19,200 Speaker 2: in a suburb. It was all broken and run down. 333 00:16:19,280 --> 00:16:21,840 Speaker 2: We had no money to renovate it. We saved money 334 00:16:21,840 --> 00:16:24,400 Speaker 2: and bit by bit we improved that property. It doubled 335 00:16:24,400 --> 00:16:27,720 Speaker 2: in value. Over was that an eight year period. We 336 00:16:27,800 --> 00:16:30,040 Speaker 2: then sold that no capital gang SAX. And then we 337 00:16:30,080 --> 00:16:32,480 Speaker 2: bought the dream forever home, the one that we're happy 338 00:16:32,520 --> 00:16:36,320 Speaker 2: to raise our three children through to adulthood. And I 339 00:16:36,400 --> 00:16:40,320 Speaker 2: focus on that partly because of the games I thought 340 00:16:40,320 --> 00:16:43,440 Speaker 2: I would make on property, but mainly because of the 341 00:16:43,440 --> 00:16:46,800 Speaker 2: lifestyle aspects, financial security. I didn't want to have to 342 00:16:46,960 --> 00:16:50,800 Speaker 2: report and deal to a landlord, deal with rent rises. 343 00:16:50,920 --> 00:16:52,880 Speaker 2: I just wanted to be in control of my own 344 00:16:52,920 --> 00:16:55,920 Speaker 2: finances where I lived. That was really important, coming home 345 00:16:56,280 --> 00:16:58,680 Speaker 2: every day to something was mine. Orbit the bank Hon's 346 00:16:58,680 --> 00:17:02,960 Speaker 2: part of it, but mine. To this discussion, Whereas some people, 347 00:17:03,080 --> 00:17:05,360 Speaker 2: and a very valid argument, they feel a different way. 348 00:17:05,440 --> 00:17:08,359 Speaker 2: They don't want the loan from a bank. They rather 349 00:17:08,600 --> 00:17:11,120 Speaker 2: have that financial freedom to be able to move around 350 00:17:11,440 --> 00:17:14,159 Speaker 2: place to place, not be burdened by that mortgage. So 351 00:17:14,560 --> 00:17:16,639 Speaker 2: when it comes to is it better to focus on 352 00:17:16,760 --> 00:17:20,600 Speaker 2: superversus a home, the consideration is there you do have 353 00:17:20,680 --> 00:17:21,200 Speaker 2: to take out. 354 00:17:21,119 --> 00:17:22,640 Speaker 3: A mortgage, and if you live in. 355 00:17:22,560 --> 00:17:25,159 Speaker 2: Sydney, Melbourne, Brisbane, Perth Adelaide, you're going to have to 356 00:17:25,200 --> 00:17:28,160 Speaker 2: take out a pretty big mortgage to buy a property. 357 00:17:28,359 --> 00:17:31,480 Speaker 2: And if your financial situation changes, you lose your job, 358 00:17:31,640 --> 00:17:33,320 Speaker 2: you could go into mortgage distress and you may have 359 00:17:33,320 --> 00:17:35,800 Speaker 2: to sell the property. If interest rates go up like 360 00:17:35,840 --> 00:17:37,600 Speaker 2: they did earlier this month, and they're likely to go 361 00:17:37,680 --> 00:17:40,400 Speaker 2: up again by July and maybe one more by December, 362 00:17:40,800 --> 00:17:43,399 Speaker 2: you could go into financial distress. And so there are 363 00:17:43,600 --> 00:17:46,280 Speaker 2: times where owning a property can put you into a 364 00:17:46,400 --> 00:17:49,399 Speaker 2: really bad financial situation and a bit of a pickle 365 00:17:49,800 --> 00:17:52,680 Speaker 2: because of that size of that loan that you have there. 366 00:17:52,800 --> 00:17:54,399 Speaker 2: So it's not black and white. You do need to 367 00:17:54,400 --> 00:17:56,879 Speaker 2: be able to cope with potential stress, particularly in the 368 00:17:56,960 --> 00:17:59,520 Speaker 2: earlier years when your mortgage is higher, when you just 369 00:17:59,520 --> 00:18:01,560 Speaker 2: bought that property and be able to be comfortable to 370 00:18:01,600 --> 00:18:04,320 Speaker 2: deal with that versus the prize of having more money 371 00:18:04,400 --> 00:18:06,520 Speaker 2: on a cashway brisis because you're renting and then dumping 372 00:18:06,560 --> 00:18:08,000 Speaker 2: that money into Super. 373 00:18:08,160 --> 00:18:10,159 Speaker 1: Okay, it can take a short break, and what I 374 00:18:10,200 --> 00:18:12,160 Speaker 1: want to do in the second half is develop this. Say, 375 00:18:12,200 --> 00:18:15,919 Speaker 1: if it's the case dollar for dollar, that money is 376 00:18:15,960 --> 00:18:18,280 Speaker 1: better going into the family home than Super. If you 377 00:18:18,320 --> 00:18:20,560 Speaker 1: agree with that, let's see what it would mean to 378 00:18:20,640 --> 00:18:22,159 Speaker 1: you as an investor. What would it mean in day 379 00:18:22,200 --> 00:18:33,280 Speaker 1: to day? Okay, back in a moment. Hello, Welcome back 380 00:18:33,280 --> 00:18:36,240 Speaker 1: to The Australian's Money Puzzle podcast. I'm James Kirby. Welcome 381 00:18:36,280 --> 00:18:40,240 Speaker 1: aboard to the second part of this show. James Girard. 382 00:18:40,359 --> 00:18:42,679 Speaker 1: Two James is here. The one with the Irish accent 383 00:18:42,720 --> 00:18:45,080 Speaker 1: is Kirby. The one with the Australian accent is Gerard. 384 00:18:45,520 --> 00:18:50,760 Speaker 1: James g two things. Okay, So if we take it 385 00:18:51,359 --> 00:18:54,560 Speaker 1: that the system is very biased against the person who rents, 386 00:18:54,800 --> 00:18:56,760 Speaker 1: I didn't even the reason. I didn't even go into 387 00:18:56,800 --> 00:18:58,560 Speaker 1: the obvious. I was trying to pick up the things 388 00:18:58,560 --> 00:19:00,960 Speaker 1: that we could were tangibly able to prove as opposed 389 00:19:01,000 --> 00:19:03,600 Speaker 1: to the stuff that's more intangible, like what's the price 390 00:19:03,640 --> 00:19:05,800 Speaker 1: of security? I mean, what's that you talk about the 391 00:19:05,800 --> 00:19:08,040 Speaker 1: pressure of having a mortgage. What's the pressure of having 392 00:19:08,320 --> 00:19:10,399 Speaker 1: to find a new place to rent If you're in 393 00:19:10,440 --> 00:19:13,960 Speaker 1: your fifties and there's a parental vacancy rate of you know, 394 00:19:14,000 --> 00:19:16,720 Speaker 1: one and a half percent, and you know that the 395 00:19:16,800 --> 00:19:20,040 Speaker 1: rent costs are way out of line compared to the 396 00:19:20,040 --> 00:19:23,919 Speaker 1: prices even now. So as thing that I think is 397 00:19:23,960 --> 00:19:28,159 Speaker 1: always there. But for someone let's take two scenarios. The 398 00:19:28,200 --> 00:19:31,640 Speaker 1: person who's halfway through paying off a mortgage and they 399 00:19:31,720 --> 00:19:38,840 Speaker 1: similarly have super, I would say that the superannuation guarantee, 400 00:19:38,880 --> 00:19:42,080 Speaker 1: the compulsory twelve percent, is high enough, and I don't 401 00:19:42,080 --> 00:19:45,080 Speaker 1: think you need to voluntarily contribute anymore if you've got 402 00:19:45,119 --> 00:19:47,440 Speaker 1: a mortgage sitting there that you need to pay off. 403 00:19:47,440 --> 00:19:49,520 Speaker 1: Because if you get to that point of home ownership, 404 00:19:49,680 --> 00:19:51,640 Speaker 1: you kind of hit that sort of blue sky that's 405 00:19:51,640 --> 00:19:57,080 Speaker 1: built within the system, which is so pro homeowner. What 406 00:19:57,080 --> 00:19:59,439 Speaker 1: would you say to someone who's sitting across from you, 407 00:20:00,600 --> 00:20:03,399 Speaker 1: seeing I'm fifty five and I could go either way, 408 00:20:03,640 --> 00:20:04,480 Speaker 1: what should I do? 409 00:20:06,800 --> 00:20:10,360 Speaker 2: I've had this conversation a lot, and the main consideration 410 00:20:10,760 --> 00:20:12,040 Speaker 2: is what's the interest rate? 411 00:20:12,200 --> 00:20:12,800 Speaker 3: Of the day. 412 00:20:13,000 --> 00:20:15,360 Speaker 2: If we go back to COVID, when you could pick 413 00:20:15,400 --> 00:20:19,560 Speaker 2: up loans at two percent variable interest rate, there's not 414 00:20:19,640 --> 00:20:22,359 Speaker 2: much benefit in pain making extra repayments on your mortgage 415 00:20:22,400 --> 00:20:25,080 Speaker 2: because you're just saving two percent. So why not maybe 416 00:20:25,080 --> 00:20:28,119 Speaker 2: consider putting a bit more into superinnuation, particularly if you 417 00:20:28,160 --> 00:20:30,840 Speaker 2: can do it with those pre tax super contributions and 418 00:20:30,920 --> 00:20:34,360 Speaker 2: claim a tax deduction on it. Whereas today, as interest 419 00:20:34,440 --> 00:20:37,920 Speaker 2: rates are increasing and the average homelan rate maybe six 420 00:20:37,960 --> 00:20:39,919 Speaker 2: and a half percent in the next twelve months, then 421 00:20:39,960 --> 00:20:43,000 Speaker 2: there's more of an argument to make those extra mortgage repayments, 422 00:20:43,000 --> 00:20:46,200 Speaker 2: and particularly if you're nearing retirement in your fifties, because 423 00:20:46,400 --> 00:20:48,320 Speaker 2: you want that certainty. I want to lock in that 424 00:20:48,520 --> 00:20:51,000 Speaker 2: guarantee six and a half percent return by paying down 425 00:20:51,040 --> 00:20:55,160 Speaker 2: my mortgage. But I would acknowledge that paying your mortgage 426 00:20:55,240 --> 00:20:58,240 Speaker 2: is with after tax dollars. So if you're earning a 427 00:20:58,280 --> 00:21:01,680 Speaker 2: decent employment income, you can lose almost half of every 428 00:21:01,720 --> 00:21:04,680 Speaker 2: dollar that you were earning in tax, and that money 429 00:21:04,720 --> 00:21:06,960 Speaker 2: left over is all you have to make those mortgage repayments. 430 00:21:07,000 --> 00:21:09,439 Speaker 2: Whereas it just been an a devil's advocate with this. 431 00:21:09,840 --> 00:21:13,840 Speaker 2: An alternative strategy is to go all right I'm going 432 00:21:13,880 --> 00:21:16,720 Speaker 2: to I like property, but I like renting where I 433 00:21:16,760 --> 00:21:18,600 Speaker 2: live as well. So what you could do in theory 434 00:21:18,840 --> 00:21:21,200 Speaker 2: is set up a self managed super fund. You could 435 00:21:21,200 --> 00:21:24,640 Speaker 2: buy property inside of your superinnuation fund and you could 436 00:21:24,640 --> 00:21:27,200 Speaker 2: borrow up to seventy percent of the purchase price inside 437 00:21:27,200 --> 00:21:29,840 Speaker 2: a super to buy that property, and you could focus 438 00:21:29,880 --> 00:21:32,480 Speaker 2: on mortgage repayments of that property in SUPER. And that's 439 00:21:32,520 --> 00:21:35,080 Speaker 2: an investment property, to be very clear. You could focus 440 00:21:35,119 --> 00:21:37,560 Speaker 2: your cash flow to make repayments on that investment property 441 00:21:37,600 --> 00:21:41,000 Speaker 2: in SUPER by tax, effectively pushing part of your wage 442 00:21:41,080 --> 00:21:44,639 Speaker 2: into SUPER. And when you turn sixty and you retire, 443 00:21:45,000 --> 00:21:47,040 Speaker 2: you can sell that investment property in SUPER and not 444 00:21:47,080 --> 00:21:49,879 Speaker 2: pay any capital gains tax. So that's the same situation 445 00:21:50,119 --> 00:21:53,360 Speaker 2: as you owning your home personally no tax. So there 446 00:21:53,400 --> 00:21:55,679 Speaker 2: is a way, too synthetical to create a strategy to 447 00:21:55,920 --> 00:21:57,920 Speaker 2: have no tax on property in super as well. 448 00:21:58,000 --> 00:22:01,600 Speaker 1: It's a way to make the invent in residential property 449 00:22:01,760 --> 00:22:06,280 Speaker 1: for you tax deductible. Correct, except what he's supposed to 450 00:22:06,320 --> 00:22:08,280 Speaker 1: do while you're doing that. 451 00:22:09,920 --> 00:22:10,200 Speaker 3: You live. 452 00:22:10,480 --> 00:22:14,960 Speaker 1: Yeah, okay, but that's that's a very valid strategy and 453 00:22:15,080 --> 00:22:17,159 Speaker 1: may suit some people, especially people I suppose who know 454 00:22:17,200 --> 00:22:18,960 Speaker 1: they're going to move around a lot, or don't know 455 00:22:19,000 --> 00:22:23,320 Speaker 1: where they want to live, and the realities of this 456 00:22:23,359 --> 00:22:25,720 Speaker 1: sort of thing. You know, are you in a couple. 457 00:22:25,960 --> 00:22:27,399 Speaker 1: Is that couple going to be you know, is that 458 00:22:27,440 --> 00:22:29,320 Speaker 1: couple going to be the Is it going to last 459 00:22:29,359 --> 00:22:30,840 Speaker 1: for ten years? It's going to last the rest of 460 00:22:30,840 --> 00:22:34,479 Speaker 1: your life. It's the job you have in Melbourne, you 461 00:22:34,520 --> 00:22:36,919 Speaker 1: know the job you're going to have next year. Do 462 00:22:36,960 --> 00:22:38,920 Speaker 1: you want to live overseas for a while. I'm leading 463 00:22:38,960 --> 00:22:41,720 Speaker 1: to when someone's younger looking at this. I was having 464 00:22:41,880 --> 00:22:43,880 Speaker 1: a conversation with my own daughter recently. You're talking about 465 00:22:43,880 --> 00:22:47,439 Speaker 1: buying a house, just thinking about it theoretically, and she 466 00:22:48,160 --> 00:22:50,960 Speaker 1: started talking about voluntary super and how her super was 467 00:22:50,960 --> 00:22:54,960 Speaker 1: behind others, and I was saying, you know, don't worry 468 00:22:55,040 --> 00:22:58,000 Speaker 1: about your super in your late twenties. If you've got 469 00:22:58,040 --> 00:23:01,160 Speaker 1: a compulsory you have to put trust sent in compulsory 470 00:23:01,560 --> 00:23:04,280 Speaker 1: and house prices are raising around you, I think the 471 00:23:04,400 --> 00:23:07,240 Speaker 1: priority should be to get the dollars in there. 472 00:23:07,600 --> 00:23:07,760 Speaker 3: Thing. 473 00:23:08,000 --> 00:23:09,480 Speaker 1: One thing I wanted to want to put you is 474 00:23:10,640 --> 00:23:14,879 Speaker 1: if this is the case, James, then where do you 475 00:23:14,880 --> 00:23:19,160 Speaker 1: stand on allow allowing people to use their superfer home deposits, 476 00:23:19,200 --> 00:23:23,760 Speaker 1: which is a Liberal Party policy, and specifically one from 477 00:23:23,800 --> 00:23:26,720 Speaker 1: Tim Winson, who we're ninety nine percent sure is about 478 00:23:26,760 --> 00:23:30,440 Speaker 1: to be announced as shadow treasure in the new Tailor 479 00:23:31,320 --> 00:23:32,360 Speaker 1: Coalition cabinet. 480 00:23:33,960 --> 00:23:37,240 Speaker 2: I think it's great and I reflect on personal experience 481 00:23:37,240 --> 00:23:39,840 Speaker 2: when I bought that to bidroom apartment in the Lowe 482 00:23:39,880 --> 00:23:42,600 Speaker 2: Now shore of my wife for now early twenties. We 483 00:23:42,920 --> 00:23:45,280 Speaker 2: borrowed one hundred and three percent. Remember back then when 484 00:23:45,320 --> 00:23:47,520 Speaker 2: you could borrow more than the purchase price. Yes, so 485 00:23:48,720 --> 00:23:50,679 Speaker 2: that was because the banking system allowed us to do that, 486 00:23:50,760 --> 00:23:54,119 Speaker 2: and the regulations have tightened up. But similarly to that 487 00:23:54,160 --> 00:23:57,800 Speaker 2: today would be to access superinnuation, and we would have 488 00:23:57,840 --> 00:23:59,679 Speaker 2: been delayed getting into the property market. 489 00:23:59,760 --> 00:24:01,159 Speaker 3: And I don't feel I would have. 490 00:24:01,160 --> 00:24:02,800 Speaker 2: Been in the same position to be able to buy 491 00:24:03,160 --> 00:24:04,760 Speaker 2: the home that I wanted to at the point of 492 00:24:04,800 --> 00:24:06,480 Speaker 2: life when I did if I wasn't able to get 493 00:24:06,520 --> 00:24:09,200 Speaker 2: into the property market as early as possible. So the 494 00:24:09,240 --> 00:24:11,439 Speaker 2: way that I think about it is that superinnuation is 495 00:24:11,480 --> 00:24:15,040 Speaker 2: therefore retirement. But a people have a long life and 496 00:24:15,040 --> 00:24:18,000 Speaker 2: if they're on their twenties, their focus if they want 497 00:24:18,240 --> 00:24:21,240 Speaker 2: home ownership should be to buy a home. Retirement's later, 498 00:24:21,280 --> 00:24:23,720 Speaker 2: home ownership's first, So if you need to dip into 499 00:24:23,720 --> 00:24:26,399 Speaker 2: that pot for retirement to be able to achieve that 500 00:24:26,480 --> 00:24:27,920 Speaker 2: earlier goal of home ownership. 501 00:24:28,119 --> 00:24:29,679 Speaker 3: I think that's a fantastic thing to do. 502 00:24:29,800 --> 00:24:32,800 Speaker 2: But of course the critics of this approach would say, well, 503 00:24:32,800 --> 00:24:35,520 Speaker 2: people will have less SUPER down the track. You just 504 00:24:35,520 --> 00:24:38,080 Speaker 2: need to be very disciplined, which I would argue most 505 00:24:38,080 --> 00:24:40,160 Speaker 2: people wouldn't be. But you need to be disciplined to go, well, 506 00:24:40,160 --> 00:24:42,800 Speaker 2: I took that money from SUPER, I bought the property. 507 00:24:43,280 --> 00:24:45,640 Speaker 2: Now I need to work hard to sort of replenish 508 00:24:45,680 --> 00:24:47,880 Speaker 2: that again and put that money back into SUPER over 509 00:24:47,880 --> 00:24:48,360 Speaker 2: and say like. 510 00:24:48,280 --> 00:24:49,960 Speaker 3: A ten year period, yes. 511 00:24:49,760 --> 00:24:53,199 Speaker 1: To achieve this comfortable retirement figure, which does assume, as 512 00:24:53,280 --> 00:24:55,200 Speaker 1: I say, they always assume you own your own house. 513 00:24:55,200 --> 00:24:58,080 Speaker 1: What about the person who says, policy wise, this is 514 00:24:58,119 --> 00:25:01,880 Speaker 1: all wrong. SUPER policy should be for SUPER and home 515 00:25:01,920 --> 00:25:04,680 Speaker 1: ownership policies should be for whole ownership, and you should 516 00:25:04,680 --> 00:25:07,159 Speaker 1: never go near SUPER that they should never touch it. 517 00:25:07,240 --> 00:25:09,679 Speaker 1: What do you think of that largericalow argument? 518 00:25:10,640 --> 00:25:13,359 Speaker 2: Yeah, I get it, And that's the reason why twelve 519 00:25:13,400 --> 00:25:18,240 Speaker 2: percent of our salaries is put into Superannuation is therefore retirement. 520 00:25:18,320 --> 00:25:19,920 Speaker 3: So it's totally valid. 521 00:25:20,000 --> 00:25:22,960 Speaker 2: And the problem is what I alluded to that people 522 00:25:22,960 --> 00:25:25,680 Speaker 2: if they touch their super, they're sure they'll buy a property, 523 00:25:25,680 --> 00:25:27,680 Speaker 2: but they're not going to replace it again. 524 00:25:27,760 --> 00:25:29,760 Speaker 3: So you're going to end up with more people in 525 00:25:29,840 --> 00:25:30,520 Speaker 3: retirement with. 526 00:25:30,520 --> 00:25:33,159 Speaker 2: Low superbalancers who were relying on the government perse for 527 00:25:33,200 --> 00:25:35,520 Speaker 2: the age pension, who are living in these million dollar 528 00:25:35,560 --> 00:25:38,400 Speaker 2: homes that they bought because they actually said super which 529 00:25:38,440 --> 00:25:40,560 Speaker 2: is exempt from the CENTERINGK tests as well. 530 00:25:40,600 --> 00:25:42,119 Speaker 3: So I can understand the other side. 531 00:25:42,160 --> 00:25:45,720 Speaker 2: But me having gone through it myself and the difficulties 532 00:25:45,760 --> 00:25:47,959 Speaker 2: have been able to buy a property in my twenties, 533 00:25:48,000 --> 00:25:50,199 Speaker 2: and the property markets jumped substantially since I was in 534 00:25:50,200 --> 00:25:53,240 Speaker 2: my twenties, I can only imagine the difficulty for people 535 00:25:53,280 --> 00:25:55,760 Speaker 2: today in their twenties been able to buy. I see 536 00:25:55,760 --> 00:25:57,840 Speaker 2: a lot of younger people come through my doors, and 537 00:25:58,480 --> 00:26:02,720 Speaker 2: without the support ofily with lions and gifts, it's really 538 00:26:02,760 --> 00:26:05,080 Speaker 2: hard for younger people to get that deposit together to 539 00:26:05,119 --> 00:26:07,399 Speaker 2: crack into the market. So although there are some government 540 00:26:07,400 --> 00:26:10,600 Speaker 2: schames to help with that, I'm very supportive of jumping 541 00:26:10,600 --> 00:26:12,680 Speaker 2: into your souper to help boost that deposit. 542 00:26:12,800 --> 00:26:16,359 Speaker 1: Yeah, I'm supportive of it too, but as I say reluctantly, 543 00:26:16,640 --> 00:26:19,000 Speaker 1: but it's factional. When you understand the tax system, folks. 544 00:26:19,440 --> 00:26:21,520 Speaker 1: I don't think there's any other answer. Okay, we'll take 545 00:26:21,560 --> 00:26:23,520 Speaker 1: short break. We've got some great questions lined up. James 546 00:26:23,520 --> 00:26:24,159 Speaker 1: is going to stick. 547 00:26:24,000 --> 00:26:35,240 Speaker 4: Around and answer them. 548 00:26:35,280 --> 00:26:38,000 Speaker 1: Hello, Welcome back to The Australian's Money Puzzled podcast. I'm 549 00:26:38,080 --> 00:26:41,639 Speaker 1: James Kirby and we're going to ask James Gerard some questions. 550 00:26:41,720 --> 00:26:43,640 Speaker 1: These are listener questions that come in all the time. 551 00:26:43,680 --> 00:26:46,200 Speaker 1: I collect them depending on the guests who I've got, 552 00:26:46,640 --> 00:26:50,879 Speaker 1: I will sort of curate them for their appropriate person. 553 00:26:51,000 --> 00:26:53,560 Speaker 1: James is definitely the appropriate person for some of these questions, 554 00:26:53,560 --> 00:26:57,399 Speaker 1: particularly the one about electric cars this pet subject. Okay, 555 00:26:58,280 --> 00:27:02,360 Speaker 1: from Lee and E. My question, is there a straightforward 556 00:27:03,040 --> 00:27:05,760 Speaker 1: way for a retiree super fond member to conduct a 557 00:27:05,800 --> 00:27:10,160 Speaker 1: recontribution strategy? Why maintaining the tax free status on earnings? 558 00:27:10,200 --> 00:27:14,040 Speaker 1: I hope this catches your interest to offer some solutions. Okay, 559 00:27:14,359 --> 00:27:16,000 Speaker 1: I know what he's saying, but Jims, could you kind 560 00:27:16,000 --> 00:27:18,399 Speaker 1: of paraphrase that question? What's he really asking there? 561 00:27:19,480 --> 00:27:23,040 Speaker 2: Of course, James, So the recontribution strategy is where you're 562 00:27:23,080 --> 00:27:26,439 Speaker 2: pulling a lump sum of money out of the superannuation 563 00:27:26,680 --> 00:27:30,480 Speaker 2: environment and putting it back in again, so it's very circular. 564 00:27:30,640 --> 00:27:32,959 Speaker 2: The end balance is the same, but the difference is 565 00:27:33,000 --> 00:27:37,720 Speaker 2: that you've altered the tax components of your superinnuation account. 566 00:27:37,920 --> 00:27:40,240 Speaker 2: So you're pulling money out, but that would be a 567 00:27:40,280 --> 00:27:43,160 Speaker 2: mix of tax free and taxable component for most people, 568 00:27:43,240 --> 00:27:45,240 Speaker 2: and when you put it back in again, it's all 569 00:27:45,320 --> 00:27:49,199 Speaker 2: tax free. No benefit for the retiree, but benefit for 570 00:27:49,359 --> 00:27:53,160 Speaker 2: the adult children of the retiree after the retiree passes away, 571 00:27:53,280 --> 00:27:57,160 Speaker 2: because there is seventeen percent tax on the taxable component 572 00:27:57,200 --> 00:27:59,880 Speaker 2: of superinnuation when it's passed through to what's classified as 573 00:28:00,200 --> 00:28:00,960 Speaker 2: non dependence. 574 00:28:01,560 --> 00:28:05,360 Speaker 1: So his specific question is he's in a big fund. Obviously, 575 00:28:05,880 --> 00:28:09,480 Speaker 1: can he do that? Ridiculous by the way, ridiculous circular 576 00:28:09,520 --> 00:28:11,879 Speaker 1: merry go round thing. But it makes sense that you 577 00:28:11,920 --> 00:28:13,439 Speaker 1: can take money out of super, believe it or not 578 00:28:13,600 --> 00:28:15,680 Speaker 1: and put it back in. It goes back in this 579 00:28:15,840 --> 00:28:20,439 Speaker 1: tax to doctoral contribution, and that means in the distant future, 580 00:28:21,359 --> 00:28:24,080 Speaker 1: when you die, your adult dependence, when they inherit that 581 00:28:24,160 --> 00:28:26,000 Speaker 1: super will pay less tax on it. That's what it's 582 00:28:26,040 --> 00:28:27,840 Speaker 1: all about. He's asking can he do it in a 583 00:28:27,880 --> 00:28:30,320 Speaker 1: big fund? Can he can? 584 00:28:30,760 --> 00:28:31,080 Speaker 3: He can? 585 00:28:31,200 --> 00:28:34,120 Speaker 2: But practically it's very messy. So Let's just assume that 586 00:28:34,400 --> 00:28:36,520 Speaker 2: lee and as you say, all the lee's out there, 587 00:28:36,680 --> 00:28:39,080 Speaker 2: he's retired. Let's just say he's got a million dollars 588 00:28:39,080 --> 00:28:42,000 Speaker 2: in his account based pension, that tax free retirement fund. 589 00:28:42,360 --> 00:28:46,240 Speaker 2: He pulls two hundred thousand dollars out, and he wants 590 00:28:46,360 --> 00:28:47,160 Speaker 2: to put that. 591 00:28:47,120 --> 00:28:47,640 Speaker 3: Back in again. 592 00:28:47,720 --> 00:28:51,120 Speaker 2: Under this recontribution strategy, given that he's only got his 593 00:28:51,160 --> 00:28:53,520 Speaker 2: account based pension, he can't put the two hundred thousand 594 00:28:53,520 --> 00:28:56,320 Speaker 2: dollars back into that same pension that he took the 595 00:28:56,320 --> 00:28:58,200 Speaker 2: money out from. He has to set up a super 596 00:28:58,200 --> 00:29:01,320 Speaker 2: accumulation account and then put in two hundred thousand dollars 597 00:29:01,360 --> 00:29:05,080 Speaker 2: into that super accumulation account. And then he can't add 598 00:29:05,080 --> 00:29:07,200 Speaker 2: that two hundred thousand dollars to the pension account because 599 00:29:07,280 --> 00:29:08,640 Speaker 2: I can't add to a pension. So he has to 600 00:29:08,680 --> 00:29:12,120 Speaker 2: do what's called a commutation of his eight hundred thousand 601 00:29:12,120 --> 00:29:15,080 Speaker 2: dollars remaining pension, so that he's got these two hundred 602 00:29:15,080 --> 00:29:17,360 Speaker 2: thousand dollars fresh money in, he's got eight hundred thousand 603 00:29:17,360 --> 00:29:19,520 Speaker 2: dollars he's pulled back together, and then he needs to 604 00:29:19,520 --> 00:29:21,160 Speaker 2: start a brand new pension account. 605 00:29:21,240 --> 00:29:22,720 Speaker 3: So in this whole. 606 00:29:22,480 --> 00:29:26,040 Speaker 2: Silly process, there's three different super accounts involved. But unfortunately, 607 00:29:26,400 --> 00:29:29,000 Speaker 2: if you want to do that recontribution strategy, they're the 608 00:29:29,000 --> 00:29:30,520 Speaker 2: hoops that you have to jump through. There's no other 609 00:29:30,520 --> 00:29:31,200 Speaker 2: way around it. 610 00:29:31,800 --> 00:29:34,640 Speaker 1: I wonder in a big super fund, and I can 611 00:29:34,720 --> 00:29:37,960 Speaker 1: name any of them, it doesn't matter. I just wonder 612 00:29:38,040 --> 00:29:39,800 Speaker 1: how you'd be getting on on the phone to your 613 00:29:39,880 --> 00:29:41,520 Speaker 1: cold center when you ring up, and so you want 614 00:29:41,520 --> 00:29:43,880 Speaker 1: to do that, I shudder to think what that would 615 00:29:43,880 --> 00:29:45,959 Speaker 1: be like easier with the set amounted super fund. I 616 00:29:46,000 --> 00:29:49,120 Speaker 1: expect that it's enow to promote them over the other book. 617 00:29:49,200 --> 00:29:53,080 Speaker 1: It's a practical issue, folks. So you can lee question 618 00:29:53,200 --> 00:29:55,280 Speaker 1: is you were how you would approach them. You'd have 619 00:29:55,320 --> 00:29:57,320 Speaker 1: to basically tell them the questions and the answers. And 620 00:29:57,360 --> 00:29:59,880 Speaker 1: I expect as you've stay, but you should be able 621 00:29:59,920 --> 00:30:01,440 Speaker 1: to who. Of course you should be able to because 622 00:30:01,440 --> 00:30:04,400 Speaker 1: you can as an SMSF. And if you were had 623 00:30:04,440 --> 00:30:07,000 Speaker 1: the discipline to do it over a long term, and 624 00:30:07,040 --> 00:30:09,760 Speaker 1: you did it systematically, year after year after year, your 625 00:30:09,800 --> 00:30:12,800 Speaker 1: adult children dependents the day they do get your super 626 00:30:12,840 --> 00:30:15,000 Speaker 1: as an inheritance, would pay much less tax because they 627 00:30:15,000 --> 00:30:17,280 Speaker 1: pay seventeen percent. You know which is they pay seventeen 628 00:30:17,280 --> 00:30:19,880 Speaker 1: percent if they inherit your super for most people most 629 00:30:19,960 --> 00:30:24,160 Speaker 1: of the time, and it is slowly becoming obvious to 630 00:30:24,160 --> 00:30:26,360 Speaker 1: the wider public that sits there. People used to think 631 00:30:26,360 --> 00:30:28,680 Speaker 1: that there's no inheritance tax in Australia, but hit this 632 00:30:28,920 --> 00:30:31,600 Speaker 1: one all right. And by the way, these answers are 633 00:30:31,720 --> 00:30:33,000 Speaker 1: information only, not advice. 634 00:30:33,120 --> 00:30:33,760 Speaker 4: As you know. 635 00:30:34,120 --> 00:30:39,560 Speaker 1: There's two questions from Car with the seed. I know 636 00:30:39,560 --> 00:30:42,120 Speaker 1: you're just mad keen to do the electric vehicle one, 637 00:30:42,360 --> 00:30:45,120 Speaker 1: but let's do the first one. He says that he's 638 00:30:45,160 --> 00:30:49,840 Speaker 1: got two questions. I recently instolled a solar array whatever 639 00:30:49,880 --> 00:30:52,720 Speaker 1: that is, with a battery. I estimate I should be 640 00:30:52,720 --> 00:30:54,960 Speaker 1: offgrade for about ninety five percent of the year. I'm 641 00:30:55,000 --> 00:30:58,440 Speaker 1: planning to join a virtual power plant to sell excess energy. 642 00:30:58,520 --> 00:31:01,320 Speaker 1: How ambitious all this is. Do I need to declare 643 00:31:01,360 --> 00:31:03,920 Speaker 1: this income to the AT or tax on it? I'll 644 00:31:03,960 --> 00:31:05,960 Speaker 1: tell you what, Car, I don't know what the answer is, 645 00:31:06,000 --> 00:31:09,720 Speaker 1: but if the ATO can smell income anywhere, I bet 646 00:31:09,720 --> 00:31:12,160 Speaker 1: the answer is yes. Yes. James Gerard, what is the 647 00:31:12,280 --> 00:31:14,280 Speaker 1: form an answer to current's question? 648 00:31:15,080 --> 00:31:18,520 Speaker 2: I read this and panic because I'm going to have 649 00:31:18,920 --> 00:31:21,720 Speaker 2: a system upgraded at by play so I'm be twenty killer. 650 00:31:21,760 --> 00:31:24,760 Speaker 2: Wat's a solo and fifty killer whateur battery, so even 651 00:31:24,760 --> 00:31:27,440 Speaker 2: bigger than what Karl has. And I didn't actually think 652 00:31:27,440 --> 00:31:31,400 Speaker 2: about the tax consideration because I'm going to know, I'm 653 00:31:31,480 --> 00:31:34,840 Speaker 2: not really excited by having this virtual power plan being 654 00:31:34,840 --> 00:31:36,480 Speaker 2: off the grid making money. 655 00:31:36,360 --> 00:31:39,400 Speaker 3: By selling my electricity back again. 656 00:31:39,560 --> 00:31:42,760 Speaker 2: So in a panic, rang my account and he said, look, 657 00:31:42,760 --> 00:31:45,040 Speaker 2: if you're a business, yes you'll have to declare it. 658 00:31:45,240 --> 00:31:47,480 Speaker 2: But if you're a homeowner and you're not in the 659 00:31:47,520 --> 00:31:49,760 Speaker 2: business and you don't run this on a commercial scale 660 00:31:49,800 --> 00:31:52,960 Speaker 2: of selling electricity back to the grid, well then it's 661 00:31:53,000 --> 00:31:54,080 Speaker 2: not taxable income. 662 00:31:54,080 --> 00:31:57,040 Speaker 1: Okay, all right, I bet the ATO will find a 663 00:31:57,040 --> 00:31:59,960 Speaker 1: way to classify it was a little walking power play. 664 00:32:00,560 --> 00:32:03,600 Speaker 1: Get some money off you sooner or later, okay. Second 665 00:32:03,640 --> 00:32:06,280 Speaker 1: part of Carl's very good questions. I've been reading about 666 00:32:06,280 --> 00:32:09,000 Speaker 1: lithium batteries, which are used in most cars, and I'm 667 00:32:09,040 --> 00:32:11,800 Speaker 1: surprised to learn that they get that there is a 668 00:32:11,920 --> 00:32:14,560 Speaker 1: gel type. I understand that solid state batteries are coming 669 00:32:14,600 --> 00:32:17,080 Speaker 1: online in the next couple of years. This is very 670 00:32:17,280 --> 00:32:19,960 Speaker 1: this is I'm myles, I have no chance on this stuff. 671 00:32:20,160 --> 00:32:22,120 Speaker 1: I can barely understand. When they lift the hood of 672 00:32:22,160 --> 00:32:24,840 Speaker 1: my car, I barely know where anything is. They apparently 673 00:32:24,920 --> 00:32:29,240 Speaker 1: last longer and faster. My question is, here's this question. 674 00:32:29,440 --> 00:32:32,880 Speaker 1: Is it worth buying an electric car now or would 675 00:32:32,880 --> 00:32:36,280 Speaker 1: it be better to wait for a context? I currently 676 00:32:36,320 --> 00:32:40,480 Speaker 1: have a cheap run around, Okay, Carl, I currently have 677 00:32:40,560 --> 00:32:42,800 Speaker 1: a petrol run around myself. And I have thought about 678 00:32:42,840 --> 00:32:45,720 Speaker 1: electric cars and I think you know, they're probably getting 679 00:32:45,720 --> 00:32:48,920 Speaker 1: better and better, and so the old ones are probably 680 00:32:48,920 --> 00:32:52,200 Speaker 1: getting worse and worse. And I think the pace of 681 00:32:53,280 --> 00:32:56,360 Speaker 1: technological invention there would tell you that the electric car 682 00:32:56,400 --> 00:32:58,440 Speaker 1: today is way better than the one three years ago, 683 00:32:58,440 --> 00:32:59,960 Speaker 1: when the one in three years time will be way better. 684 00:33:00,000 --> 00:33:02,920 Speaker 1: At what point do you jump in? What is the answer? 685 00:33:03,080 --> 00:33:07,520 Speaker 1: James Gerard car, electric vehicle driver, et cetera. 686 00:33:08,640 --> 00:33:11,320 Speaker 2: Correct with all of the above. I was an early adopter, 687 00:33:11,600 --> 00:33:15,040 Speaker 2: as you're aware. I jumped in twenty twenty two when 688 00:33:15,080 --> 00:33:18,600 Speaker 2: the government opened up that scheme to basically use a 689 00:33:18,640 --> 00:33:19,640 Speaker 2: pre tax income to. 690 00:33:19,640 --> 00:33:22,560 Speaker 1: Fund the police costs. 691 00:33:22,320 --> 00:33:22,560 Speaker 3: Exist. 692 00:33:23,160 --> 00:33:26,120 Speaker 1: It's fully tax deductible, basically if you do a put 693 00:33:26,120 --> 00:33:28,520 Speaker 1: simply anyway, yes, Carr, answer. 694 00:33:29,400 --> 00:33:31,960 Speaker 3: So no long bilk, no french maniphests tax. 695 00:33:32,080 --> 00:33:34,400 Speaker 2: It's great and I've kept an eye on the EV 696 00:33:34,520 --> 00:33:36,520 Speaker 2: markets and I've written about it for you, James and 697 00:33:36,520 --> 00:33:38,600 Speaker 2: The Australian in the WEL section a couple of times, 698 00:33:38,760 --> 00:33:41,160 Speaker 2: and I've looked at I looked at a couple of things. 699 00:33:41,200 --> 00:33:45,800 Speaker 2: One thing I looked at is total operating cost including depreciation. 700 00:33:46,040 --> 00:33:48,160 Speaker 2: Is it better to go for an ice S, which 701 00:33:48,200 --> 00:33:50,840 Speaker 2: is internal combustion engine. Is it better to go for 702 00:33:50,880 --> 00:33:52,880 Speaker 2: a hybrid or is it better to go for an 703 00:33:52,880 --> 00:33:57,120 Speaker 2: electric vehicle? And up until very recently, it's always been 704 00:33:57,200 --> 00:34:00,120 Speaker 2: the petrol engine car because it's the cheapest, so that 705 00:34:00,160 --> 00:34:03,560 Speaker 2: would cost you more on ongoing basis fuel. The depreciation 706 00:34:03,960 --> 00:34:07,200 Speaker 2: is much lower because you buy it for a lot cheaper. 707 00:34:07,640 --> 00:34:10,399 Speaker 2: But now these days you can buy evs for twenty 708 00:34:10,440 --> 00:34:13,680 Speaker 2: five thousand dollars drive away. Sure they're the little hatchback ones, 709 00:34:13,680 --> 00:34:16,400 Speaker 2: but a couple of years ago it was forty forty 710 00:34:16,400 --> 00:34:18,440 Speaker 2: five thousand dollars minimum. 711 00:34:18,640 --> 00:34:19,600 Speaker 3: They're all very deep. 712 00:34:19,880 --> 00:34:21,560 Speaker 2: You go back to the start of this, so ten 713 00:34:21,640 --> 00:34:23,520 Speaker 2: years ago when it was just Tesla's and they were 714 00:34:23,560 --> 00:34:26,279 Speaker 2: like one hundred thousand dollars. So the price has come 715 00:34:26,320 --> 00:34:29,680 Speaker 2: down substantially on the evs due to the influx of 716 00:34:29,760 --> 00:34:31,240 Speaker 2: Chinese manufacturers. 717 00:34:31,400 --> 00:34:32,920 Speaker 3: I see all these cars on the road these days, 718 00:34:32,920 --> 00:34:34,280 Speaker 3: and I don't recognize that the brand. 719 00:34:34,320 --> 00:34:36,480 Speaker 2: I remember as a kid there was only like five 720 00:34:36,680 --> 00:34:39,200 Speaker 2: or so car companies. Only everything was these days is 721 00:34:39,440 --> 00:34:41,879 Speaker 2: all these cars going around with these and all these things. 722 00:34:42,800 --> 00:34:45,360 Speaker 1: If you don't recognize the brand, it's Chinese as a 723 00:34:45,400 --> 00:34:48,160 Speaker 1: general rule. But tell me that's true. Books tell me 724 00:34:48,400 --> 00:34:51,600 Speaker 1: about car's question should he weet? 725 00:34:52,360 --> 00:34:52,440 Speaker 3: Oh? 726 00:34:52,480 --> 00:34:53,279 Speaker 1: Should he buy now? 727 00:34:53,960 --> 00:34:54,839 Speaker 3: I think you should buy now. 728 00:34:54,960 --> 00:34:58,640 Speaker 2: Technology is at the point that the range, so how 729 00:34:58,640 --> 00:35:00,719 Speaker 2: far you can drive the sea info you need to recharge, 730 00:35:00,840 --> 00:35:01,680 Speaker 2: is very long. 731 00:35:01,719 --> 00:35:03,000 Speaker 3: It's come leaps and bounds. 732 00:35:03,000 --> 00:35:06,080 Speaker 2: So when I look at my twenty twenty two Volvo EV, 733 00:35:06,320 --> 00:35:08,640 Speaker 2: the range was about four hundred kilometers. If I have 734 00:35:08,719 --> 00:35:10,720 Speaker 2: to buy the equivalent model today, the range is probably 735 00:35:10,719 --> 00:35:13,720 Speaker 2: six hundred and fifty kilometers. So there's been significant gains 736 00:35:13,840 --> 00:35:17,560 Speaker 2: on the battery technology that the prices come down. Just 737 00:35:17,680 --> 00:35:20,920 Speaker 2: the technology inside the car, not just the battery itself, 738 00:35:20,960 --> 00:35:23,040 Speaker 2: but the ways that the car is just set up 739 00:35:23,239 --> 00:35:24,960 Speaker 2: is better as well. And I think it's at that 740 00:35:25,000 --> 00:35:27,920 Speaker 2: point where it's the computers, the PCs in the nineteen 741 00:35:27,960 --> 00:35:30,120 Speaker 2: nineties and the two thousands, that every year there'll be 742 00:35:30,120 --> 00:35:32,360 Speaker 2: a new Pentium that comes out with more ram but 743 00:35:32,760 --> 00:35:35,239 Speaker 2: it's got to a point where the next year was 744 00:35:35,280 --> 00:35:38,040 Speaker 2: only like slightly better than the year before that. And 745 00:35:38,120 --> 00:35:40,120 Speaker 2: I think we're starting to get to that point with 746 00:35:40,200 --> 00:35:42,839 Speaker 2: EVS where there will be more gains. But if you've 747 00:35:42,880 --> 00:35:45,120 Speaker 2: been interested and you need a new car, now's a 748 00:35:45,120 --> 00:35:45,600 Speaker 2: great time. 749 00:35:45,880 --> 00:35:50,080 Speaker 1: Okay. I like that. That's very interesting. I know that 750 00:35:50,160 --> 00:35:52,760 Speaker 1: you have taken the mantle basically of writing on the 751 00:35:52,800 --> 00:35:56,160 Speaker 1: evs far the web section. At one stage before you 752 00:35:56,239 --> 00:35:57,640 Speaker 1: came along, I used to write on them and I 753 00:35:57,719 --> 00:36:01,080 Speaker 1: met the grievous error on one one piece for The 754 00:36:01,080 --> 00:36:05,680 Speaker 1: Australian of getting into technical detail. And we had a 755 00:36:05,680 --> 00:36:07,680 Speaker 1: lot of comments. As you know, the readers of the 756 00:36:07,719 --> 00:36:10,960 Speaker 1: Australian sometimes a little bit skeptical about electrically cars and 757 00:36:11,080 --> 00:36:15,520 Speaker 1: I hadn't mentioned towing capacity and towing capacity, well, let 758 00:36:15,520 --> 00:36:18,399 Speaker 1: me tell you, folks outside the city fringe, you want 759 00:36:18,440 --> 00:36:20,719 Speaker 1: to know your towing capacity? And don't you dare ever 760 00:36:20,760 --> 00:36:23,880 Speaker 1: write about electric cars? How's the towing capacity on James? 761 00:36:24,160 --> 00:36:25,319 Speaker 1: Has that come along as well? 762 00:36:27,120 --> 00:36:27,640 Speaker 3: Not really? 763 00:36:28,400 --> 00:36:28,680 Speaker 1: I see. 764 00:36:28,719 --> 00:36:33,120 Speaker 2: If you're a metropolitan person who wants to tow jet Ski, 765 00:36:33,280 --> 00:36:36,439 Speaker 2: great EVS for you. But if you want to tell 766 00:36:36,480 --> 00:36:38,880 Speaker 2: anything above that, no, probably not an ev. 767 00:36:38,920 --> 00:36:42,560 Speaker 1: If you got electric jet ski yet, No, I don't know. 768 00:36:42,600 --> 00:36:44,000 Speaker 3: I've seen electric motorbikes around. 769 00:36:44,600 --> 00:36:47,040 Speaker 1: Yeah, maybe I think it's inevitable, but maybe they might 770 00:36:47,160 --> 00:36:50,680 Speaker 1: make as much noise. We'll see, Okay, terrific. Hey, thanks 771 00:36:50,800 --> 00:36:52,759 Speaker 1: very much James for talking to us today. That was 772 00:36:52,800 --> 00:36:55,000 Speaker 1: pretty good. We haven't done a show on this before 773 00:36:55,960 --> 00:36:58,319 Speaker 1: on the Core Nocean, and I think on Super, I 774 00:36:58,320 --> 00:37:02,360 Speaker 1: think people need to fully see to fully see the 775 00:37:02,400 --> 00:37:04,960 Speaker 1: tax situation on Super. I think it would inform a 776 00:37:04,960 --> 00:37:07,640 Speaker 1: lot of Feaver's opinions. Thanks James, your ard Financial Advisor 777 00:37:07,640 --> 00:37:09,200 Speaker 1: dot com dot au will talk to you again. 778 00:37:09,800 --> 00:37:12,320 Speaker 3: That's great. Thank you James, and thanks to Leah. 779 00:37:12,160 --> 00:37:14,359 Speaker 1: Samag Glue for producing today's show. Talk to you soon.