WEBVTT - Special edition: Listener questions answered 0:00:09.440 --> 0:00:12.640 Hello, and welcome to The Australian's Money Puzzle podcast. I'm 0:00:12.760 --> 0:00:17.000 James Kirby, the editor at The Australian, and welcome aboard everybody. Well, 0:00:17.040 --> 0:00:20.480 I've had by public demand, you might say, we've had 0:00:20.720 --> 0:00:23.320 lots of questions, and I know they've been banking up 0:00:23.320 --> 0:00:25.640 and I know a lot of you have had questions 0:00:26.079 --> 0:00:28.800 in the tank if you like for some time today, 0:00:28.840 --> 0:00:32.479 we're going to do a special on readers questions and 0:00:32.560 --> 0:00:34.519 I think you'll find it very interesting. We will go 0:00:34.560 --> 0:00:36.680 off in all sorts of directions, so you won't have 0:00:36.760 --> 0:00:38.839 a common theme if you like. There won't be much 0:00:38.840 --> 0:00:41.400 in the way of structure or order that we normally have, 0:00:41.920 --> 0:00:44.680 but we will actually bounce off a lot of really 0:00:44.720 --> 0:00:49.240 interesting subjects. There are all questions from listeners, all types, 0:00:50.000 --> 0:00:54.120 all real and genuine. I'd like to add, and who 0:00:54.440 --> 0:00:57.280 will help me with these questions? Well, I mentioned to 0:00:57.360 --> 0:00:59.319 you that I'm away for a week, so the next 0:00:59.400 --> 0:01:02.520 two shows will be hosted by James Girard and he 0:01:02.600 --> 0:01:04.880 is here to help me today. How are you, James Gerard? 0:01:05.200 --> 0:01:07.800 I'm doing well. Good to be back again. Thanks James, 0:01:08.280 --> 0:01:08.959 You're welcome. 0:01:09.040 --> 0:01:12.480 James Gerard, a financial advisor dot com dot au here 0:01:12.520 --> 0:01:16.319 with me. So on the other thing I'm going to do, James, 0:01:16.400 --> 0:01:19.399 is as you know, i'm trained as an editor, I'm 0:01:19.440 --> 0:01:22.280 a bit I'm a bit severe on the editing, as 0:01:22.360 --> 0:01:25.720 you would probably know as a contributor to the paper. 0:01:26.000 --> 0:01:29.520 But more than that, with the with the correspondence we 0:01:29.600 --> 0:01:32.840 get and I do want to take the opportunity to 0:01:32.880 --> 0:01:35.959 say thank you to everyone who writes in and if 0:01:36.000 --> 0:01:38.520 you ever feel the urge to write a review on 0:01:39.240 --> 0:01:41.880 your podcast app, I would really like that too. But 0:01:42.120 --> 0:01:45.039 in editing, I keep the questions I demand if you 0:01:45.240 --> 0:01:47.440 like that, questions are short, and people have got very 0:01:47.480 --> 0:01:49.760 good at that. That's just in the interest of fairness 0:01:49.800 --> 0:01:52.480 really that we can get more done. But also, James, 0:01:52.520 --> 0:01:57.920 as an editor, I snip off endearments or things like 0:01:58.000 --> 0:01:59.560 you know, I love the show or whatever, but I 0:01:59.560 --> 0:02:02.440 think today we leave them in just to give people 0:02:02.440 --> 0:02:04.279 a flavor here and there of some of the stuff 0:02:04.320 --> 0:02:09.000 that people are saying. All right, so my first question, 0:02:09.080 --> 0:02:13.079 and we'll read them alternately, James, and we'll take our 0:02:13.200 --> 0:02:16.359 usual segments, but we'll try and do maybe three or 0:02:16.360 --> 0:02:20.040 four in each segment. So the first question straight off, first, 0:02:20.040 --> 0:02:25.760 Cab off the rank, folks is Yolanda Hiolanda. She says, 0:02:25.760 --> 0:02:30.280 you mentioned a Super black spot, a zone where you 0:02:30.400 --> 0:02:32.800 have too much or too little in Super. Are you 0:02:32.919 --> 0:02:37.400 able to describe this in more detail and give a range? 0:02:38.840 --> 0:02:43.880 Surely a very common range would be six six seven 0:02:43.960 --> 0:02:46.480 to one point five million? What is the amount most 0:02:46.520 --> 0:02:48.880 people with a full working life which SUPER will have 0:02:49.000 --> 0:02:53.639 in superun retirement without making extra extra contributions. And if 0:02:53.639 --> 0:02:56.520 you can't answer it, she says, can you point me 0:02:56.560 --> 0:02:59.640 to someone who can hold on? Yolanda, we will make 0:02:59.639 --> 0:03:02.720 a damn good job of answering this. I hope James 0:03:02.760 --> 0:03:05.800 calls this is really funny. James as an advisor and 0:03:05.840 --> 0:03:10.680 an optimist, cause it the sweet spot. He talks about 0:03:10.720 --> 0:03:13.639 sweet spot and Super where you should be. I talk 0:03:13.680 --> 0:03:16.080 about the black spot and Super where you shouldn't be. 0:03:16.440 --> 0:03:20.919 That might tell you something about our distinct personalities. But anyway, 0:03:21.000 --> 0:03:25.000 for what it's worth, here's the thing. And always remember, 0:03:25.080 --> 0:03:28.200 of course, before we say any answer here, it's probably 0:03:28.240 --> 0:03:30.960 better to have your own money. Of course, it is okay. 0:03:30.960 --> 0:03:32.640 You're going to be more independent if you've got a 0:03:32.680 --> 0:03:34.480 million in Super and someone says I don't have a 0:03:34.480 --> 0:03:36.280 million in super, but guess what I might as well 0:03:36.320 --> 0:03:39.280 have for the amount I'm getting in various ways through 0:03:39.320 --> 0:03:46.440 government payments, and technically that can actually be argued in 0:03:46.480 --> 0:03:50.920 some cases it's not the same. However, for all the 0:03:50.960 --> 0:03:56.200 effort we make for all the savings, you do wonder 0:03:56.280 --> 0:03:59.240 sometimes is there a zone in super where when it's 0:03:59.480 --> 0:04:04.920 arguable on a year to year income basis okay, and 0:04:04.960 --> 0:04:07.040 I'm including everything you can get from the government done 0:04:07.080 --> 0:04:10.360 Central Link and coming with seniors health cards and everything else, 0:04:10.920 --> 0:04:13.880 and there is a zone where it's arguable whether it's 0:04:13.920 --> 0:04:17.600 worth the effort. I think James, it's somewhere in the 0:04:17.920 --> 0:04:23.280 order of four hundred thousand to six hundred thousand. What 0:04:24.279 --> 0:04:24.960 do you work on? 0:04:26.360 --> 0:04:31.880 Yeah, that's about right. It depends on the person, if 0:04:31.880 --> 0:04:35.000 they're single, if they're a couple, if they own a house, 0:04:35.040 --> 0:04:38.920 or if they don't own a house. Because what I call, 0:04:39.320 --> 0:04:42.240 as you've mentioned, the sweet spot. So the ideal situation 0:04:42.640 --> 0:04:45.360 is where you can pick up the age pension from 0:04:45.480 --> 0:04:48.360 the government in retirement, which is available from age sixty 0:04:48.400 --> 0:04:51.680 seven onwards but subject to an assets and income test. 0:04:51.839 --> 0:04:55.360 But you're also what we call a self funded retiree 0:04:55.800 --> 0:04:59.120 or have hundreds of thousands of dollars in super as well. 0:04:59.400 --> 0:05:01.440 So the way that you sort of hit that sweet 0:05:01.480 --> 0:05:04.200 spot to get the full age pension from the government, 0:05:04.520 --> 0:05:07.600 which for a single person is almost thirty thousand dollars 0:05:07.640 --> 0:05:09.640 a year. So it's not pocket money here. 0:05:09.839 --> 0:05:11.240 Well that's what happened when I was saying about a 0:05:11.320 --> 0:05:13.760 million dollars. I mean, if you're very conservative estimate if 0:05:13.800 --> 0:05:16.280 you had it in a poorly paying cash account, a 0:05:16.360 --> 0:05:18.720 million dollars, what the thirty thousand a year might be 0:05:18.920 --> 0:05:21.000 there thereabouts what you're going to get, right, So. 0:05:21.400 --> 0:05:23.760 Yeah, that's right. So yeah, you caush your mind back 0:05:23.760 --> 0:05:25.320 a couple of years ago when the cash rates and 0:05:25.440 --> 0:05:27.400 will turn to positve rates, we're giving you half a percent, 0:05:27.640 --> 0:05:30.520 one percent, you're getting peanuts and even on a million dollars. 0:05:30.760 --> 0:05:34.160 So getting this guaranteed payment of thirty thousand if you're 0:05:34.160 --> 0:05:36.560 a single, forty five thousand if you're a couple from 0:05:36.600 --> 0:05:39.040 the government is great. But of course, with the cash 0:05:39.120 --> 0:05:41.480 rate going up, the return out of super being better. 0:05:42.240 --> 0:05:45.679 But still the principles are the same around this sweet spot. 0:05:46.480 --> 0:05:48.800 So the place that your lander should have a look 0:05:48.839 --> 0:05:52.839 at is it's called a guide to Australian Government payments 0:05:52.920 --> 0:05:56.000 and it's on the services website and you go there, 0:05:56.160 --> 0:05:58.040 you have a look in the back around the assets 0:05:58.120 --> 0:06:00.560 test section and then you just identify which one you 0:06:00.640 --> 0:06:02.840 are and again are you single, you're a couple, Do 0:06:02.839 --> 0:06:04.280 you own a house? Do you not own a house? 0:06:04.480 --> 0:06:06.800 And it will show you how much assets, so how 0:06:06.880 --> 0:06:10.039 much super value of your bank account, car contents, how 0:06:10.120 --> 0:06:12.840 much you can have in assets to receive the full 0:06:12.880 --> 0:06:15.320 age pension. And then if you exceed the threshold for 0:06:15.360 --> 0:06:17.000 an age and full age pension, you're going to the 0:06:17.080 --> 0:06:19.320 part pension range. And then if you exceed that up 0:06:19.400 --> 0:06:20.960 a threshold, you get zip. 0:06:21.720 --> 0:06:23.919 So it's called it, and they taper it, don't they. 0:06:24.040 --> 0:06:27.640 So it's like for every dollar over x, it takes 0:06:27.680 --> 0:06:33.000 fifty cents off your pension. And so keep that in mind. 0:06:33.040 --> 0:06:34.840 It's a long term thing. But it's I mean, it's 0:06:34.920 --> 0:06:38.520 I think it's just a huge issue. And by the way, folks, 0:06:38.560 --> 0:06:43.040 all these retirement calculators, you know, be very careful, be 0:06:43.200 --> 0:06:45.559 damn skeptical about these people saying you need a million 0:06:45.600 --> 0:06:47.479 and super you need one point six million, a million, 0:06:48.200 --> 0:06:50.640 what do you need? Well, you know there's a government 0:06:50.680 --> 0:06:53.560 pension for first of all, and some people will live 0:06:53.640 --> 0:06:56.440 on that. Part two, there are a lot of other 0:06:56.640 --> 0:07:01.719 issue items that you can pick up as an older 0:07:01.800 --> 0:07:07.279 person if you don't have SUPER. But the megapoint I'd 0:07:07.360 --> 0:07:12.559 like to make to everyone, James is if you don't 0:07:12.800 --> 0:07:15.560 own your own home, you will pay highly in this 0:07:15.680 --> 0:07:20.240 system because it's entirely biased towards the homeowner because the 0:07:20.480 --> 0:07:26.040 home value is basically not counted, but all SUPER is. 0:07:26.440 --> 0:07:29.480 So if there's two people, one has a five million 0:07:29.480 --> 0:07:32.120 dollar house and tiny bit of SUPER and the other 0:07:32.200 --> 0:07:37.080 person has a million dollars and SUPER but no home, 0:07:38.480 --> 0:07:41.760 then that person with just lots of SUPER and no house, 0:07:42.280 --> 0:07:44.160 they're going to do worse than the system, aren't they. 0:07:45.360 --> 0:07:45.680 They are. 0:07:45.840 --> 0:07:48.840 That's a really good point. The net assets of the 0:07:48.920 --> 0:07:53.720 person with the house is much higher, but they get 0:07:53.760 --> 0:07:55.800 the pension, where it's someone with a lower net asset, 0:07:55.880 --> 0:07:58.160 but just because their money is in SUPER, they don't 0:07:58.200 --> 0:08:01.680 get the pensions. So that's a very good thing. That 0:08:01.800 --> 0:08:04.560 the good point to note that the family house is 0:08:04.680 --> 0:08:07.080 not included in the assets test. 0:08:07.480 --> 0:08:09.280 So keep that in mind, you lander, and all the 0:08:09.360 --> 0:08:12.679 your lander's out there. No advice here, of course, information only, 0:08:13.200 --> 0:08:16.760 And also folks, That is why if you were listening 0:08:16.840 --> 0:08:19.800 to the most recent show, it's why I've come around 0:08:19.840 --> 0:08:21.840 to saying you, yes, you can use your super to 0:08:21.920 --> 0:08:24.280 buy a family home. Not because it's a great idea, 0:08:24.400 --> 0:08:27.440 not because it's in principle I think it's terrific, but 0:08:27.600 --> 0:08:30.320 because the tax system is so loaded against you if 0:08:30.360 --> 0:08:33.000 you don't have a home that you are better off 0:08:33.160 --> 0:08:36.920 with one before you start forever, not just in midlife, 0:08:37.040 --> 0:08:41.640 young life, but even more so when you're retired. Okay, 0:08:41.960 --> 0:08:45.000 a question from Luke. Do you want to read that one, James? 0:08:45.679 --> 0:08:50.040 I will. When in a DP acronym for dividend reinvestment 0:08:50.080 --> 0:08:53.599 plan for an ETF acronym for exchange traded fund, is 0:08:53.679 --> 0:08:57.120 a dividend reinvestment made at the price post or pre 0:08:57.400 --> 0:09:01.600 distribution post. 0:09:03.040 --> 0:09:06.400 Yes, oh please? Do you're the financial advisor? Yes? 0:09:06.480 --> 0:09:09.720 Okay, so I wasn't sure. If I asked you a bit, 0:09:10.240 --> 0:09:10.880 I'll ask. 0:09:11.360 --> 0:09:13.400 If they're hard. If they're hard, you answer, it's really 0:09:13.960 --> 0:09:15.040 it's basically the routine. 0:09:15.600 --> 0:09:17.920 All right, got it? Sorry, I'll get with the program. Okay. 0:09:17.960 --> 0:09:21.120 So the answer is that the dividend is paid and 0:09:21.640 --> 0:09:25.080 then it gets reinvested. So the dividend reinvestment is made 0:09:25.200 --> 0:09:28.280 based on the share price after the end. 0:09:29.240 --> 0:09:33.160 They so so they figure out what the dividend is. 0:09:33.880 --> 0:09:38.080 The dividend is the dollar per share, and then once 0:09:38.160 --> 0:09:41.679 they know that, I presume after thirty within the period 0:09:41.760 --> 0:09:44.480 of something, they reinvest that dollar for you in the 0:09:44.600 --> 0:09:47.040 shares that you have in there in the in the 0:09:47.160 --> 0:09:49.600 ETF just like a share, just like an ordinary share. 0:09:49.679 --> 0:09:51.400 They do it the same way. I don't believe there's 0:09:51.440 --> 0:09:53.600 any difference at all, And I know people are always 0:09:53.640 --> 0:09:57.000 asking that. Okay, Pavel p A v. E. L Hi 0:09:57.440 --> 0:10:01.040 as a regular listener to the podcast, and it informative 0:10:01.120 --> 0:10:04.760 and enjoyable, and especially given the quality of the guests 0:10:04.800 --> 0:10:08.280 that you have honored their experience and willingness to share 0:10:08.320 --> 0:10:10.960 good insights. That's you, James Gerard. I think it would 0:10:11.000 --> 0:10:15.800 be great if, not if in the not too distant future, 0:10:16.120 --> 0:10:18.920 you could have a financial advisor to summarize what the 0:10:19.040 --> 0:10:24.400 recontribution strategy is. Oh, okay, our completely upside down, totally 0:10:24.440 --> 0:10:28.600 twisted supersystem has a thing which allows you to take 0:10:28.760 --> 0:10:32.920 money out and put it back in and reduce your 0:10:33.040 --> 0:10:38.800 tax ability of your ultimate inheritance you might pass on 0:10:38.920 --> 0:10:43.480 through your super That's it conceptually. Would you explain what 0:10:43.640 --> 0:10:46.400 a recontribution strategy is, James, how it might work. 0:10:48.920 --> 0:10:54.319 Yep. So we have this hangover from supernuation years of 0:10:54.480 --> 0:10:58.160 the past, with components of supernuation. There's a taxable component, 0:10:58.280 --> 0:11:01.360 there's a tax free component. There's even a less common 0:11:01.520 --> 0:11:04.839 untaxed component as well. And this was back when I 0:11:04.880 --> 0:11:07.440 first started my career twenty years ago, where we had 0:11:07.480 --> 0:11:10.040 things like reasonable benefits limits and we had to do 0:11:10.160 --> 0:11:13.120 these complex calculations to work out how much people could 0:11:13.200 --> 0:11:16.120 get out of super in retirement tax free. But going 0:11:16.160 --> 0:11:18.199 back on maybe fifteen years ago now they sort of 0:11:18.240 --> 0:11:20.480 simplified the system and got rid of all these complex 0:11:20.559 --> 0:11:22.880 calculations and basically said that people over the age of 0:11:22.920 --> 0:11:25.839 sixty who are retired will have everything tax free and 0:11:26.200 --> 0:11:29.120 if they're in the pension phase. But the last the 0:11:29.200 --> 0:11:31.360 past few years they've changed the rules a bit and 0:11:31.400 --> 0:11:33.920 they've brought in these one point nine million dollar caps, 0:11:33.920 --> 0:11:35.880 and it's going to be a three million dollar cap 0:11:36.240 --> 0:11:40.520 at thirty percent. But that aside, for most people who 0:11:40.559 --> 0:11:44.600 are retired in drawing a pension money out of it's 0:11:44.720 --> 0:11:47.880 tax free. So the strategy here around the recontribution is 0:11:47.920 --> 0:11:50.360 that it didn't really really mean anything to you while 0:11:50.400 --> 0:11:52.679 you're retired drawing your pension because it's tax free. It's 0:11:52.760 --> 0:11:56.360 more for your non dependence. So typically adult children who 0:11:56.600 --> 0:12:00.640 inherit your super money after you pass away dependent so 0:12:00.720 --> 0:12:03.600 spouses they receive the money tax free from your super 0:12:03.640 --> 0:12:06.840 if you pass away, but non dependence. So for kids 0:12:06.880 --> 0:12:09.319 who are grown up, who have their own spouses and 0:12:09.400 --> 0:12:11.920 families and who are not reliant on you, they have 0:12:12.080 --> 0:12:16.160 to pay seventeen percent tax only on the taxable component 0:12:16.640 --> 0:12:19.280 of your super account. So a lot of people don't 0:12:19.280 --> 0:12:21.400 actually know what their components of their SUPO is, So 0:12:21.440 --> 0:12:22.880 you probably need to look at a statement or bring 0:12:23.000 --> 0:12:24.920 up the super fund and you might be surprised because 0:12:25.320 --> 0:12:28.079 there might be a high taxable component, which again you 0:12:28.080 --> 0:12:30.240 shouldn't be worried about because it doesn't mean anything for 0:12:30.320 --> 0:12:33.839 you in retirement. But there's a planning opportunity depending on 0:12:33.880 --> 0:12:37.400 your age, because you can do this recontribution strategy where 0:12:37.920 --> 0:12:41.160 you take money out of super and then you put 0:12:41.200 --> 0:12:44.000 it back in again, and doing that, you're taking money out, 0:12:44.080 --> 0:12:47.720 and when you take money out, your withdrawal is proportionately 0:12:47.760 --> 0:12:50.920 split between the taxable and tax free component. So in 0:12:51.000 --> 0:12:52.920 simple terms, if you had one hundred thousand dollars in 0:12:53.040 --> 0:12:55.520 your super account and it was fifty percent taxable fifty 0:12:55.559 --> 0:12:58.079 percent tax free, and if you took ten thousand dollars 0:12:58.120 --> 0:13:00.720 out as a lumps on withdrawal, that one thousand dollars 0:13:00.920 --> 0:13:03.840 withdraw payment would be a mix of fifty percent taxable 0:13:03.960 --> 0:13:06.480 fifty percent tax free. And so you've got this ten 0:13:06.520 --> 0:13:09.240 thousand dollars in your bank account. Now you can put 0:13:09.280 --> 0:13:11.520 it back as what we call a non concessional contribution. 0:13:11.800 --> 0:13:14.199 There's no tax payable when that goes back in, and 0:13:14.559 --> 0:13:18.280 that payment adds to the tax free component of your 0:13:18.320 --> 0:13:18.960 super account. 0:13:19.120 --> 0:13:26.920 It's a long, elaborate, my mildly absurd way of legitimize, 0:13:27.240 --> 0:13:35.160 legitimately minimizing the tax of your beneficiaries in the long 0:13:35.200 --> 0:13:36.960 period of time. And most people by the time they 0:13:37.000 --> 0:13:41.000 get inheritance now are adults anyway, aren't they. But the 0:13:41.120 --> 0:13:44.160 other thing is to say, for as, if you've never 0:13:44.280 --> 0:13:49.160 met any voluntary contributions ever, would you're would it be 0:13:49.320 --> 0:13:53.840 one hundred percent taxable? Then that's right, yeah, which would 0:13:53.840 --> 0:13:58.000 be a lot of people. And increasingly and increasingly people 0:13:59.120 --> 0:14:02.800 know that the SGC so high that I imagine that 0:14:02.880 --> 0:14:05.959 group is getting bigger and bigger. Okay, I imagine that 0:14:06.080 --> 0:14:11.679 all makes perfect sense to you also far these are 0:14:11.800 --> 0:14:15.280 questions that I've basically distilled some of the more common 0:14:15.440 --> 0:14:18.800 questions that we get, and we will, as I say, 0:14:18.920 --> 0:14:22.520 be bouncing around. That was very quickly there. That was 0:14:22.560 --> 0:14:26.160 two on super and one on dividend reinvestment plans, which, 0:14:26.200 --> 0:14:28.440 of course I'm sure you know what they are. Once 0:14:28.520 --> 0:14:30.920 upon a time all shares used to have them. Now 0:14:31.000 --> 0:14:34.160 it's sort of entirely they're so sort of ruthless in 0:14:34.200 --> 0:14:36.800 their ways corporate, so they turned them all and off 0:14:36.840 --> 0:14:40.520 as it suits them. But it's a good discipline if 0:14:40.600 --> 0:14:42.520 you have shares to just sign up for a d 0:14:42.680 --> 0:14:44.800 or P unless you're very efficient and you know exactly 0:14:44.840 --> 0:14:46.440 what you're going to do with your cash every time. 0:14:47.320 --> 0:14:49.760 And the other theory academically is like if you think 0:14:50.000 --> 0:14:52.920 a company is good enough, like if you think Commonwealth 0:14:53.080 --> 0:14:55.640 is good enough, common Well Bank's good enough, then it's 0:14:55.720 --> 0:14:59.960 probably good enough to reinvest in. That is an interesting 0:15:00.080 --> 0:15:01.680 sort of test if you ever want to sign up 0:15:01.720 --> 0:15:04.360 for a dividend reinvestment plan for either an ETF or 0:15:04.440 --> 0:15:06.600 a share. Okay, we'll take a short break and we'll 0:15:06.600 --> 0:15:10.240 be back in a moment. Hello, Welcome back to the 0:15:10.320 --> 0:15:14.480 Australian's Money Puzzle podcast James Kirby with James Girard, and 0:15:14.560 --> 0:15:18.560 we have a reader's Questions special show for you today. 0:15:19.040 --> 0:15:23.600 Nothing but readers questions, all sorts, shapes and sizes, and 0:15:24.200 --> 0:15:26.800 a really interesting one from Scott. I've got to read this. 0:15:28.200 --> 0:15:30.800 This is a great question. What is the endgame of 0:15:30.960 --> 0:15:34.240 someone who invests in shares outside of Super for the 0:15:34.320 --> 0:15:38.560 long term? What's their desired end state? If you're investing 0:15:38.600 --> 0:15:40.240 in shares for the long term, you'd surely do it 0:15:40.320 --> 0:15:43.680 in Super if you're worried about quick access or liquidity. 0:15:43.760 --> 0:15:47.160 That's what an emergency fund is for. I'm forty and 0:15:47.240 --> 0:15:49.560 I've spent the last fifteen years investing in the share 0:15:49.600 --> 0:15:54.280 market for the long term outside Super through index based ETPs. 0:15:54.800 --> 0:15:57.240 It suddenly dawned on me that I would likely to 0:15:57.280 --> 0:16:01.760 crystallize these investments before retirement. I would have invested through Super. Whoops, 0:16:02.520 --> 0:16:05.760 Well yeah, okay, Scott and all the Scott's out there. 0:16:05.840 --> 0:16:08.800 Interesting point. I originally, when I saw this question, I 0:16:08.840 --> 0:16:10.680 thought it was what's the end game of investing? There 0:16:10.720 --> 0:16:12.840 was the old joke in the in the in the 0:16:12.920 --> 0:16:17.440 Danny DeVito movie about with the two they're fighting over, 0:16:17.760 --> 0:16:20.200 it's all about It's about money this movie. It will 0:16:20.240 --> 0:16:23.200 come to me in a second. Well, it's cold, and 0:16:23.360 --> 0:16:26.200 he explains to someone else on Wall Street. The guy says, 0:16:26.240 --> 0:16:28.640 what what's it all about? Why are we doing this anyway? 0:16:28.680 --> 0:16:31.000 And Danny DeVito says, the guy who dies with the 0:16:31.120 --> 0:16:36.800 most wins, which which is what people will say sometimes 0:16:36.920 --> 0:16:41.200 to me on issues about Super. But I say to them, yes, yes, 0:16:41.320 --> 0:16:44.320 well settle down there. We all need money in this world, 0:16:44.640 --> 0:16:47.000 and we need to be able to defend ourselves in 0:16:47.120 --> 0:16:50.120 times of difficulty. That's the first thing not to mention 0:16:50.480 --> 0:16:52.280 when we get when we are not able to make 0:16:52.320 --> 0:17:00.480 the Sundari we make in our prime. Now, Scott, the 0:17:00.560 --> 0:17:02.240 only thing I would say to you in retrospect because 0:17:02.280 --> 0:17:05.760 it's too late, right, I imagine, so you could switch 0:17:05.840 --> 0:17:08.199 this stuff into super in specie transfer, but it's too 0:17:08.320 --> 0:17:12.679 late in many ways. You can have. How much can 0:17:12.760 --> 0:17:16.040 you have outside of super tax free in income anyway? James, 0:17:16.240 --> 0:17:18.480 any single person, anyone in the country can have a 0:17:18.520 --> 0:17:19.080 certain amount. 0:17:19.400 --> 0:17:22.399 Yeah, you can. It depends a little bit if you're 0:17:22.400 --> 0:17:25.480 a capitable single But let's say start to day ten thousand, 0:17:25.560 --> 0:17:28.080 but it can be around twenty five thousand in circumstances. 0:17:29.080 --> 0:17:33.560 Okay, so whoever you are, even a rock bottom minimum, 0:17:33.640 --> 0:17:39.840 you can make an income of eighteen thousand perannum and 0:17:39.960 --> 0:17:42.200 it's tax free. It doesn't matter whether that money's in 0:17:42.280 --> 0:17:45.120 super or not. So perhaps someone like Scott could could 0:17:45.119 --> 0:17:46.600 hold it right there and have a look and say, well, 0:17:46.640 --> 0:17:48.840 how much am I making? What would be the income 0:17:48.880 --> 0:17:50.800 out of this? And you mightn't have to transfer it 0:17:51.240 --> 0:17:53.720 if he wanted to transfer it into super, if that 0:17:53.880 --> 0:18:00.199 was his, if that seemed better. How can you do there? 0:18:00.240 --> 0:18:03.120 Can you say this? And I've got did he give 0:18:03.119 --> 0:18:04.200 a number one? How much is there? 0:18:04.480 --> 0:18:04.520 No? 0:18:04.600 --> 0:18:06.280 But let's say let's say he has twenty five brand 0:18:06.359 --> 0:18:09.920 in investments their ETFs and he says, God, I should 0:18:09.920 --> 0:18:11.480 have put that in my super fund ten years ago, 0:18:11.560 --> 0:18:13.840 but he's still got ten years to go or twenty 0:18:13.960 --> 0:18:16.680 years ago. Can he switch that stuff into his super 0:18:16.760 --> 0:18:19.840 and what would be the upside or downside of that move? 0:18:20.119 --> 0:18:23.680 Yeah, he can definitely do that. The upshot is that 0:18:23.960 --> 0:18:27.520 it reduces tax downstream when he's retired, as zero percent 0:18:27.640 --> 0:18:30.440 tax on the capital gains. If he eventually sells it 0:18:31.359 --> 0:18:33.360 and super funds. A lot of them will do what's 0:18:33.359 --> 0:18:36.359 called in specie transfer, so Scott won't have to sell 0:18:36.520 --> 0:18:39.160 the share and then repurchase it through his super fun 0:18:39.240 --> 0:18:40.919 He can just like pick it up and then transfer 0:18:40.960 --> 0:18:43.000 it and drop it into his superfund, which is good. 0:18:43.640 --> 0:18:46.840 There will be capital gains tax implications though, because he's 0:18:46.880 --> 0:18:50.560 crystallizing again whether he does the in specie transfer or 0:18:50.800 --> 0:18:52.560 sells it and moves it to the super fund, so 0:18:52.640 --> 0:18:56.320 that needs to be considered. One thing which I speak 0:18:56.400 --> 0:19:01.119 to clients about is deferring or minimize in capital gains tax. 0:19:01.359 --> 0:19:04.760 We're accumulating assets. We're acumulating shares and properties throughout our 0:19:04.840 --> 0:19:07.840 working lives, partly in super, partly personally. So the stuff 0:19:07.840 --> 0:19:11.200 that we hold outside of souper, the best time to 0:19:11.520 --> 0:19:15.000 transfer it into super is generally just stuff you stop working, 0:19:15.480 --> 0:19:17.959 and the reason is that you don't have your employment income, 0:19:18.320 --> 0:19:20.320 which means that you're not being pulled into the higher 0:19:20.400 --> 0:19:22.080 tax brackets. So as soon as you go into the 0:19:22.160 --> 0:19:25.200 lower tax bracket when you're retired, assuming that you're still 0:19:25.280 --> 0:19:28.840 under the seventy five years of age for the contribution caps, 0:19:29.359 --> 0:19:30.720 that's when we start to crystalize. 0:19:30.800 --> 0:19:33.600 So good. This is exactly where our advice comes into play. 0:19:33.680 --> 0:19:36.119 This is where you know, I would say, folks, this 0:19:36.320 --> 0:19:42.040 is where using advice really pays off. That's such an 0:19:42.280 --> 0:19:48.280 interesting way of using and optimizing how the system works, 0:19:48.320 --> 0:19:52.119 and people wouldn't necessarily guess that. Yeah, okay, so just 0:19:53.400 --> 0:19:56.160 so just ron that scenario. If you were gems about 0:19:56.200 --> 0:19:58.320 the person who had the ETFs and let's say they 0:19:58.359 --> 0:20:00.439 had the twenty grand in ETF and 's they're ten 0:20:00.520 --> 0:20:03.440 years to go to retirement, what would a person what's 0:20:03.640 --> 0:20:08.560 what is in your view and an optimum uh a 0:20:08.720 --> 0:20:09.600 pathway there? 0:20:11.600 --> 0:20:13.560 Yeah, you know, if they've held that ETF for a 0:20:13.600 --> 0:20:16.280 while and there's a large capital gains tax bill, we 0:20:16.359 --> 0:20:18.199 would just leave it and say, okay, let's just let 0:20:18.240 --> 0:20:20.000 it ride, assuming that we like that et F, and 0:20:20.080 --> 0:20:22.920 then when you retire, the year after you retire, we'll 0:20:23.000 --> 0:20:25.320 sell it at lower tax rates and then transfer that 0:20:25.400 --> 0:20:28.200 money into souper. If there's not that much in the 0:20:28.240 --> 0:20:30.520 way of capital gains tax ten years from retirement, we 0:20:30.600 --> 0:20:33.480 might do it earlier. So it just depends on how 0:20:33.560 --> 0:20:35.159 much tax we're going to get. 0:20:35.160 --> 0:20:37.920 The little tax treads and ew because of their age. 0:20:38.040 --> 0:20:41.359 Correct yeah, that's kind of the key there, I see. 0:20:41.760 --> 0:20:46.280 Very very interesting. Okay, okay, very good. All right, you 0:20:46.320 --> 0:20:48.879 want to read the question from mac Daddy, which I 0:20:49.000 --> 0:20:51.560 presume is not a real name. M A C D 0:20:51.720 --> 0:20:53.080 A D d y macdaddy. 0:20:53.400 --> 0:20:55.000 It's not an Irish name, is it, James. You haven't 0:20:55.000 --> 0:20:55.480 come across it. 0:20:55.640 --> 0:20:57.920 Now unless it's a very very obscure Scottish name. And 0:20:57.960 --> 0:21:01.320 I don't think it is that Danny DeVito movie. I 0:21:01.359 --> 0:21:03.159 think it was Other People's Money, the one you're here 0:21:03.359 --> 0:21:07.320 are the people's money. Thank you. It's good to Yes, 0:21:07.440 --> 0:21:10.920 we should do a session sometime on financial business and 0:21:11.000 --> 0:21:13.200 investment movies. That's one of the that is one of 0:21:13.280 --> 0:21:17.320 the really good ones, Steady de Vito, Other People's Money year. Okay, Macdaddy, Right, 0:21:17.359 --> 0:21:17.920 what's the question? 0:21:18.080 --> 0:21:21.040 Thanks for the insightful and entertaining commentary you provide each 0:21:21.080 --> 0:21:23.960 week on Everything finance. How does the stock split affect 0:21:24.000 --> 0:21:26.720 the charts and graphs of the company's share price? For example, 0:21:26.800 --> 0:21:29.159 if a company does a one to four split with 0:21:29.280 --> 0:21:32.200 the share price suddenly dropped by seventy five percent, I 0:21:32.320 --> 0:21:34.280 am guessing not so. How are the share price and 0:21:34.400 --> 0:21:37.320