1 00:00:09,440 --> 00:00:12,640 Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm 2 00:00:12,760 --> 00:00:17,000 Speaker 1: James Kirby, the editor at The Australian, and welcome aboard everybody. Well, 3 00:00:17,040 --> 00:00:20,480 Speaker 1: I've had by public demand, you might say, we've had 4 00:00:20,720 --> 00:00:23,320 Speaker 1: lots of questions, and I know they've been banking up 5 00:00:23,320 --> 00:00:25,640 Speaker 1: and I know a lot of you have had questions 6 00:00:26,079 --> 00:00:28,800 Speaker 1: in the tank if you like for some time today, 7 00:00:28,840 --> 00:00:32,479 Speaker 1: we're going to do a special on readers questions and 8 00:00:32,560 --> 00:00:34,519 Speaker 1: I think you'll find it very interesting. We will go 9 00:00:34,560 --> 00:00:36,680 Speaker 1: off in all sorts of directions, so you won't have 10 00:00:36,760 --> 00:00:38,839 Speaker 1: a common theme if you like. There won't be much 11 00:00:38,840 --> 00:00:41,400 Speaker 1: in the way of structure or order that we normally have, 12 00:00:41,920 --> 00:00:44,680 Speaker 1: but we will actually bounce off a lot of really 13 00:00:44,720 --> 00:00:49,240 Speaker 1: interesting subjects. There are all questions from listeners, all types, 14 00:00:50,000 --> 00:00:54,120 Speaker 1: all real and genuine. I'd like to add, and who 15 00:00:54,440 --> 00:00:57,280 Speaker 1: will help me with these questions? Well, I mentioned to 16 00:00:57,360 --> 00:00:59,319 Speaker 1: you that I'm away for a week, so the next 17 00:00:59,400 --> 00:01:02,520 Speaker 1: two shows will be hosted by James Girard and he 18 00:01:02,600 --> 00:01:04,880 Speaker 1: is here to help me today. How are you, James Gerard? 19 00:01:05,200 --> 00:01:07,800 Speaker 2: I'm doing well. Good to be back again. Thanks James, 20 00:01:08,280 --> 00:01:08,959 Speaker 2: You're welcome. 21 00:01:09,040 --> 00:01:12,480 Speaker 1: James Gerard, a financial advisor dot com dot au here 22 00:01:12,520 --> 00:01:16,319 Speaker 1: with me. So on the other thing I'm going to do, James, 23 00:01:16,400 --> 00:01:19,399 Speaker 1: is as you know, i'm trained as an editor, I'm 24 00:01:19,440 --> 00:01:22,280 Speaker 1: a bit I'm a bit severe on the editing, as 25 00:01:22,360 --> 00:01:25,720 Speaker 1: you would probably know as a contributor to the paper. 26 00:01:26,000 --> 00:01:29,520 Speaker 1: But more than that, with the with the correspondence we 27 00:01:29,600 --> 00:01:32,840 Speaker 1: get and I do want to take the opportunity to 28 00:01:32,880 --> 00:01:35,959 Speaker 1: say thank you to everyone who writes in and if 29 00:01:36,000 --> 00:01:38,520 Speaker 1: you ever feel the urge to write a review on 30 00:01:39,240 --> 00:01:41,880 Speaker 1: your podcast app, I would really like that too. But 31 00:01:42,120 --> 00:01:45,039 Speaker 1: in editing, I keep the questions I demand if you 32 00:01:45,240 --> 00:01:47,440 Speaker 1: like that, questions are short, and people have got very 33 00:01:47,480 --> 00:01:49,760 Speaker 1: good at that. That's just in the interest of fairness 34 00:01:49,800 --> 00:01:52,480 Speaker 1: really that we can get more done. But also, James, 35 00:01:52,520 --> 00:01:57,920 Speaker 1: as an editor, I snip off endearments or things like 36 00:01:58,000 --> 00:01:59,560 Speaker 1: you know, I love the show or whatever, but I 37 00:01:59,560 --> 00:02:02,440 Speaker 1: think today we leave them in just to give people 38 00:02:02,440 --> 00:02:04,279 Speaker 1: a flavor here and there of some of the stuff 39 00:02:04,320 --> 00:02:09,000 Speaker 1: that people are saying. All right, so my first question, 40 00:02:09,080 --> 00:02:13,079 Speaker 1: and we'll read them alternately, James, and we'll take our 41 00:02:13,200 --> 00:02:16,359 Speaker 1: usual segments, but we'll try and do maybe three or 42 00:02:16,360 --> 00:02:20,040 Speaker 1: four in each segment. So the first question straight off, first, 43 00:02:20,040 --> 00:02:25,760 Speaker 1: Cab off the rank, folks is Yolanda Hiolanda. She says, 44 00:02:25,760 --> 00:02:30,280 Speaker 1: you mentioned a Super black spot, a zone where you 45 00:02:30,400 --> 00:02:32,800 Speaker 1: have too much or too little in Super. Are you 46 00:02:32,919 --> 00:02:37,400 Speaker 1: able to describe this in more detail and give a range? 47 00:02:38,840 --> 00:02:43,880 Speaker 1: Surely a very common range would be six six seven 48 00:02:43,960 --> 00:02:46,480 Speaker 1: to one point five million? What is the amount most 49 00:02:46,520 --> 00:02:48,880 Speaker 1: people with a full working life which SUPER will have 50 00:02:49,000 --> 00:02:53,639 Speaker 1: in superun retirement without making extra extra contributions. And if 51 00:02:53,639 --> 00:02:56,520 Speaker 1: you can't answer it, she says, can you point me 52 00:02:56,560 --> 00:02:59,640 Speaker 1: to someone who can hold on? Yolanda, we will make 53 00:02:59,639 --> 00:03:02,720 Speaker 1: a damn good job of answering this. I hope James 54 00:03:02,760 --> 00:03:05,800 Speaker 1: calls this is really funny. James as an advisor and 55 00:03:05,840 --> 00:03:10,680 Speaker 1: an optimist, cause it the sweet spot. He talks about 56 00:03:10,720 --> 00:03:13,639 Speaker 1: sweet spot and Super where you should be. I talk 57 00:03:13,680 --> 00:03:16,080 Speaker 1: about the black spot and Super where you shouldn't be. 58 00:03:16,440 --> 00:03:20,919 Speaker 1: That might tell you something about our distinct personalities. But anyway, 59 00:03:21,000 --> 00:03:25,000 Speaker 1: for what it's worth, here's the thing. And always remember, 60 00:03:25,080 --> 00:03:28,200 Speaker 1: of course, before we say any answer here, it's probably 61 00:03:28,240 --> 00:03:30,960 Speaker 1: better to have your own money. Of course, it is okay. 62 00:03:30,960 --> 00:03:32,640 Speaker 1: You're going to be more independent if you've got a 63 00:03:32,680 --> 00:03:34,480 Speaker 1: million in Super and someone says I don't have a 64 00:03:34,480 --> 00:03:36,280 Speaker 1: million in super, but guess what I might as well 65 00:03:36,320 --> 00:03:39,280 Speaker 1: have for the amount I'm getting in various ways through 66 00:03:39,320 --> 00:03:46,440 Speaker 1: government payments, and technically that can actually be argued in 67 00:03:46,480 --> 00:03:50,920 Speaker 1: some cases it's not the same. However, for all the 68 00:03:50,960 --> 00:03:56,200 Speaker 1: effort we make for all the savings, you do wonder 69 00:03:56,280 --> 00:03:59,240 Speaker 1: sometimes is there a zone in super where when it's 70 00:03:59,480 --> 00:04:04,920 Speaker 1: arguable on a year to year income basis okay, and 71 00:04:04,960 --> 00:04:07,040 Speaker 1: I'm including everything you can get from the government done 72 00:04:07,080 --> 00:04:10,360 Speaker 1: Central Link and coming with seniors health cards and everything else, 73 00:04:10,920 --> 00:04:13,880 Speaker 1: and there is a zone where it's arguable whether it's 74 00:04:13,920 --> 00:04:17,600 Speaker 1: worth the effort. I think James, it's somewhere in the 75 00:04:17,920 --> 00:04:23,280 Speaker 1: order of four hundred thousand to six hundred thousand. What 76 00:04:24,279 --> 00:04:24,960 Speaker 1: do you work on? 77 00:04:26,360 --> 00:04:31,880 Speaker 2: Yeah, that's about right. It depends on the person, if 78 00:04:31,880 --> 00:04:35,000 Speaker 2: they're single, if they're a couple, if they own a house, 79 00:04:35,040 --> 00:04:38,920 Speaker 2: or if they don't own a house. Because what I call, 80 00:04:39,320 --> 00:04:42,240 Speaker 2: as you've mentioned, the sweet spot. So the ideal situation 81 00:04:42,640 --> 00:04:45,360 Speaker 2: is where you can pick up the age pension from 82 00:04:45,480 --> 00:04:48,360 Speaker 2: the government in retirement, which is available from age sixty 83 00:04:48,400 --> 00:04:51,680 Speaker 2: seven onwards but subject to an assets and income test. 84 00:04:51,839 --> 00:04:55,360 Speaker 2: But you're also what we call a self funded retiree 85 00:04:55,800 --> 00:04:59,120 Speaker 2: or have hundreds of thousands of dollars in super as well. 86 00:04:59,400 --> 00:05:01,440 Speaker 2: So the way that you sort of hit that sweet 87 00:05:01,480 --> 00:05:04,200 Speaker 2: spot to get the full age pension from the government, 88 00:05:04,520 --> 00:05:07,600 Speaker 2: which for a single person is almost thirty thousand dollars 89 00:05:07,640 --> 00:05:09,640 Speaker 2: a year. So it's not pocket money here. 90 00:05:09,839 --> 00:05:11,240 Speaker 1: Well that's what happened when I was saying about a 91 00:05:11,320 --> 00:05:13,760 Speaker 1: million dollars. I mean, if you're very conservative estimate if 92 00:05:13,800 --> 00:05:16,280 Speaker 1: you had it in a poorly paying cash account, a 93 00:05:16,360 --> 00:05:18,720 Speaker 1: million dollars, what the thirty thousand a year might be 94 00:05:18,920 --> 00:05:21,000 Speaker 1: there thereabouts what you're going to get, right, So. 95 00:05:21,400 --> 00:05:23,760 Speaker 2: Yeah, that's right. So yeah, you caush your mind back 96 00:05:23,760 --> 00:05:25,320 Speaker 2: a couple of years ago when the cash rates and 97 00:05:25,440 --> 00:05:27,400 Speaker 2: will turn to positve rates, we're giving you half a percent, 98 00:05:27,640 --> 00:05:30,520 Speaker 2: one percent, you're getting peanuts and even on a million dollars. 99 00:05:30,760 --> 00:05:34,160 Speaker 2: So getting this guaranteed payment of thirty thousand if you're 100 00:05:34,160 --> 00:05:36,560 Speaker 2: a single, forty five thousand if you're a couple from 101 00:05:36,600 --> 00:05:39,040 Speaker 2: the government is great. But of course, with the cash 102 00:05:39,120 --> 00:05:41,480 Speaker 2: rate going up, the return out of super being better. 103 00:05:42,240 --> 00:05:45,679 Speaker 2: But still the principles are the same around this sweet spot. 104 00:05:46,480 --> 00:05:48,800 Speaker 2: So the place that your lander should have a look 105 00:05:48,839 --> 00:05:52,839 Speaker 2: at is it's called a guide to Australian Government payments 106 00:05:52,920 --> 00:05:56,000 Speaker 2: and it's on the services website and you go there, 107 00:05:56,160 --> 00:05:58,040 Speaker 2: you have a look in the back around the assets 108 00:05:58,120 --> 00:06:00,560 Speaker 2: test section and then you just identify which one you 109 00:06:00,640 --> 00:06:02,840 Speaker 2: are and again are you single, you're a couple, Do 110 00:06:02,839 --> 00:06:04,280 Speaker 2: you own a house? Do you not own a house? 111 00:06:04,480 --> 00:06:06,800 Speaker 2: And it will show you how much assets, so how 112 00:06:06,880 --> 00:06:10,039 Speaker 2: much super value of your bank account, car contents, how 113 00:06:10,120 --> 00:06:12,840 Speaker 2: much you can have in assets to receive the full 114 00:06:12,880 --> 00:06:15,320 Speaker 2: age pension. And then if you exceed the threshold for 115 00:06:15,360 --> 00:06:17,000 Speaker 2: an age and full age pension, you're going to the 116 00:06:17,080 --> 00:06:19,320 Speaker 2: part pension range. And then if you exceed that up 117 00:06:19,400 --> 00:06:20,960 Speaker 2: a threshold, you get zip. 118 00:06:21,720 --> 00:06:23,919 Speaker 1: So it's called it, and they taper it, don't they. 119 00:06:24,040 --> 00:06:27,640 Speaker 1: So it's like for every dollar over x, it takes 120 00:06:27,680 --> 00:06:33,000 Speaker 1: fifty cents off your pension. And so keep that in mind. 121 00:06:33,040 --> 00:06:34,840 Speaker 1: It's a long term thing. But it's I mean, it's 122 00:06:34,920 --> 00:06:38,520 Speaker 1: I think it's just a huge issue. And by the way, folks, 123 00:06:38,560 --> 00:06:43,040 Speaker 1: all these retirement calculators, you know, be very careful, be 124 00:06:43,200 --> 00:06:45,559 Speaker 1: damn skeptical about these people saying you need a million 125 00:06:45,600 --> 00:06:47,479 Speaker 1: and super you need one point six million, a million, 126 00:06:48,200 --> 00:06:50,640 Speaker 1: what do you need? Well, you know there's a government 127 00:06:50,680 --> 00:06:53,560 Speaker 1: pension for first of all, and some people will live 128 00:06:53,640 --> 00:06:56,440 Speaker 1: on that. Part two, there are a lot of other 129 00:06:56,640 --> 00:07:01,719 Speaker 1: issue items that you can pick up as an older 130 00:07:01,800 --> 00:07:07,279 Speaker 1: person if you don't have SUPER. But the megapoint I'd 131 00:07:07,360 --> 00:07:12,559 Speaker 1: like to make to everyone, James is if you don't 132 00:07:12,800 --> 00:07:15,560 Speaker 1: own your own home, you will pay highly in this 133 00:07:15,680 --> 00:07:20,240 Speaker 1: system because it's entirely biased towards the homeowner because the 134 00:07:20,480 --> 00:07:26,040 Speaker 1: home value is basically not counted, but all SUPER is. 135 00:07:26,440 --> 00:07:29,480 Speaker 1: So if there's two people, one has a five million 136 00:07:29,480 --> 00:07:32,120 Speaker 1: dollar house and tiny bit of SUPER and the other 137 00:07:32,200 --> 00:07:37,080 Speaker 1: person has a million dollars and SUPER but no home, 138 00:07:38,480 --> 00:07:41,760 Speaker 1: then that person with just lots of SUPER and no house, 139 00:07:42,280 --> 00:07:44,160 Speaker 1: they're going to do worse than the system, aren't they. 140 00:07:45,360 --> 00:07:45,680 Speaker 1: They are. 141 00:07:45,840 --> 00:07:48,840 Speaker 2: That's a really good point. The net assets of the 142 00:07:48,920 --> 00:07:53,720 Speaker 2: person with the house is much higher, but they get 143 00:07:53,760 --> 00:07:55,800 Speaker 2: the pension, where it's someone with a lower net asset, 144 00:07:55,880 --> 00:07:58,160 Speaker 2: but just because their money is in SUPER, they don't 145 00:07:58,200 --> 00:08:01,680 Speaker 2: get the pensions. So that's a very good thing. That 146 00:08:01,800 --> 00:08:04,560 Speaker 2: the good point to note that the family house is 147 00:08:04,680 --> 00:08:07,080 Speaker 2: not included in the assets test. 148 00:08:07,480 --> 00:08:09,280 Speaker 1: So keep that in mind, you lander, and all the 149 00:08:09,360 --> 00:08:12,679 Speaker 1: your lander's out there. No advice here, of course, information only, 150 00:08:13,200 --> 00:08:16,760 Speaker 1: And also folks, That is why if you were listening 151 00:08:16,840 --> 00:08:19,800 Speaker 1: to the most recent show, it's why I've come around 152 00:08:19,840 --> 00:08:21,840 Speaker 1: to saying you, yes, you can use your super to 153 00:08:21,920 --> 00:08:24,280 Speaker 1: buy a family home. Not because it's a great idea, 154 00:08:24,400 --> 00:08:27,440 Speaker 1: not because it's in principle I think it's terrific, but 155 00:08:27,600 --> 00:08:30,320 Speaker 1: because the tax system is so loaded against you if 156 00:08:30,360 --> 00:08:33,000 Speaker 1: you don't have a home that you are better off 157 00:08:33,160 --> 00:08:36,920 Speaker 1: with one before you start forever, not just in midlife, 158 00:08:37,040 --> 00:08:41,640 Speaker 1: young life, but even more so when you're retired. Okay, 159 00:08:41,960 --> 00:08:45,000 Speaker 1: a question from Luke. Do you want to read that one, James? 160 00:08:45,679 --> 00:08:50,040 Speaker 2: I will. When in a DP acronym for dividend reinvestment 161 00:08:50,080 --> 00:08:53,599 Speaker 2: plan for an ETF acronym for exchange traded fund, is 162 00:08:53,679 --> 00:08:57,120 Speaker 2: a dividend reinvestment made at the price post or pre 163 00:08:57,400 --> 00:09:01,600 Speaker 2: distribution post. 164 00:09:03,040 --> 00:09:06,400 Speaker 1: Yes, oh please? Do you're the financial advisor? Yes? 165 00:09:06,480 --> 00:09:09,720 Speaker 2: Okay, so I wasn't sure. If I asked you a bit, 166 00:09:10,240 --> 00:09:10,880 Speaker 2: I'll ask. 167 00:09:11,360 --> 00:09:13,400 Speaker 1: If they're hard. If they're hard, you answer, it's really 168 00:09:13,960 --> 00:09:15,040 Speaker 1: it's basically the routine. 169 00:09:15,600 --> 00:09:17,920 Speaker 2: All right, got it? Sorry, I'll get with the program. Okay. 170 00:09:17,960 --> 00:09:21,120 Speaker 2: So the answer is that the dividend is paid and 171 00:09:21,640 --> 00:09:25,080 Speaker 2: then it gets reinvested. So the dividend reinvestment is made 172 00:09:25,200 --> 00:09:28,280 Speaker 2: based on the share price after the end. 173 00:09:29,240 --> 00:09:33,160 Speaker 1: They so so they figure out what the dividend is. 174 00:09:33,880 --> 00:09:38,080 Speaker 1: The dividend is the dollar per share, and then once 175 00:09:38,160 --> 00:09:41,679 Speaker 1: they know that, I presume after thirty within the period 176 00:09:41,760 --> 00:09:44,480 Speaker 1: of something, they reinvest that dollar for you in the 177 00:09:44,600 --> 00:09:47,040 Speaker 1: shares that you have in there in the in the 178 00:09:47,160 --> 00:09:49,600 Speaker 1: ETF just like a share, just like an ordinary share. 179 00:09:49,679 --> 00:09:51,400 Speaker 1: They do it the same way. I don't believe there's 180 00:09:51,440 --> 00:09:53,600 Speaker 1: any difference at all, And I know people are always 181 00:09:53,640 --> 00:09:57,000 Speaker 1: asking that. Okay, Pavel p A v. E. L Hi 182 00:09:57,440 --> 00:10:01,040 Speaker 1: as a regular listener to the podcast, and it informative 183 00:10:01,120 --> 00:10:04,760 Speaker 1: and enjoyable, and especially given the quality of the guests 184 00:10:04,800 --> 00:10:08,280 Speaker 1: that you have honored their experience and willingness to share 185 00:10:08,320 --> 00:10:10,960 Speaker 1: good insights. That's you, James Gerard. I think it would 186 00:10:11,000 --> 00:10:15,800 Speaker 1: be great if, not if in the not too distant future, 187 00:10:16,120 --> 00:10:18,920 Speaker 1: you could have a financial advisor to summarize what the 188 00:10:19,040 --> 00:10:24,400 Speaker 1: recontribution strategy is. Oh, okay, our completely upside down, totally 189 00:10:24,440 --> 00:10:28,600 Speaker 1: twisted supersystem has a thing which allows you to take 190 00:10:28,760 --> 00:10:32,920 Speaker 1: money out and put it back in and reduce your 191 00:10:33,040 --> 00:10:38,800 Speaker 1: tax ability of your ultimate inheritance you might pass on 192 00:10:38,920 --> 00:10:43,480 Speaker 1: through your super That's it conceptually. Would you explain what 193 00:10:43,640 --> 00:10:46,400 Speaker 1: a recontribution strategy is, James, how it might work. 194 00:10:48,920 --> 00:10:54,319 Speaker 2: Yep. So we have this hangover from supernuation years of 195 00:10:54,480 --> 00:10:58,160 Speaker 2: the past, with components of supernuation. There's a taxable component, 196 00:10:58,280 --> 00:11:01,360 Speaker 2: there's a tax free component. There's even a less common 197 00:11:01,520 --> 00:11:04,839 Speaker 2: untaxed component as well. And this was back when I 198 00:11:04,880 --> 00:11:07,440 Speaker 2: first started my career twenty years ago, where we had 199 00:11:07,480 --> 00:11:10,040 Speaker 2: things like reasonable benefits limits and we had to do 200 00:11:10,160 --> 00:11:13,120 Speaker 2: these complex calculations to work out how much people could 201 00:11:13,200 --> 00:11:16,120 Speaker 2: get out of super in retirement tax free. But going 202 00:11:16,160 --> 00:11:18,199 Speaker 2: back on maybe fifteen years ago now they sort of 203 00:11:18,240 --> 00:11:20,480 Speaker 2: simplified the system and got rid of all these complex 204 00:11:20,559 --> 00:11:22,880 Speaker 2: calculations and basically said that people over the age of 205 00:11:22,920 --> 00:11:25,839 Speaker 2: sixty who are retired will have everything tax free and 206 00:11:26,200 --> 00:11:29,120 Speaker 2: if they're in the pension phase. But the last the 207 00:11:29,200 --> 00:11:31,360 Speaker 2: past few years they've changed the rules a bit and 208 00:11:31,400 --> 00:11:33,920 Speaker 2: they've brought in these one point nine million dollar caps, 209 00:11:33,920 --> 00:11:35,880 Speaker 2: and it's going to be a three million dollar cap 210 00:11:36,240 --> 00:11:40,520 Speaker 2: at thirty percent. But that aside, for most people who 211 00:11:40,559 --> 00:11:44,600 Speaker 2: are retired in drawing a pension money out of it's 212 00:11:44,720 --> 00:11:47,880 Speaker 2: tax free. So the strategy here around the recontribution is 213 00:11:47,920 --> 00:11:50,360 Speaker 2: that it didn't really really mean anything to you while 214 00:11:50,400 --> 00:11:52,679 Speaker 2: you're retired drawing your pension because it's tax free. It's 215 00:11:52,760 --> 00:11:56,360 Speaker 2: more for your non dependence. So typically adult children who 216 00:11:56,600 --> 00:12:00,640 Speaker 2: inherit your super money after you pass away dependent so 217 00:12:00,720 --> 00:12:03,600 Speaker 2: spouses they receive the money tax free from your super 218 00:12:03,640 --> 00:12:06,840 Speaker 2: if you pass away, but non dependence. So for kids 219 00:12:06,880 --> 00:12:09,319 Speaker 2: who are grown up, who have their own spouses and 220 00:12:09,400 --> 00:12:11,920 Speaker 2: families and who are not reliant on you, they have 221 00:12:12,080 --> 00:12:16,160 Speaker 2: to pay seventeen percent tax only on the taxable component 222 00:12:16,640 --> 00:12:19,280 Speaker 2: of your super account. So a lot of people don't 223 00:12:19,280 --> 00:12:21,400 Speaker 2: actually know what their components of their SUPO is, So 224 00:12:21,440 --> 00:12:22,880 Speaker 2: you probably need to look at a statement or bring 225 00:12:23,000 --> 00:12:24,920 Speaker 2: up the super fund and you might be surprised because 226 00:12:25,320 --> 00:12:28,079 Speaker 2: there might be a high taxable component, which again you 227 00:12:28,080 --> 00:12:30,240 Speaker 2: shouldn't be worried about because it doesn't mean anything for 228 00:12:30,320 --> 00:12:33,839 Speaker 2: you in retirement. But there's a planning opportunity depending on 229 00:12:33,880 --> 00:12:37,400 Speaker 2: your age, because you can do this recontribution strategy where 230 00:12:37,920 --> 00:12:41,160 Speaker 2: you take money out of super and then you put 231 00:12:41,200 --> 00:12:44,000 Speaker 2: it back in again, and doing that, you're taking money out, 232 00:12:44,080 --> 00:12:47,720 Speaker 2: and when you take money out, your withdrawal is proportionately 233 00:12:47,760 --> 00:12:50,920 Speaker 2: split between the taxable and tax free component. So in 234 00:12:51,000 --> 00:12:52,920 Speaker 2: simple terms, if you had one hundred thousand dollars in 235 00:12:53,040 --> 00:12:55,520 Speaker 2: your super account and it was fifty percent taxable fifty 236 00:12:55,559 --> 00:12:58,079 Speaker 2: percent tax free, and if you took ten thousand dollars 237 00:12:58,120 --> 00:13:00,720 Speaker 2: out as a lumps on withdrawal, that one thousand dollars 238 00:13:00,920 --> 00:13:03,840 Speaker 2: withdraw payment would be a mix of fifty percent taxable 239 00:13:03,960 --> 00:13:06,480 Speaker 2: fifty percent tax free. And so you've got this ten 240 00:13:06,520 --> 00:13:09,240 Speaker 2: thousand dollars in your bank account. Now you can put 241 00:13:09,280 --> 00:13:11,520 Speaker 2: it back as what we call a non concessional contribution. 242 00:13:11,800 --> 00:13:14,199 Speaker 2: There's no tax payable when that goes back in, and 243 00:13:14,559 --> 00:13:18,280 Speaker 2: that payment adds to the tax free component of your 244 00:13:18,320 --> 00:13:18,960 Speaker 2: super account. 245 00:13:19,120 --> 00:13:26,920 Speaker 1: It's a long, elaborate, my mildly absurd way of legitimize, 246 00:13:27,240 --> 00:13:35,160 Speaker 1: legitimately minimizing the tax of your beneficiaries in the long 247 00:13:35,200 --> 00:13:36,960 Speaker 1: period of time. And most people by the time they 248 00:13:37,000 --> 00:13:41,000 Speaker 1: get inheritance now are adults anyway, aren't they. But the 249 00:13:41,120 --> 00:13:44,160 Speaker 1: other thing is to say, for as, if you've never 250 00:13:44,280 --> 00:13:49,160 Speaker 1: met any voluntary contributions ever, would you're would it be 251 00:13:49,320 --> 00:13:53,840 Speaker 1: one hundred percent taxable? Then that's right, yeah, which would 252 00:13:53,840 --> 00:13:58,000 Speaker 1: be a lot of people. And increasingly and increasingly people 253 00:13:59,120 --> 00:14:02,800 Speaker 1: know that the SGC so high that I imagine that 254 00:14:02,880 --> 00:14:05,959 Speaker 1: group is getting bigger and bigger. Okay, I imagine that 255 00:14:06,080 --> 00:14:11,679 Speaker 1: all makes perfect sense to you also far these are 256 00:14:11,800 --> 00:14:15,280 Speaker 1: questions that I've basically distilled some of the more common 257 00:14:15,440 --> 00:14:18,800 Speaker 1: questions that we get, and we will, as I say, 258 00:14:18,920 --> 00:14:22,520 Speaker 1: be bouncing around. That was very quickly there. That was 259 00:14:22,560 --> 00:14:26,160 Speaker 1: two on super and one on dividend reinvestment plans, which, 260 00:14:26,200 --> 00:14:28,440 Speaker 1: of course I'm sure you know what they are. Once 261 00:14:28,520 --> 00:14:30,920 Speaker 1: upon a time all shares used to have them. Now 262 00:14:31,000 --> 00:14:34,160 Speaker 1: it's sort of entirely they're so sort of ruthless in 263 00:14:34,200 --> 00:14:36,800 Speaker 1: their ways corporate, so they turned them all and off 264 00:14:36,840 --> 00:14:40,520 Speaker 1: as it suits them. But it's a good discipline if 265 00:14:40,600 --> 00:14:42,520 Speaker 1: you have shares to just sign up for a d 266 00:14:42,680 --> 00:14:44,800 Speaker 1: or P unless you're very efficient and you know exactly 267 00:14:44,840 --> 00:14:46,440 Speaker 1: what you're going to do with your cash every time. 268 00:14:47,320 --> 00:14:49,760 Speaker 1: And the other theory academically is like if you think 269 00:14:50,000 --> 00:14:52,920 Speaker 1: a company is good enough, like if you think Commonwealth 270 00:14:53,080 --> 00:14:55,640 Speaker 1: is good enough, common Well Bank's good enough, then it's 271 00:14:55,720 --> 00:14:59,960 Speaker 1: probably good enough to reinvest in. That is an interesting 272 00:15:00,080 --> 00:15:01,680 Speaker 1: sort of test if you ever want to sign up 273 00:15:01,720 --> 00:15:04,360 Speaker 1: for a dividend reinvestment plan for either an ETF or 274 00:15:04,440 --> 00:15:06,600 Speaker 1: a share. Okay, we'll take a short break and we'll 275 00:15:06,600 --> 00:15:10,240 Speaker 1: be back in a moment. Hello, Welcome back to the 276 00:15:10,320 --> 00:15:14,480 Speaker 1: Australian's Money Puzzle podcast James Kirby with James Girard, and 277 00:15:14,560 --> 00:15:18,560 Speaker 1: we have a reader's Questions special show for you today. 278 00:15:19,040 --> 00:15:23,600 Speaker 1: Nothing but readers questions, all sorts, shapes and sizes, and 279 00:15:24,200 --> 00:15:26,800 Speaker 1: a really interesting one from Scott. I've got to read this. 280 00:15:28,200 --> 00:15:30,800 Speaker 1: This is a great question. What is the endgame of 281 00:15:30,960 --> 00:15:34,240 Speaker 1: someone who invests in shares outside of Super for the 282 00:15:34,320 --> 00:15:38,560 Speaker 1: long term? What's their desired end state? If you're investing 283 00:15:38,600 --> 00:15:40,240 Speaker 1: in shares for the long term, you'd surely do it 284 00:15:40,320 --> 00:15:43,680 Speaker 1: in Super if you're worried about quick access or liquidity. 285 00:15:43,760 --> 00:15:47,160 Speaker 1: That's what an emergency fund is for. I'm forty and 286 00:15:47,240 --> 00:15:49,560 Speaker 1: I've spent the last fifteen years investing in the share 287 00:15:49,600 --> 00:15:54,280 Speaker 1: market for the long term outside Super through index based ETPs. 288 00:15:54,800 --> 00:15:57,240 Speaker 1: It suddenly dawned on me that I would likely to 289 00:15:57,280 --> 00:16:01,760 Speaker 1: crystallize these investments before retirement. I would have invested through Super. Whoops, 290 00:16:02,520 --> 00:16:05,760 Speaker 1: Well yeah, okay, Scott and all the Scott's out there. 291 00:16:05,840 --> 00:16:08,800 Speaker 1: Interesting point. I originally, when I saw this question, I 292 00:16:08,840 --> 00:16:10,680 Speaker 1: thought it was what's the end game of investing? There 293 00:16:10,720 --> 00:16:12,840 Speaker 1: was the old joke in the in the in the 294 00:16:12,920 --> 00:16:17,440 Speaker 1: Danny DeVito movie about with the two they're fighting over, 295 00:16:17,760 --> 00:16:20,200 Speaker 1: it's all about It's about money this movie. It will 296 00:16:20,240 --> 00:16:23,200 Speaker 1: come to me in a second. Well, it's cold, and 297 00:16:23,360 --> 00:16:26,200 Speaker 1: he explains to someone else on Wall Street. The guy says, 298 00:16:26,240 --> 00:16:28,640 Speaker 1: what what's it all about? Why are we doing this anyway? 299 00:16:28,680 --> 00:16:31,000 Speaker 1: And Danny DeVito says, the guy who dies with the 300 00:16:31,120 --> 00:16:36,800 Speaker 1: most wins, which which is what people will say sometimes 301 00:16:36,920 --> 00:16:41,200 Speaker 1: to me on issues about Super. But I say to them, yes, yes, 302 00:16:41,320 --> 00:16:44,320 Speaker 1: well settle down there. We all need money in this world, 303 00:16:44,640 --> 00:16:47,000 Speaker 1: and we need to be able to defend ourselves in 304 00:16:47,120 --> 00:16:50,120 Speaker 1: times of difficulty. That's the first thing not to mention 305 00:16:50,480 --> 00:16:52,280 Speaker 1: when we get when we are not able to make 306 00:16:52,320 --> 00:17:00,480 Speaker 1: the Sundari we make in our prime. Now, Scott, the 307 00:17:00,560 --> 00:17:02,240 Speaker 1: only thing I would say to you in retrospect because 308 00:17:02,280 --> 00:17:05,760 Speaker 1: it's too late, right, I imagine, so you could switch 309 00:17:05,840 --> 00:17:08,199 Speaker 1: this stuff into super in specie transfer, but it's too 310 00:17:08,320 --> 00:17:12,679 Speaker 1: late in many ways. You can have. How much can 311 00:17:12,760 --> 00:17:16,040 Speaker 1: you have outside of super tax free in income anyway? James, 312 00:17:16,240 --> 00:17:18,480 Speaker 1: any single person, anyone in the country can have a 313 00:17:18,520 --> 00:17:19,080 Speaker 1: certain amount. 314 00:17:19,400 --> 00:17:22,399 Speaker 2: Yeah, you can. It depends a little bit if you're 315 00:17:22,400 --> 00:17:25,480 Speaker 2: a capitable single But let's say start to day ten thousand, 316 00:17:25,560 --> 00:17:28,080 Speaker 2: but it can be around twenty five thousand in circumstances. 317 00:17:29,080 --> 00:17:33,560 Speaker 1: Okay, so whoever you are, even a rock bottom minimum, 318 00:17:33,640 --> 00:17:39,840 Speaker 1: you can make an income of eighteen thousand perannum and 319 00:17:39,960 --> 00:17:42,200 Speaker 1: it's tax free. It doesn't matter whether that money's in 320 00:17:42,280 --> 00:17:45,120 Speaker 1: super or not. So perhaps someone like Scott could could 321 00:17:45,119 --> 00:17:46,600 Speaker 1: hold it right there and have a look and say, well, 322 00:17:46,640 --> 00:17:48,840 Speaker 1: how much am I making? What would be the income 323 00:17:48,880 --> 00:17:50,800 Speaker 1: out of this? And you mightn't have to transfer it 324 00:17:51,240 --> 00:17:53,720 Speaker 1: if he wanted to transfer it into super, if that 325 00:17:53,880 --> 00:18:00,199 Speaker 1: was his, if that seemed better. How can you do there? 326 00:18:00,240 --> 00:18:03,120 Speaker 1: Can you say this? And I've got did he give 327 00:18:03,119 --> 00:18:04,200 Speaker 1: a number one? How much is there? 328 00:18:04,480 --> 00:18:04,520 Speaker 2: No? 329 00:18:04,600 --> 00:18:06,280 Speaker 1: But let's say let's say he has twenty five brand 330 00:18:06,359 --> 00:18:09,920 Speaker 1: in investments their ETFs and he says, God, I should 331 00:18:09,920 --> 00:18:11,480 Speaker 1: have put that in my super fund ten years ago, 332 00:18:11,560 --> 00:18:13,840 Speaker 1: but he's still got ten years to go or twenty 333 00:18:13,960 --> 00:18:16,680 Speaker 1: years ago. Can he switch that stuff into his super 334 00:18:16,760 --> 00:18:19,840 Speaker 1: and what would be the upside or downside of that move? 335 00:18:20,119 --> 00:18:23,680 Speaker 2: Yeah, he can definitely do that. The upshot is that 336 00:18:23,960 --> 00:18:27,520 Speaker 2: it reduces tax downstream when he's retired, as zero percent 337 00:18:27,640 --> 00:18:30,440 Speaker 2: tax on the capital gains. If he eventually sells it 338 00:18:31,359 --> 00:18:33,360 Speaker 2: and super funds. A lot of them will do what's 339 00:18:33,359 --> 00:18:36,359 Speaker 2: called in specie transfer, so Scott won't have to sell 340 00:18:36,520 --> 00:18:39,160 Speaker 2: the share and then repurchase it through his super fun 341 00:18:39,240 --> 00:18:40,919 Speaker 2: He can just like pick it up and then transfer 342 00:18:40,960 --> 00:18:43,000 Speaker 2: it and drop it into his superfund, which is good. 343 00:18:43,640 --> 00:18:46,840 Speaker 2: There will be capital gains tax implications though, because he's 344 00:18:46,880 --> 00:18:50,560 Speaker 2: crystallizing again whether he does the in specie transfer or 345 00:18:50,800 --> 00:18:52,560 Speaker 2: sells it and moves it to the super fund, so 346 00:18:52,640 --> 00:18:56,320 Speaker 2: that needs to be considered. One thing which I speak 347 00:18:56,400 --> 00:19:01,119 Speaker 2: to clients about is deferring or minimize in capital gains tax. 348 00:19:01,359 --> 00:19:04,760 Speaker 2: We're accumulating assets. We're acumulating shares and properties throughout our 349 00:19:04,840 --> 00:19:07,840 Speaker 2: working lives, partly in super, partly personally. So the stuff 350 00:19:07,840 --> 00:19:11,200 Speaker 2: that we hold outside of souper, the best time to 351 00:19:11,520 --> 00:19:15,000 Speaker 2: transfer it into super is generally just stuff you stop working, 352 00:19:15,480 --> 00:19:17,959 Speaker 2: and the reason is that you don't have your employment income, 353 00:19:18,320 --> 00:19:20,320 Speaker 2: which means that you're not being pulled into the higher 354 00:19:20,400 --> 00:19:22,080 Speaker 2: tax brackets. So as soon as you go into the 355 00:19:22,160 --> 00:19:25,200 Speaker 2: lower tax bracket when you're retired, assuming that you're still 356 00:19:25,280 --> 00:19:28,840 Speaker 2: under the seventy five years of age for the contribution caps, 357 00:19:29,359 --> 00:19:30,720 Speaker 2: that's when we start to crystalize. 358 00:19:30,800 --> 00:19:33,600 Speaker 1: So good. This is exactly where our advice comes into play. 359 00:19:33,680 --> 00:19:36,119 Speaker 1: This is where you know, I would say, folks, this 360 00:19:36,320 --> 00:19:42,040 Speaker 1: is where using advice really pays off. That's such an 361 00:19:42,280 --> 00:19:48,280 Speaker 1: interesting way of using and optimizing how the system works, 362 00:19:48,320 --> 00:19:52,119 Speaker 1: and people wouldn't necessarily guess that. Yeah, okay, so just 363 00:19:53,400 --> 00:19:56,160 Speaker 1: so just ron that scenario. If you were gems about 364 00:19:56,200 --> 00:19:58,320 Speaker 1: the person who had the ETFs and let's say they 365 00:19:58,359 --> 00:20:00,439 Speaker 1: had the twenty grand in ETF and 's they're ten 366 00:20:00,520 --> 00:20:03,440 Speaker 1: years to go to retirement, what would a person what's 367 00:20:03,640 --> 00:20:08,560 Speaker 1: what is in your view and an optimum uh a 368 00:20:08,720 --> 00:20:09,600 Speaker 1: pathway there? 369 00:20:11,600 --> 00:20:13,560 Speaker 2: Yeah, you know, if they've held that ETF for a 370 00:20:13,600 --> 00:20:16,280 Speaker 2: while and there's a large capital gains tax bill, we 371 00:20:16,359 --> 00:20:18,199 Speaker 2: would just leave it and say, okay, let's just let 372 00:20:18,240 --> 00:20:20,000 Speaker 2: it ride, assuming that we like that et F, and 373 00:20:20,080 --> 00:20:22,920 Speaker 2: then when you retire, the year after you retire, we'll 374 00:20:23,000 --> 00:20:25,320 Speaker 2: sell it at lower tax rates and then transfer that 375 00:20:25,400 --> 00:20:28,200 Speaker 2: money into souper. If there's not that much in the 376 00:20:28,240 --> 00:20:30,520 Speaker 2: way of capital gains tax ten years from retirement, we 377 00:20:30,600 --> 00:20:33,480 Speaker 2: might do it earlier. So it just depends on how 378 00:20:33,560 --> 00:20:35,159 Speaker 2: much tax we're going to get. 379 00:20:35,160 --> 00:20:37,920 Speaker 1: The little tax treads and ew because of their age. 380 00:20:38,040 --> 00:20:41,359 Speaker 1: Correct yeah, that's kind of the key there, I see. 381 00:20:41,760 --> 00:20:46,280 Speaker 1: Very very interesting. Okay, okay, very good. All right, you 382 00:20:46,320 --> 00:20:48,879 Speaker 1: want to read the question from mac Daddy, which I 383 00:20:49,000 --> 00:20:51,560 Speaker 1: presume is not a real name. M A C D 384 00:20:51,720 --> 00:20:53,080 Speaker 1: A D d y macdaddy. 385 00:20:53,400 --> 00:20:55,000 Speaker 2: It's not an Irish name, is it, James. You haven't 386 00:20:55,000 --> 00:20:55,480 Speaker 2: come across it. 387 00:20:55,640 --> 00:20:57,920 Speaker 1: Now unless it's a very very obscure Scottish name. And 388 00:20:57,960 --> 00:21:01,320 Speaker 1: I don't think it is that Danny DeVito movie. I 389 00:21:01,359 --> 00:21:03,159 Speaker 1: think it was Other People's Money, the one you're here 390 00:21:03,359 --> 00:21:07,320 Speaker 1: are the people's money. Thank you. It's good to Yes, 391 00:21:07,440 --> 00:21:10,920 Speaker 1: we should do a session sometime on financial business and 392 00:21:11,000 --> 00:21:13,200 Speaker 1: investment movies. That's one of the that is one of 393 00:21:13,280 --> 00:21:17,320 Speaker 1: the really good ones, Steady de Vito, Other People's Money year. Okay, Macdaddy, Right, 394 00:21:17,359 --> 00:21:17,920 Speaker 1: what's the question? 395 00:21:18,080 --> 00:21:21,040 Speaker 2: Thanks for the insightful and entertaining commentary you provide each 396 00:21:21,080 --> 00:21:23,960 Speaker 2: week on Everything finance. How does the stock split affect 397 00:21:24,000 --> 00:21:26,720 Speaker 2: the charts and graphs of the company's share price? For example, 398 00:21:26,800 --> 00:21:29,159 Speaker 2: if a company does a one to four split with 399 00:21:29,280 --> 00:21:32,200 Speaker 2: the share price suddenly dropped by seventy five percent, I 400 00:21:32,320 --> 00:21:34,280 Speaker 2: am guessing not so. How are the share price and 401 00:21:34,400 --> 00:21:37,320 Speaker 2: charts of a single price adjusted for a stock split. 402 00:21:38,400 --> 00:21:43,960 Speaker 1: Great question, Macdaddy. Oh gosh, every financial journalist nightmare the 403 00:21:44,840 --> 00:21:46,800 Speaker 1: time you do the story about the plunge and the 404 00:21:46,880 --> 00:21:49,760 Speaker 1: share price and you get a call the next day 405 00:21:49,840 --> 00:21:52,480 Speaker 1: saying you didn't know that there was a stock split, 406 00:21:52,640 --> 00:21:56,920 Speaker 1: did you? Oh god, it did happen to me once. 407 00:21:57,600 --> 00:21:59,320 Speaker 1: It was a dot com. It was in the middle 408 00:21:59,320 --> 00:22:01,520 Speaker 1: of all the crazy, crazy craziness of dark com. But 409 00:22:01,640 --> 00:22:04,080 Speaker 1: it did happen, and I was super alert to them 410 00:22:04,080 --> 00:22:07,080 Speaker 1: ever since. So stock split, First of all, actually there's 411 00:22:07,080 --> 00:22:10,359 Speaker 1: one going on. Is it in Vidia going to do one? 412 00:22:11,280 --> 00:22:14,800 Speaker 2: Yeah, I've followed, But would make sense given how much 413 00:22:14,880 --> 00:22:15,920 Speaker 2: the share price? I don't think so. 414 00:22:16,600 --> 00:22:20,280 Speaker 1: I think so so companies do it when often when 415 00:22:20,400 --> 00:22:24,720 Speaker 1: they when the share price just goes bananas and it's 416 00:22:24,840 --> 00:22:28,800 Speaker 1: just so so high that they that they are of 417 00:22:28,920 --> 00:22:32,720 Speaker 1: the opinion that retail investors don't don't want to buy 418 00:22:32,840 --> 00:22:35,440 Speaker 1: shocks stocks that cost ten thousand each or whatever, so 419 00:22:35,520 --> 00:22:39,480 Speaker 1: they split them at ten and for every stock you have, 420 00:22:39,600 --> 00:22:42,640 Speaker 1: suddenly you have ten worth a thousand rather than rather 421 00:22:42,760 --> 00:22:49,280 Speaker 1: than one worth ten thousand. But it doesn't affect anything, really, 422 00:22:49,320 --> 00:22:52,040 Speaker 1: does it, James. It's just a technicality on the charts. 423 00:22:52,080 --> 00:22:55,800 Speaker 1: I supposed it'd be some sort of an inflection point 424 00:22:55,920 --> 00:22:57,639 Speaker 1: or something which would suggest what happened. 425 00:22:57,840 --> 00:23:01,119 Speaker 2: Yeah, so I've seen this over the years, and what 426 00:23:01,280 --> 00:23:05,480 Speaker 2: happens is that the charts, the historical charts, and the volumes, 427 00:23:05,560 --> 00:23:09,200 Speaker 2: the share volumes are adjusted to ensure continuity, so that 428 00:23:09,280 --> 00:23:12,320 Speaker 2: you're looking at it based on the current after split 429 00:23:12,440 --> 00:23:14,600 Speaker 2: share price. And how it works is, let's just say 430 00:23:14,640 --> 00:23:18,360 Speaker 2: that you have one hundred shares at one hundred dollars each. 431 00:23:18,680 --> 00:23:22,720 Speaker 2: After the split, you'd have you'd have shared at twenty 432 00:23:22,760 --> 00:23:25,159 Speaker 2: five dollars. You'd have more shares, you'd have four hundred shares, 433 00:23:25,200 --> 00:23:27,280 Speaker 2: but you still own the same amount, and the stock 434 00:23:27,480 --> 00:23:30,040 Speaker 2: chart just adjust to show that the new share price 435 00:23:30,080 --> 00:23:33,880 Speaker 2: at twenty five dollars in the proportioned that the previous 436 00:23:34,359 --> 00:23:36,720 Speaker 2: price history, so it all looks nice and clean. 437 00:23:37,560 --> 00:23:41,560 Speaker 1: So it was one for four split. As mcdeddie asks, 438 00:23:41,640 --> 00:23:45,040 Speaker 1: then would the share price drop by seventy five drop? 439 00:23:45,840 --> 00:23:49,640 Speaker 2: Yeah, it does show a drop of that seventy five 440 00:23:49,800 --> 00:23:52,239 Speaker 2: percent straight away, but what I've seen is that they 441 00:23:52,440 --> 00:23:54,119 Speaker 2: sort of smooth it out, so they sort of like 442 00:23:54,240 --> 00:23:56,840 Speaker 2: apply the split, if that makes sense, going backwards, so 443 00:23:57,000 --> 00:24:00,160 Speaker 2: that you don't see that big drop if you I'm 444 00:24:00,200 --> 00:24:02,520 Speaker 2: back six months later. It just looked like everything had 445 00:24:02,520 --> 00:24:03,159 Speaker 2: always been. 446 00:24:03,640 --> 00:24:08,840 Speaker 1: Yeah, the charts, and it doesn't matter. Well apart from 447 00:24:08,840 --> 00:24:11,240 Speaker 1: the fact that you have four shares for everyone you had, 448 00:24:11,480 --> 00:24:16,600 Speaker 1: mac Daddy, the value of the shares you have have 449 00:24:16,760 --> 00:24:19,240 Speaker 1: in no way change whatsoever. All things been equal, I 450 00:24:19,320 --> 00:24:21,920 Speaker 1: mean on the day that it happened. But interesting, and 451 00:24:22,000 --> 00:24:24,680 Speaker 1: it's interesting. We haven't had a question on stock splits before. 452 00:24:24,680 --> 00:24:27,560 Speaker 1: They're not as common as they used to be, but 453 00:24:29,200 --> 00:24:31,800 Speaker 1: every now and again they happen in companies. I think 454 00:24:32,080 --> 00:24:35,280 Speaker 1: I think CESL might have had one along the way, 455 00:24:36,080 --> 00:24:41,000 Speaker 1: and in video I think I've read that they might 456 00:24:41,040 --> 00:24:41,600 Speaker 1: be doing one. 457 00:24:42,040 --> 00:24:42,200 Speaker 2: Two. 458 00:24:43,000 --> 00:24:49,359 Speaker 1: Okay, right, that was mac daddy. Brad. Thank you for 459 00:24:49,440 --> 00:24:52,399 Speaker 1: your excellent and concise financial, property and market commentary. I 460 00:24:52,440 --> 00:24:54,720 Speaker 1: won't bore you with this stuff anymore, folks. I just 461 00:24:54,800 --> 00:24:57,639 Speaker 1: thought today and it being a reader's question show, we 462 00:24:57,640 --> 00:24:59,680 Speaker 1: would actually read out what they say. We normally ate 463 00:24:59,720 --> 00:25:02,760 Speaker 1: it all stuff out. I plan to hold some equities 464 00:25:02,800 --> 00:25:05,680 Speaker 1: that is, by the way, they're called shares shares, and 465 00:25:05,920 --> 00:25:08,240 Speaker 1: sell after the end of June in order to raise 466 00:25:08,800 --> 00:25:12,480 Speaker 1: realize capital gains at a lower tax rate. Because the 467 00:25:12,560 --> 00:25:16,919 Speaker 1: Stage three tax cuts are coming through. Do you believe 468 00:25:17,040 --> 00:25:19,680 Speaker 1: others will do the same and will there be any 469 00:25:20,040 --> 00:25:23,320 Speaker 1: impact on financial and property markets in the next financial 470 00:25:23,440 --> 00:25:26,280 Speaker 1: year as a result of Stage three tax cuts? I 471 00:25:26,440 --> 00:25:29,119 Speaker 1: love your question, Brad. Here's the thing. I'll do a 472 00:25:29,160 --> 00:25:31,200 Speaker 1: quick thing about property and James might pick up on 473 00:25:31,280 --> 00:25:39,080 Speaker 1: the financial side. Do you know that following Stage three 474 00:25:39,200 --> 00:25:42,200 Speaker 1: tax cuts which kick in on July one. I don't 475 00:25:42,240 --> 00:25:47,000 Speaker 1: have the tables in front of me, but if you 476 00:25:47,119 --> 00:25:50,360 Speaker 1: were on one hundred thousand a year when your tax 477 00:25:50,440 --> 00:25:53,800 Speaker 1: cut comes in, your borrowing capacity will go up by 478 00:25:53,840 --> 00:25:57,960 Speaker 1: twenty five thousand dollars straight away on July one. If 479 00:25:58,000 --> 00:26:01,840 Speaker 1: you're on one hundred and fifty thousand, your borrowing capacity 480 00:26:02,320 --> 00:26:05,159 Speaker 1: that is the amount extra you can bid on a 481 00:26:05,240 --> 00:26:09,520 Speaker 1: house for, will will increase by thirty seven thousand automatically 482 00:26:09,640 --> 00:26:12,440 Speaker 1: on July one. These are figures from Morga's Choice, which 483 00:26:12,480 --> 00:26:16,679 Speaker 1: I just got yesterday. So there's a property market impact 484 00:26:17,400 --> 00:26:20,840 Speaker 1: instantly that people will be able to borrow and bid more. 485 00:26:21,840 --> 00:26:24,480 Speaker 1: So that's take it or anyway you like, But that 486 00:26:24,880 --> 00:26:27,399 Speaker 1: is not going to put prices down. Let's put it 487 00:26:27,440 --> 00:26:29,919 Speaker 1: that way. It has the potential to put them up. 488 00:26:30,320 --> 00:26:34,760 Speaker 1: What about more generally James the s there's all sorts 489 00:26:34,800 --> 00:26:36,680 Speaker 1: of angers on this one is for an advisor. 490 00:26:37,680 --> 00:26:41,600 Speaker 2: Yeah, So firstly, with the planning, with the tax changes 491 00:26:41,640 --> 00:26:44,639 Speaker 2: from one July, some clients are trying to bring forward 492 00:26:45,040 --> 00:26:48,160 Speaker 2: productions into this financial year to claim a higher tax 493 00:26:48,240 --> 00:26:52,080 Speaker 2: deduction because there's higher tax bands compared to next financial year. 494 00:26:52,160 --> 00:26:54,040 Speaker 2: But really that's only for people who earn less than 495 00:26:54,040 --> 00:26:56,520 Speaker 2: one hundred and ninety thousand dollars per year, because if 496 00:26:56,560 --> 00:26:58,879 Speaker 2: you were in one hundred and ninety thousand dollars a 497 00:26:59,040 --> 00:27:01,080 Speaker 2: year next financial year, you're still going to be taxed 498 00:27:01,080 --> 00:27:04,840 Speaker 2: at a marginal rate of forty seven percent. So people 499 00:27:04,920 --> 00:27:06,520 Speaker 2: below one hundred and ninety then there can be a 500 00:27:06,560 --> 00:27:09,000 Speaker 2: bit of a benefit by trying to prepay interest and 501 00:27:09,080 --> 00:27:11,840 Speaker 2: do other things like that this financial year. With regards 502 00:27:11,840 --> 00:27:14,640 Speaker 2: to broader impacts on financial markets, I don't think it's 503 00:27:14,640 --> 00:27:18,080 Speaker 2: going to be that much. Cuts will happen, people will 504 00:27:18,080 --> 00:27:20,040 Speaker 2: be happy. But you know, if I ask you, can 505 00:27:20,080 --> 00:27:22,239 Speaker 2: you remember the tax cuts that occurred years ago, ten 506 00:27:22,320 --> 00:27:24,399 Speaker 2: years ago, how do you feel about that? Does that 507 00:27:24,440 --> 00:27:28,120 Speaker 2: still influence your financial decisions? And it is no for everybody, 508 00:27:28,240 --> 00:27:30,399 Speaker 2: So it'll just flow through. People be a little bit 509 00:27:31,359 --> 00:27:33,040 Speaker 2: richer with more money in their pockets, and then everyone 510 00:27:33,080 --> 00:27:33,840 Speaker 2: will get on with life. 511 00:27:37,640 --> 00:27:40,920 Speaker 1: They might spend more, though, which could push up inflation. Yeah, 512 00:27:40,920 --> 00:27:43,640 Speaker 1: I don't say that. I'm looking forward. I was looking 513 00:27:43,720 --> 00:27:45,520 Speaker 1: forward to interest rates coming down. 514 00:27:45,680 --> 00:27:47,919 Speaker 2: Later this year. Yeah, it looks like next year. Now 515 00:27:48,080 --> 00:27:48,760 Speaker 2: is the later? 516 00:27:48,880 --> 00:27:51,320 Speaker 1: Oh yeah, now they're saying December twenty twenty five. This 517 00:27:51,480 --> 00:27:54,480 Speaker 1: is the money markets. Oh yeah, why don't you say 518 00:27:54,520 --> 00:27:57,320 Speaker 1: twenty twenty six file you're at it? Oh lord, yes, 519 00:27:57,440 --> 00:27:59,680 Speaker 1: they'll be waiting. We did say, we did say a 520 00:27:59,720 --> 00:28:01,720 Speaker 1: lot time and go on this show. Don't be waiting 521 00:28:01,760 --> 00:28:04,680 Speaker 1: for their interest rate cuts, my friends. There is no 522 00:28:04,880 --> 00:28:08,040 Speaker 1: sign of them at all. But thank you for the question. Bad, 523 00:28:08,200 --> 00:28:13,040 Speaker 1: very very interesting. So tax cuts, yes, some obvious things 524 00:28:13,200 --> 00:28:17,560 Speaker 1: is that people will have more to spend. Two surveys, 525 00:28:17,680 --> 00:28:20,680 Speaker 1: NAB and Westpact, both done in the last month, both 526 00:28:20,760 --> 00:28:23,840 Speaker 1: said the same thing, that the majority of people intend 527 00:28:23,920 --> 00:28:26,440 Speaker 1: to save their tax cuts. And the only thing I 528 00:28:26,520 --> 00:28:28,680 Speaker 1: have to say about those surveys is what people say 529 00:28:28,720 --> 00:28:31,159 Speaker 1: on surveys and what they do can be very very different. 530 00:28:31,400 --> 00:28:36,200 Speaker 1: As you know from election polls. Pre election, people will 531 00:28:36,200 --> 00:28:38,720 Speaker 1: always say what you what they think they should say. 532 00:28:39,400 --> 00:28:41,720 Speaker 1: I say the chances that the people will save eighty 533 00:28:41,800 --> 00:28:45,560 Speaker 1: percent of their tax cuts are zilch. That's my that's 534 00:28:45,600 --> 00:28:47,720 Speaker 1: my personal view. What do you think? 535 00:28:48,400 --> 00:28:51,560 Speaker 2: I agree? I agree, it's been tough time. 536 00:28:52,360 --> 00:28:56,239 Speaker 1: Say that anyway, won't you? Yeah? Did the extend they 537 00:28:56,280 --> 00:28:57,160 Speaker 1: even notice them? 538 00:28:58,880 --> 00:28:59,280 Speaker 2: You know what? 539 00:28:59,440 --> 00:29:01,040 Speaker 1: I I don't mean to be facetious there, but how 540 00:29:01,080 --> 00:29:05,440 Speaker 1: many people are so numerous and financially obsessive that they 541 00:29:05,560 --> 00:29:11,600 Speaker 1: will note the change per per in their in their pay? 542 00:29:11,800 --> 00:29:13,800 Speaker 1: Not everybody, I have to say, and I'm not just 543 00:29:13,920 --> 00:29:18,040 Speaker 1: guessing about that. In those same surveys, twenty percent of 544 00:29:18,080 --> 00:29:21,760 Speaker 1: people didn't know anything about the text cuts. They didn't 545 00:29:21,840 --> 00:29:24,720 Speaker 1: know they were coming because they haven't been listening to 546 00:29:24,840 --> 00:29:29,680 Speaker 1: podcasts or reading newspapers. All right, we will take a break. 547 00:29:29,760 --> 00:29:33,440 Speaker 1: I'm back with some very good questions from John and 548 00:29:33,640 --> 00:29:38,800 Speaker 1: Dan and Rick. Hello. Welcome back to The Australian's Money 549 00:29:38,880 --> 00:29:45,240 Speaker 1: Puzzle podcast. It's a reader's and listeners listeners questions special 550 00:29:45,720 --> 00:29:48,440 Speaker 1: they have been building up. I thought you might enjoy 551 00:29:48,760 --> 00:29:52,880 Speaker 1: hearing the questions that are coming in from all sorts 552 00:29:52,880 --> 00:29:56,360 Speaker 1: of angles. Sometimes we in the show, we we do 553 00:29:56,840 --> 00:29:59,800 Speaker 1: them at the end. Perhaps we do do them too quickly, 554 00:30:00,440 --> 00:30:03,720 Speaker 1: And I thought this was an opportunity expandid opportunity to 555 00:30:03,880 --> 00:30:06,400 Speaker 1: catch up to speed on them and actually just zone 556 00:30:06,440 --> 00:30:09,400 Speaker 1: in on them as well. Okay, question from John Great podcast. 557 00:30:09,480 --> 00:30:13,280 Speaker 1: We have three children age between twelve and eighteen. I 558 00:30:13,360 --> 00:30:16,400 Speaker 1: would like them to be involved in the families financial decisions. 559 00:30:16,600 --> 00:30:19,200 Speaker 1: I think this would help them in the future. At 560 00:30:19,280 --> 00:30:24,120 Speaker 1: what age would you recommend involving them in financial decisions, 561 00:30:24,320 --> 00:30:28,320 Speaker 1: what chairs to buy, what property to invest in, how 562 00:30:28,400 --> 00:30:31,440 Speaker 1: to manager family trust? Should they be so lucky as 563 00:30:32,080 --> 00:30:34,440 Speaker 1: having one? He didn't say that that was me at 564 00:30:34,480 --> 00:30:41,200 Speaker 1: the end, James Strars, we both have this situation. My guys. 565 00:30:41,440 --> 00:30:46,280 Speaker 1: I have to say. They used to say that they 566 00:30:46,360 --> 00:30:50,840 Speaker 1: understood everything anyway, and then I would challenge them. I say, 567 00:30:50,920 --> 00:30:52,160 Speaker 1: what do you know about Super? 568 00:30:52,280 --> 00:30:52,360 Speaker 2: Oh? 569 00:30:52,440 --> 00:30:54,200 Speaker 1: I know all about that it was, and then I'd 570 00:30:54,200 --> 00:30:56,360 Speaker 1: ask them one or two questions, precise questions. They would 571 00:30:56,480 --> 00:31:01,720 Speaker 1: know the answers. So I have found that their interest 572 00:31:02,200 --> 00:31:07,800 Speaker 1: is building rapidly and it's almost entirely linked with not 573 00:31:07,960 --> 00:31:10,160 Speaker 1: with Super. They're aware of Super, but it's almost entirely 574 00:31:10,200 --> 00:31:13,560 Speaker 1: linked with the property prices and how they will fare 575 00:31:13,680 --> 00:31:19,000 Speaker 1: and how they will ever get into the metropolitan markets 576 00:31:19,040 --> 00:31:21,440 Speaker 1: of Australia. Which is probably where they're going to live, 577 00:31:21,840 --> 00:31:24,040 Speaker 1: considering the sort of jobs that they are probably going 578 00:31:24,120 --> 00:31:29,760 Speaker 1: to get. But so I tried with my guys when 579 00:31:29,800 --> 00:31:34,160 Speaker 1: they were but I think there were sixteen seventeen eighty 580 00:31:34,240 --> 00:31:36,880 Speaker 1: when I even tried in any serious way to sit 581 00:31:36,960 --> 00:31:38,800 Speaker 1: them down a bit. What do you think and what 582 00:31:39,280 --> 00:31:40,960 Speaker 1: do you think and what do you actually do? 583 00:31:41,160 --> 00:31:44,480 Speaker 2: B Okay, all right? So similar to John, I've got 584 00:31:44,560 --> 00:31:49,440 Speaker 2: three kids, three girls, so Vivian's five, Viva seven, and 585 00:31:49,520 --> 00:31:51,800 Speaker 2: Chloe's fourteen, so I can speak up to fourteen years 586 00:31:51,840 --> 00:31:55,040 Speaker 2: of age with experience. And I also I insist that 587 00:31:55,080 --> 00:31:58,000 Speaker 2: they listened to the podcast around the dinner table. So hello, girls, 588 00:31:58,200 --> 00:32:01,040 Speaker 2: I love you, hope you're listening to this. And what 589 00:32:01,360 --> 00:32:04,440 Speaker 2: we do is, of course, you want them to understand 590 00:32:04,480 --> 00:32:07,000 Speaker 2: finance at a young age, but I find that children 591 00:32:07,080 --> 00:32:10,240 Speaker 2: just aren't interested and you shouldn't force it on them. 592 00:32:10,560 --> 00:32:13,160 Speaker 2: I found that with Chloe, my elders starting to introduce 593 00:32:13,200 --> 00:32:15,520 Speaker 2: her to debit cards, and I think the good age 594 00:32:15,600 --> 00:32:17,960 Speaker 2: is anywhere from twelve to maybe up to fifteen years 595 00:32:17,960 --> 00:32:20,000 Speaker 2: of age, so they start to understand the basics of 596 00:32:20,520 --> 00:32:24,640 Speaker 2: spending money and earning money through pocket money and doing 597 00:32:24,760 --> 00:32:27,920 Speaker 2: jobs from fifteen onwards, and then starting to introduce them 598 00:32:27,960 --> 00:32:31,600 Speaker 2: to investments, maybe from sixteen through to twenty as they 599 00:32:31,640 --> 00:32:34,400 Speaker 2: show interest in that, and then introducing them to more 600 00:32:34,480 --> 00:32:37,240 Speaker 2: advanced things such as if you have a family trust, 601 00:32:38,040 --> 00:32:40,200 Speaker 2: how that works, what that means for them in the future, 602 00:32:40,280 --> 00:32:44,360 Speaker 2: the property market, superannuation, saving for the future. I think 603 00:32:44,360 --> 00:32:47,160 Speaker 2: all that foundational stuff. Anyway, from twenty to twenty five. 604 00:32:47,240 --> 00:32:49,800 Speaker 2: It's sort of sounds a bit late, but really it's 605 00:32:49,840 --> 00:32:52,520 Speaker 2: difficult to sit an eighteen year old down and get 606 00:32:52,560 --> 00:32:55,600 Speaker 2: them to think about supernuation and salary sacrificing in the 607 00:32:55,640 --> 00:32:58,640 Speaker 2: benefits they'll get at age sixty when they're thinking about 608 00:32:58,760 --> 00:32:59,920 Speaker 2: going to the next tailor swift. 609 00:33:00,960 --> 00:33:04,920 Speaker 1: That's right, Well that was I suppose you can kick 610 00:33:04,960 --> 00:33:08,160 Speaker 1: it around forever. But that was the brilliance, in some 611 00:33:08,320 --> 00:33:11,200 Speaker 1: ways of the Paul Kating move of the SGC. I mean, 612 00:33:11,240 --> 00:33:13,200 Speaker 1: here we are saying, you know, you can actually tap 613 00:33:13,280 --> 00:33:16,200 Speaker 1: it for your super on the same show. But there's 614 00:33:16,200 --> 00:33:18,200 Speaker 1: no two ways about it. I mean, it's in your 615 00:33:18,280 --> 00:33:20,800 Speaker 1: twenties that you really really got to get started to 616 00:33:20,840 --> 00:33:22,800 Speaker 1: get the compounding, and it's in your twenties that you 617 00:33:23,000 --> 00:33:27,040 Speaker 1: really really really don't care two jots for super because 618 00:33:27,040 --> 00:33:30,360 Speaker 1: you think you're going to live forever, et cetera. So 619 00:33:31,160 --> 00:33:32,760 Speaker 1: one other thing I thought I just thought I might 620 00:33:32,920 --> 00:33:36,600 Speaker 1: mention to John is that in my dealings with very 621 00:33:36,720 --> 00:33:39,680 Speaker 1: very wealthy families, and we've had advisers on the show, 622 00:33:39,760 --> 00:33:43,440 Speaker 1: you know who don't say this on the show, but 623 00:33:44,160 --> 00:33:45,760 Speaker 1: they won't deal with people that have you know, they 624 00:33:45,800 --> 00:33:48,720 Speaker 1: they have to deal with people with ten million. I've had. 625 00:33:48,800 --> 00:33:52,080 Speaker 1: There's one advisory, there's two advisors on the show that 626 00:33:52,200 --> 00:33:55,760 Speaker 1: basically that's their range. They just have a small squad 627 00:33:55,800 --> 00:33:58,960 Speaker 1: of clients and these people are very very wealthy. That's 628 00:33:59,000 --> 00:33:59,400 Speaker 1: all they do. 629 00:34:00,400 --> 00:34:01,200 Speaker 2: Uh. And and. 630 00:34:02,960 --> 00:34:06,760 Speaker 1: What they tell me is how these matriarchs and patriarchs 631 00:34:07,440 --> 00:34:14,000 Speaker 1: at seriously wealthy families, how they get their kids. More 632 00:34:14,040 --> 00:34:16,680 Speaker 1: difficult in sub cases for them because you can't really 633 00:34:16,760 --> 00:34:19,120 Speaker 1: convince the kids that they're going to ever need money, 634 00:34:20,280 --> 00:34:22,360 Speaker 1: that they're going to have to pay the mortgage and 635 00:34:22,400 --> 00:34:24,040 Speaker 1: blah blah blah, because they know they're not going to 636 00:34:24,080 --> 00:34:26,960 Speaker 1: because they know there's just so much there. And so 637 00:34:27,080 --> 00:34:31,359 Speaker 1: the issue becomes imperative. Uh And what and their way 638 00:34:31,440 --> 00:34:35,239 Speaker 1: in is philanthropy. So they say, well, you know, you 639 00:34:35,520 --> 00:34:38,800 Speaker 1: you want to achieve something in climate, climate change, or 640 00:34:38,920 --> 00:34:41,799 Speaker 1: you want to make a difference in some way, get 641 00:34:41,920 --> 00:34:47,919 Speaker 1: involved in the Family Investment Committee and have your place 642 00:34:48,000 --> 00:34:50,080 Speaker 1: at the table, and then we'll see if we can 643 00:34:50,840 --> 00:34:54,759 Speaker 1: do what you wanted to do. That's actually a way 644 00:34:54,840 --> 00:34:57,200 Speaker 1: in as I imagine that, imagine that it works for 645 00:34:57,560 --> 00:34:59,720 Speaker 1: all families, at all ages and all types of families. 646 00:34:59,760 --> 00:35:04,400 Speaker 1: It's that the figures are smaller. Perhaps all right, maybe 647 00:35:04,480 --> 00:35:07,880 Speaker 1: believe it at that terrific great great answers and and 648 00:35:08,080 --> 00:35:10,759 Speaker 1: and really good on all those issues. And thank you 649 00:35:10,880 --> 00:35:14,680 Speaker 1: everybody for listening to the show. Okay emails the money 650 00:35:14,719 --> 00:35:18,200 Speaker 1: Puzzle at the Australian dot com dot a U Okay, 651 00:35:18,280 --> 00:35:18,879 Speaker 1: talk to you soon.