Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm
Speaker 1: James Kirby, the editor at The Australian, and welcome aboard everybody. Well,
Speaker 1: I've had by public demand, you might say, we've had
Speaker 1: lots of questions, and I know they've been banking up
Speaker 1: and I know a lot of you have had questions
Speaker 1: in the tank if you like for some time today,
Speaker 1: we're going to do a special on readers questions and
Speaker 1: I think you'll find it very interesting. We will go
Speaker 1: off in all sorts of directions, so you won't have
Speaker 1: a common theme if you like. There won't be much
Speaker 1: in the way of structure or order that we normally have,
Speaker 1: but we will actually bounce off a lot of really
Speaker 1: interesting subjects. There are all questions from listeners, all types,
Speaker 1: all real and genuine. I'd like to add, and who
Speaker 1: will help me with these questions? Well, I mentioned to
Speaker 1: you that I'm away for a week, so the next
Speaker 1: two shows will be hosted by James Girard and he
Speaker 1: is here to help me today. How are you, James Gerard?
Speaker 2: I'm doing well. Good to be back again. Thanks James,
Speaker 2: You're welcome.
Speaker 1: James Gerard, a financial advisor dot com dot au here
Speaker 1: with me. So on the other thing I'm going to do, James,
Speaker 1: is as you know, i'm trained as an editor, I'm
Speaker 1: a bit I'm a bit severe on the editing, as
Speaker 1: you would probably know as a contributor to the paper.
Speaker 1: But more than that, with the with the correspondence we
Speaker 1: get and I do want to take the opportunity to
Speaker 1: say thank you to everyone who writes in and if
Speaker 1: you ever feel the urge to write a review on
Speaker 1: your podcast app, I would really like that too. But
Speaker 1: in editing, I keep the questions I demand if you
Speaker 1: like that, questions are short, and people have got very
Speaker 1: good at that. That's just in the interest of fairness
Speaker 1: really that we can get more done. But also, James,
Speaker 1: as an editor, I snip off endearments or things like
Speaker 1: you know, I love the show or whatever, but I
Speaker 1: think today we leave them in just to give people
Speaker 1: a flavor here and there of some of the stuff
Speaker 1: that people are saying. All right, so my first question,
Speaker 1: and we'll read them alternately, James, and we'll take our
Speaker 1: usual segments, but we'll try and do maybe three or
Speaker 1: four in each segment. So the first question straight off, first,
Speaker 1: Cab off the rank, folks is Yolanda Hiolanda. She says,
Speaker 1: you mentioned a Super black spot, a zone where you
Speaker 1: have too much or too little in Super. Are you
Speaker 1: able to describe this in more detail and give a range?
Speaker 1: Surely a very common range would be six six seven
Speaker 1: to one point five million? What is the amount most
Speaker 1: people with a full working life which SUPER will have
Speaker 1: in superun retirement without making extra extra contributions. And if
Speaker 1: you can't answer it, she says, can you point me
Speaker 1: to someone who can hold on? Yolanda, we will make
Speaker 1: a damn good job of answering this. I hope James
Speaker 1: calls this is really funny. James as an advisor and
Speaker 1: an optimist, cause it the sweet spot. He talks about
Speaker 1: sweet spot and Super where you should be. I talk
Speaker 1: about the black spot and Super where you shouldn't be.
Speaker 1: That might tell you something about our distinct personalities. But anyway,
Speaker 1: for what it's worth, here's the thing. And always remember,
Speaker 1: of course, before we say any answer here, it's probably
Speaker 1: better to have your own money. Of course, it is okay.
Speaker 1: You're going to be more independent if you've got a
Speaker 1: million in Super and someone says I don't have a
Speaker 1: million in super, but guess what I might as well
Speaker 1: have for the amount I'm getting in various ways through
Speaker 1: government payments, and technically that can actually be argued in
Speaker 1: some cases it's not the same. However, for all the
Speaker 1: effort we make for all the savings, you do wonder
Speaker 1: sometimes is there a zone in super where when it's
Speaker 1: arguable on a year to year income basis okay, and
Speaker 1: I'm including everything you can get from the government done
Speaker 1: Central Link and coming with seniors health cards and everything else,
Speaker 1: and there is a zone where it's arguable whether it's
Speaker 1: worth the effort. I think James, it's somewhere in the
Speaker 1: order of four hundred thousand to six hundred thousand. What
Speaker 1: do you work on?
Speaker 2: Yeah, that's about right. It depends on the person, if
Speaker 2: they're single, if they're a couple, if they own a house,
Speaker 2: or if they don't own a house. Because what I call,
Speaker 2: as you've mentioned, the sweet spot. So the ideal situation
Speaker 2: is where you can pick up the age pension from
Speaker 2: the government in retirement, which is available from age sixty
Speaker 2: seven onwards but subject to an assets and income test.
Speaker 2: But you're also what we call a self funded retiree
Speaker 2: or have hundreds of thousands of dollars in super as well.
Speaker 2: So the way that you sort of hit that sweet
Speaker 2: spot to get the full age pension from the government,
Speaker 2: which for a single person is almost thirty thousand dollars
Speaker 2: a year. So it's not pocket money here.
Speaker 1: Well that's what happened when I was saying about a
Speaker 1: million dollars. I mean, if you're very conservative estimate if
Speaker 1: you had it in a poorly paying cash account, a
Speaker 1: million dollars, what the thirty thousand a year might be
Speaker 1: there thereabouts what you're going to get, right, So.
Speaker 2: Yeah, that's right. So yeah, you caush your mind back
Speaker 2: a couple of years ago when the cash rates and
Speaker 2: will turn to positve rates, we're giving you half a percent,
Speaker 2: one percent, you're getting peanuts and even on a million dollars.
Speaker 2: So getting this guaranteed payment of thirty thousand if you're
Speaker 2: a single, forty five thousand if you're a couple from
Speaker 2: the government is great. But of course, with the cash
Speaker 2: rate going up, the return out of super being better.
Speaker 2: But still the principles are the same around this sweet spot.
Speaker 2: So the place that your lander should have a look
Speaker 2: at is it's called a guide to Australian Government payments
Speaker 2: and it's on the services website and you go there,
Speaker 2: you have a look in the back around the assets
Speaker 2: test section and then you just identify which one you
Speaker 2: are and again are you single, you're a couple, Do
Speaker 2: you own a house? Do you not own a house?
Speaker 2: And it will show you how much assets, so how
Speaker 2: much super value of your bank account, car contents, how
Speaker 2: much you can have in assets to receive the full
Speaker 2: age pension. And then if you exceed the threshold for
Speaker 2: an age and full age pension, you're going to the
Speaker 2: part pension range. And then if you exceed that up
Speaker 2: a threshold, you get zip.
Speaker 1: So it's called it, and they taper it, don't they.
Speaker 1: So it's like for every dollar over x, it takes
Speaker 1: fifty cents off your pension. And so keep that in mind.
Speaker 1: It's a long term thing. But it's I mean, it's
Speaker 1: I think it's just a huge issue. And by the way, folks,
Speaker 1: all these retirement calculators, you know, be very careful, be
Speaker 1: damn skeptical about these people saying you need a million
Speaker 1: and super you need one point six million, a million,
Speaker 1: what do you need? Well, you know there's a government
Speaker 1: pension for first of all, and some people will live
Speaker 1: on that. Part two, there are a lot of other
Speaker 1: issue items that you can pick up as an older
Speaker 1: person if you don't have SUPER. But the megapoint I'd
Speaker 1: like to make to everyone, James is if you don't
Speaker 1: own your own home, you will pay highly in this
Speaker 1: system because it's entirely biased towards the homeowner because the
Speaker 1: home value is basically not counted, but all SUPER is.
Speaker 1: So if there's two people, one has a five million
Speaker 1: dollar house and tiny bit of SUPER and the other
Speaker 1: person has a million dollars and SUPER but no home,
Speaker 1: then that person with just lots of SUPER and no house,
Speaker 1: they're going to do worse than the system, aren't they.
Speaker 1: They are.
Speaker 2: That's a really good point. The net assets of the
Speaker 2: person with the house is much higher, but they get
Speaker 2: the pension, where it's someone with a lower net asset,
Speaker 2: but just because their money is in SUPER, they don't
Speaker 2: get the pensions. So that's a very good thing. That
Speaker 2: the good point to note that the family house is
Speaker 2: not included in the assets test.
Speaker 1: So keep that in mind, you lander, and all the
Speaker 1: your lander's out there. No advice here, of course, information only,
Speaker 1: And also folks, That is why if you were listening
Speaker 1: to the most recent show, it's why I've come around
Speaker 1: to saying you, yes, you can use your super to
Speaker 1: buy a family home. Not because it's a great idea,
Speaker 1: not because it's in principle I think it's terrific, but
Speaker 1: because the tax system is so loaded against you if
Speaker 1: you don't have a home that you are better off
Speaker 1: with one before you start forever, not just in midlife,
Speaker 1: young life, but even more so when you're retired. Okay,
Speaker 1: a question from Luke. Do you want to read that one, James?
Speaker 2: I will. When in a DP acronym for dividend reinvestment
Speaker 2: plan for an ETF acronym for exchange traded fund, is
Speaker 2: a dividend reinvestment made at the price post or pre
Speaker 2: distribution post.
Speaker 1: Yes, oh please? Do you're the financial advisor? Yes?
Speaker 2: Okay, so I wasn't sure. If I asked you a bit,
Speaker 2: I'll ask.
Speaker 1: If they're hard. If they're hard, you answer, it's really
Speaker 1: it's basically the routine.
Speaker 2: All right, got it? Sorry, I'll get with the program. Okay.
Speaker 2: So the answer is that the dividend is paid and
Speaker 2: then it gets reinvested. So the dividend reinvestment is made
Speaker 2: based on the share price after the end.
Speaker 1: They so so they figure out what the dividend is.
Speaker 1: The dividend is the dollar per share, and then once
Speaker 1: they know that, I presume after thirty within the period
Speaker 1: of something, they reinvest that dollar for you in the
Speaker 1: shares that you have in there in the in the
Speaker 1: ETF just like a share, just like an ordinary share.
Speaker 1: They do it the same way. I don't believe there's
Speaker 1: any difference at all, And I know people are always
Speaker 1: asking that. Okay, Pavel p A v. E. L Hi
Speaker 1: as a regular listener to the podcast, and it informative
Speaker 1: and enjoyable, and especially given the quality of the guests
Speaker 1: that you have honored their experience and willingness to share
Speaker 1: good insights. That's you, James Gerard. I think it would
Speaker 1: be great if, not if in the not too distant future,
Speaker 1: you could have a financial advisor to summarize what the
Speaker 1: recontribution strategy is. Oh, okay, our completely upside down, totally
Speaker 1: twisted supersystem has a thing which allows you to take
Speaker 1: money out and put it back in and reduce your
Speaker 1: tax ability of your ultimate inheritance you might pass on
Speaker 1: through your super That's it conceptually. Would you explain what
Speaker 1: a recontribution strategy is, James, how it might work.
Speaker 2: Yep. So we have this hangover from supernuation years of
Speaker 2: the past, with components of supernuation. There's a taxable component,
Speaker 2: there's a tax free component. There's even a less common
Speaker 2: untaxed component as well. And this was back when I
Speaker 2: first started my career twenty years ago, where we had
Speaker 2: things like reasonable benefits limits and we had to do
Speaker 2: these complex calculations to work out how much people could
Speaker 2: get out of super in retirement tax free. But going
Speaker 2: back on maybe fifteen years ago now they sort of
Speaker 2: simplified the system and got rid of all these complex
Speaker 2: calculations and basically said that people over the age of
Speaker 2: sixty who are retired will have everything tax free and
Speaker 2: if they're in the pension phase. But the last the
Speaker 2: past few years they've changed the rules a bit and
Speaker 2: they've brought in these one point nine million dollar caps,
Speaker 2: and it's going to be a three million dollar cap
Speaker 2: at thirty percent. But that aside, for most people who
Speaker 2: are retired in drawing a pension money out of it's
Speaker 2: tax free. So the strategy here around the recontribution is
Speaker 2: that it didn't really really mean anything to you while
Speaker 2: you're retired drawing your pension because it's tax free. It's
Speaker 2: more for your non dependence. So typically adult children who
Speaker 2: inherit your super money after you pass away dependent so
Speaker 2: spouses they receive the money tax free from your super
Speaker 2: if you pass away, but non dependence. So for kids
Speaker 2: who are grown up, who have their own spouses and
Speaker 2: families and who are not reliant on you, they have
Speaker 2: to pay seventeen percent tax only on the taxable component
Speaker 2: of your super account. So a lot of people don't
Speaker 2: actually know what their components of their SUPO is, So
Speaker 2: you probably need to look at a statement or bring
Speaker 2: up the super fund and you might be surprised because
Speaker 2: there might be a high taxable component, which again you
Speaker 2: shouldn't be worried about because it doesn't mean anything for
Speaker 2: you in retirement. But there's a planning opportunity depending on
Speaker 2: your age, because you can do this recontribution strategy where
Speaker 2: you take money out of super and then you put
Speaker 2: it back in again, and doing that, you're taking money out,
Speaker 2: and when you take money out, your withdrawal is proportionately
Speaker 2: split between the taxable and tax free component. So in
Speaker 2: simple terms, if you had one hundred thousand dollars in
Speaker 2: your super account and it was fifty percent taxable fifty
Speaker 2: percent tax free, and if you took ten thousand dollars
Speaker 2: out as a lumps on withdrawal, that one thousand dollars
Speaker 2: withdraw payment would be a mix of fifty percent taxable
Speaker 2: fifty percent tax free. And so you've got this ten
Speaker 2: thousand dollars in your bank account. Now you can put
Speaker 2: it back as what we call a non concessional contribution.
Speaker 2: There's no tax payable when that goes back in, and
Speaker 2: that payment adds to the tax free component of your
Speaker 2: super account.
Speaker 1: It's a long, elaborate, my mildly absurd way of legitimize,
Speaker 1: legitimately minimizing the tax of your beneficiaries in the long
Speaker 1: period of time. And most people by the time they
Speaker 1: get inheritance now are adults anyway, aren't they. But the
Speaker 1: other thing is to say, for as, if you've never
Speaker 1: met any voluntary contributions ever, would you're would it be
Speaker 1: one hundred percent taxable? Then that's right, yeah, which would
Speaker 1: be a lot of people. And increasingly and increasingly people
Speaker 1: know that the SGC so high that I imagine that
Speaker 1: group is getting bigger and bigger. Okay, I imagine that
Speaker 1: all makes perfect sense to you also far these are
Speaker 1: questions that I've basically distilled some of the more common
Speaker 1: questions that we get, and we will, as I say,
Speaker 1: be bouncing around. That was very quickly there. That was
Speaker 1: two on super and one on dividend reinvestment plans, which,
Speaker 1: of course I'm sure you know what they are. Once
Speaker 1: upon a time all shares used to have them. Now
Speaker 1: it's sort of entirely they're so sort of ruthless in
Speaker 1: their ways corporate, so they turned them all and off
Speaker 1: as it suits them. But it's a good discipline if
Speaker 1: you have shares to just sign up for a d
Speaker 1: or P unless you're very efficient and you know exactly
Speaker 1: what you're going to do with your cash every time.
Speaker 1: And the other theory academically is like if you think
Speaker 1: a company is good enough, like if you think Commonwealth
Speaker 1: is good enough, common Well Bank's good enough, then it's
Speaker 1: probably good enough to reinvest in. That is an interesting
Speaker 1: sort of test if you ever want to sign up
Speaker 1: for a dividend reinvestment plan for either an ETF or
Speaker 1: a share. Okay, we'll take a short break and we'll
Speaker 1: be back in a moment. Hello, Welcome back to the
Speaker 1: Australian's Money Puzzle podcast James Kirby with James Girard, and
Speaker 1: we have a reader's Questions special show for you today.
Speaker 1: Nothing but readers questions, all sorts, shapes and sizes, and
Speaker 1: a really interesting one from Scott. I've got to read this.
Speaker 1: This is a great question. What is the endgame of
Speaker 1: someone who invests in shares outside of Super for the
Speaker 1: long term? What's their desired end state? If you're investing
Speaker 1: in shares for the long term, you'd surely do it
Speaker 1: in Super if you're worried about quick access or liquidity.
Speaker 1: That's what an emergency fund is for. I'm forty and
Speaker 1: I've spent the last fifteen years investing in the share
Speaker 1: market for the long term outside Super through index based ETPs.
Speaker 1: It suddenly dawned on me that I would likely to
Speaker 1: crystallize these investments before retirement. I would have invested through Super. Whoops,
Speaker 1: Well yeah, okay, Scott and all the Scott's out there.
Speaker 1: Interesting point. I originally, when I saw this question, I
Speaker 1: thought it was what's the end game of investing? There
Speaker 1: was the old joke in the in the in the
Speaker 1: Danny DeVito movie about with the two they're fighting over,
Speaker 1: it's all about It's about money this movie. It will
Speaker 1: come to me in a second. Well, it's cold, and
Speaker 1: he explains to someone else on Wall Street. The guy says,
Speaker 1: what what's it all about? Why are we doing this anyway?
Speaker 1: And Danny DeVito says, the guy who dies with the
Speaker 1: most wins, which which is what people will say sometimes
Speaker 1: to me on issues about Super. But I say to them, yes, yes,
Speaker 1: well settle down there. We all need money in this world,
Speaker 1: and we need to be able to defend ourselves in
Speaker 1: times of difficulty. That's the first thing not to mention
Speaker 1: when we get when we are not able to make
Speaker 1: the Sundari we make in our prime. Now, Scott, the
Speaker 1: only thing I would say to you in retrospect because
Speaker 1: it's too late, right, I imagine, so you could switch
Speaker 1: this stuff into super in specie transfer, but it's too
Speaker 1: late in many ways. You can have. How much can
Speaker 1: you have outside of super tax free in income anyway? James,
Speaker 1: any single person, anyone in the country can have a
Speaker 1: certain amount.
Speaker 2: Yeah, you can. It depends a little bit if you're
Speaker 2: a capitable single But let's say start to day ten thousand,
Speaker 2: but it can be around twenty five thousand in circumstances.
Speaker 1: Okay, so whoever you are, even a rock bottom minimum,
Speaker 1: you can make an income of eighteen thousand perannum and
Speaker 1: it's tax free. It doesn't matter whether that money's in
Speaker 1: super or not. So perhaps someone like Scott could could
Speaker 1: hold it right there and have a look and say, well,
Speaker 1: how much am I making? What would be the income
Speaker 1: out of this? And you mightn't have to transfer it
Speaker 1: if he wanted to transfer it into super, if that
Speaker 1: was his, if that seemed better. How can you do there?
Speaker 1: Can you say this? And I've got did he give
Speaker 1: a number one? How much is there?
Speaker 2: No?
Speaker 1: But let's say let's say he has twenty five brand
Speaker 1: in investments their ETFs and he says, God, I should
Speaker 1: have put that in my super fund ten years ago,
Speaker 1: but he's still got ten years to go or twenty
Speaker 1: years ago. Can he switch that stuff into his super
Speaker 1: and what would be the upside or downside of that move?
Speaker 2: Yeah, he can definitely do that. The upshot is that
Speaker 2: it reduces tax downstream when he's retired, as zero percent
Speaker 2: tax on the capital gains. If he eventually sells it
Speaker 2: and super funds. A lot of them will do what's
Speaker 2: called in specie transfer, so Scott won't have to sell
Speaker 2: the share and then repurchase it through his super fun
Speaker 2: He can just like pick it up and then transfer
Speaker 2: it and drop it into his superfund, which is good.
Speaker 2: There will be capital gains tax implications though, because he's
Speaker 2: crystallizing again whether he does the in specie transfer or
Speaker 2: sells it and moves it to the super fund, so
Speaker 2: that needs to be considered. One thing which I speak
Speaker 2: to clients about is deferring or minimize in capital gains tax.
Speaker 2: We're accumulating assets. We're acumulating shares and properties throughout our
Speaker 2: working lives, partly in super, partly personally. So the stuff
Speaker 2: that we hold outside of souper, the best time to
Speaker 2: transfer it into super is generally just stuff you stop working,
Speaker 2: and the reason is that you don't have your employment income,
Speaker 2: which means that you're not being pulled into the higher
Speaker 2: tax brackets. So as soon as you go into the
Speaker 2: lower tax bracket when you're retired, assuming that you're still
Speaker 2: under the seventy five years of age for the contribution caps,
Speaker 2: that's when we start to crystalize.
Speaker 1: So good. This is exactly where our advice comes into play.
Speaker 1: This is where you know, I would say, folks, this
Speaker 1: is where using advice really pays off. That's such an
Speaker 1: interesting way of using and optimizing how the system works,
Speaker 1: and people wouldn't necessarily guess that. Yeah, okay, so just
Speaker 1: so just ron that scenario. If you were gems about
Speaker 1: the person who had the ETFs and let's say they
Speaker 1: had the twenty grand in ETF and 's they're ten
Speaker 1: years to go to retirement, what would a person what's
Speaker 1: what is in your view and an optimum uh a
Speaker 1: pathway there?
Speaker 2: Yeah, you know, if they've held that ETF for a
Speaker 2: while and there's a large capital gains tax bill, we
Speaker 2: would just leave it and say, okay, let's just let
Speaker 2: it ride, assuming that we like that et F, and
Speaker 2: then when you retire, the year after you retire, we'll
Speaker 2: sell it at lower tax rates and then transfer that
Speaker 2: money into souper. If there's not that much in the
Speaker 2: way of capital gains tax ten years from retirement, we
Speaker 2: might do it earlier. So it just depends on how
Speaker 2: much tax we're going to get.
Speaker 1: The little tax treads and ew because of their age.
Speaker 1: Correct yeah, that's kind of the key there, I see.
Speaker 1: Very very interesting. Okay, okay, very good. All right, you
Speaker 1: want to read the question from mac Daddy, which I
Speaker 1: presume is not a real name. M A C D
Speaker 1: A D d y macdaddy.
Speaker 2: It's not an Irish name, is it, James. You haven't
Speaker 2: come across it.
Speaker 1: Now unless it's a very very obscure Scottish name. And
Speaker 1: I don't think it is that Danny DeVito movie. I
Speaker 1: think it was Other People's Money, the one you're here
Speaker 1: are the people's money. Thank you. It's good to Yes,
Speaker 1: we should do a session sometime on financial business and
Speaker 1: investment movies. That's one of the that is one of
Speaker 1: the really good ones, Steady de Vito, Other People's Money year. Okay, Macdaddy, Right,
Speaker 1: what's the question?
Speaker 2: Thanks for the insightful and entertaining commentary you provide each
Speaker 2: week on Everything finance. How does the stock split affect
Speaker 2: the charts and graphs of the company's share price? For example,
Speaker 2: if a company does a one to four split with
Speaker 2: the share price suddenly dropped by seventy five percent, I
Speaker 2: am guessing not so. How are the share price and
Speaker 2: charts of a single price adjusted for a stock split.
Speaker 1: Great question, Macdaddy. Oh gosh, every financial journalist nightmare the
Speaker 1: time you do the story about the plunge and the
Speaker 1: share price and you get a call the next day
Speaker 1: saying you didn't know that there was a stock split,
Speaker 1: did you? Oh god, it did happen to me once.
Speaker 1: It was a dot com. It was in the middle
Speaker 1: of all the crazy, crazy craziness of dark com. But
Speaker 1: it did happen, and I was super alert to them
Speaker 1: ever since. So stock split, First of all, actually there's
Speaker 1: one going on. Is it in Vidia going to do one?
Speaker 2: Yeah, I've followed, But would make sense given how much
Speaker 2: the share price? I don't think so.
Speaker 1: I think so so companies do it when often when
Speaker 1: they when the share price just goes bananas and it's
Speaker 1: just so so high that they that they are of
Speaker 1: the opinion that retail investors don't don't want to buy
Speaker 1: shocks stocks that cost ten thousand each or whatever, so
Speaker 1: they split them at ten and for every stock you have,
Speaker 1: suddenly you have ten worth a thousand rather than rather
Speaker 1: than one worth ten thousand. But it doesn't affect anything, really,
Speaker 1: does it, James. It's just a technicality on the charts.
Speaker 1: I supposed it'd be some sort of an inflection point
Speaker 1: or something which would suggest what happened.
Speaker 2: Yeah, so I've seen this over the years, and what
Speaker 2: happens is that the charts, the historical charts, and the volumes,
Speaker 2: the share volumes are adjusted to ensure continuity, so that
Speaker 2: you're looking at it based on the current after split
Speaker 2: share price. And how it works is, let's just say
Speaker 2: that you have one hundred shares at one hundred dollars each.
Speaker 2: After the split, you'd have you'd have shared at twenty
Speaker 2: five dollars. You'd have more shares, you'd have four hundred shares,
Speaker 2: but you still own the same amount, and the stock
Speaker 2: chart just adjust to show that the new share price
Speaker 2: at twenty five dollars in the proportioned that the previous
Speaker 2: price history, so it all looks nice and clean.
Speaker 1: So it was one for four split. As mcdeddie asks,
Speaker 1: then would the share price drop by seventy five drop?
Speaker 2: Yeah, it does show a drop of that seventy five
Speaker 2: percent straight away, but what I've seen is that they
Speaker 2: sort of smooth it out, so they sort of like
Speaker 2: apply the split, if that makes sense, going backwards, so
Speaker 2: that you don't see that big drop if you I'm
Speaker 2: back six months later. It just looked like everything had
Speaker 2: always been.
Speaker 1: Yeah, the charts, and it doesn't matter. Well apart from
Speaker 1: the fact that you have four shares for everyone you had,
Speaker 1: mac Daddy, the value of the shares you have have
Speaker 1: in no way change whatsoever. All things been equal, I
Speaker 1: mean on the day that it happened. But interesting, and
Speaker 1: it's interesting. We haven't had a question on stock splits before.
Speaker 1: They're not as common as they used to be, but
Speaker 1: every now and again they happen in companies. I think
Speaker 1: I think CESL might have had one along the way,
Speaker 1: and in video I think I've read that they might
Speaker 1: be doing one.
Speaker 2: Two.
Speaker 1: Okay, right, that was mac daddy. Brad. Thank you for
Speaker 1: your excellent and concise financial, property and market commentary. I
Speaker 1: won't bore you with this stuff anymore, folks. I just
Speaker 1: thought today and it being a reader's question show, we
Speaker 1: would actually read out what they say. We normally ate
Speaker 1: it all stuff out. I plan to hold some equities
Speaker 1: that is, by the way, they're called shares shares, and
Speaker 1: sell after the end of June in order to raise
Speaker 1: realize capital gains at a lower tax rate. Because the
Speaker 1: Stage three tax cuts are coming through. Do you believe
Speaker 1: others will do the same and will there be any
Speaker 1: impact on financial and property markets in the next financial
Speaker 1: year as a result of Stage three tax cuts? I
Speaker 1: love your question, Brad. Here's the thing. I'll do a
Speaker 1: quick thing about property and James might pick up on
Speaker 1: the financial side. Do you know that following Stage three
Speaker 1: tax cuts which kick in on July one. I don't
Speaker 1: have the tables in front of me, but if you
Speaker 1: were on one hundred thousand a year when your tax
Speaker 1: cut comes in, your borrowing capacity will go up by
Speaker 1: twenty five thousand dollars straight away on July one. If
Speaker 1: you're on one hundred and fifty thousand, your borrowing capacity
Speaker 1: that is the amount extra you can bid on a
Speaker 1: house for, will will increase by thirty seven thousand automatically
Speaker 1: on July one. These are figures from Morga's Choice, which
Speaker 1: I just got yesterday. So there's a property market impact
Speaker 1: instantly that people will be able to borrow and bid more.
Speaker 1: So that's take it or anyway you like, But that
Speaker 1: is not going to put prices down. Let's put it
Speaker 1: that way. It has the potential to put them up.
Speaker 1: What about more generally James the s there's all sorts
Speaker 1: of angers on this one is for an advisor.
Speaker 2: Yeah, So firstly, with the planning, with the tax changes
Speaker 2: from one July, some clients are trying to bring forward
Speaker 2: productions into this financial year to claim a higher tax
Speaker 2: deduction because there's higher tax bands compared to next financial year.
Speaker 2: But really that's only for people who earn less than
Speaker 2: one hundred and ninety thousand dollars per year, because if
Speaker 2: you were in one hundred and ninety thousand dollars a
Speaker 2: year next financial year, you're still going to be taxed
Speaker 2: at a marginal rate of forty seven percent. So people
Speaker 2: below one hundred and ninety then there can be a
Speaker 2: bit of a benefit by trying to prepay interest and
Speaker 2: do other things like that this financial year. With regards
Speaker 2: to broader impacts on financial markets, I don't think it's
Speaker 2: going to be that much. Cuts will happen, people will
Speaker 2: be happy. But you know, if I ask you, can
Speaker 2: you remember the tax cuts that occurred years ago, ten
Speaker 2: years ago, how do you feel about that? Does that
Speaker 2: still influence your financial decisions? And it is no for everybody,
Speaker 2: So it'll just flow through. People be a little bit
Speaker 2: richer with more money in their pockets, and then everyone
Speaker 2: will get on with life.
Speaker 1: They might spend more, though, which could push up inflation. Yeah,
Speaker 1: I don't say that. I'm looking forward. I was looking
Speaker 1: forward to interest rates coming down.
Speaker 2: Later this year. Yeah, it looks like next year. Now
Speaker 2: is the later?
Speaker 1: Oh yeah, now they're saying December twenty twenty five. This
Speaker 1: is the money markets. Oh yeah, why don't you say
Speaker 1: twenty twenty six file you're at it? Oh lord, yes,
Speaker 1: they'll be waiting. We did say, we did say a
Speaker 1: lot time and go on this show. Don't be waiting
Speaker 1: for their interest rate cuts, my friends. There is no
Speaker 1: sign of them at all. But thank you for the question. Bad,
Speaker 1: very very interesting. So tax cuts, yes, some obvious things
Speaker 1: is that people will have more to spend. Two surveys,
Speaker 1: NAB and Westpact, both done in the last month, both
Speaker 1: said the same thing, that the majority of people intend
Speaker 1: to save their tax cuts. And the only thing I
Speaker 1: have to say about those surveys is what people say
Speaker 1: on surveys and what they do can be very very different.
Speaker 1: As you know from election polls. Pre election, people will
Speaker 1: always say what you what they think they should say.
Speaker 1: I say the chances that the people will save eighty
Speaker 1: percent of their tax cuts are zilch. That's my that's
Speaker 1: my personal view. What do you think?
Speaker 2: I agree? I agree, it's been tough time.
Speaker 1: Say that anyway, won't you? Yeah? Did the extend they
Speaker 1: even notice them?
Speaker 2: You know what?
Speaker 1: I I don't mean to be facetious there, but how
Speaker 1: many people are so numerous and financially obsessive that they
Speaker 1: will note the change per per in their in their pay?
Speaker 1: Not everybody, I have to say, and I'm not just
Speaker 1: guessing about that. In those same surveys, twenty percent of
Speaker 1: people didn't know anything about the text cuts. They didn't
Speaker 1: know they were coming because they haven't been listening to
Speaker 1: podcasts or reading newspapers. All right, we will take a break.
Speaker 1: I'm back with some very good questions from John and
Speaker 1: Dan and Rick. Hello. Welcome back to The Australian's Money
Speaker 1: Puzzle podcast. It's a reader's and listeners listeners questions special
Speaker 1: they have been building up. I thought you might enjoy
Speaker 1: hearing the questions that are coming in from all sorts
Speaker 1: of angles. Sometimes we in the show, we we do
Speaker 1: them at the end. Perhaps we do do them too quickly,
Speaker 1: And I thought this was an opportunity expandid opportunity to
Speaker 1: catch up to speed on them and actually just zone
Speaker 1: in on them as well. Okay, question from John Great podcast.
Speaker 1: We have three children age between twelve and eighteen. I
Speaker 1: would like them to be involved in the families financial decisions.
Speaker 1: I think this would help them in the future. At
Speaker 1: what age would you recommend involving them in financial decisions,
Speaker 1: what chairs to buy, what property to invest in, how
Speaker 1: to manager family trust? Should they be so lucky as
Speaker 1: having one? He didn't say that that was me at
Speaker 1: the end, James Strars, we both have this situation. My guys.
Speaker 1: I have to say. They used to say that they
Speaker 1: understood everything anyway, and then I would challenge them. I say,
Speaker 1: what do you know about Super?
Speaker 2: Oh?
Speaker 1: I know all about that it was, and then I'd
Speaker 1: ask them one or two questions, precise questions. They would
Speaker 1: know the answers. So I have found that their interest
Speaker 1: is building rapidly and it's almost entirely linked with not
Speaker 1: with Super. They're aware of Super, but it's almost entirely
Speaker 1: linked with the property prices and how they will fare
Speaker 1: and how they will ever get into the metropolitan markets
Speaker 1: of Australia. Which is probably where they're going to live,
Speaker 1: considering the sort of jobs that they are probably going
Speaker 1: to get. But so I tried with my guys when
Speaker 1: they were but I think there were sixteen seventeen eighty
Speaker 1: when I even tried in any serious way to sit
Speaker 1: them down a bit. What do you think and what
Speaker 1: do you think and what do you actually do?
Speaker 2: B Okay, all right? So similar to John, I've got
Speaker 2: three kids, three girls, so Vivian's five, Viva seven, and
Speaker 2: Chloe's fourteen, so I can speak up to fourteen years
Speaker 2: of age with experience. And I also I insist that
Speaker 2: they listened to the podcast around the dinner table. So hello, girls,
Speaker 2: I love you, hope you're listening to this. And what
Speaker 2: we do is, of course, you want them to understand
Speaker 2: finance at a young age, but I find that children
Speaker 2: just aren't interested and you shouldn't force it on them.
Speaker 2: I found that with Chloe, my elders starting to introduce
Speaker 2: her to debit cards, and I think the good age
Speaker 2: is anywhere from twelve to maybe up to fifteen years
Speaker 2: of age, so they start to understand the basics of
Speaker 2: spending money and earning money through pocket money and doing
Speaker 2: jobs from fifteen onwards, and then starting to introduce them
Speaker 2: to investments, maybe from sixteen through to twenty as they
Speaker 2: show interest in that, and then introducing them to more
Speaker 2: advanced things such as if you have a family trust,
Speaker 2: how that works, what that means for them in the future,
Speaker 2: the property market, superannuation, saving for the future. I think
Speaker 2: all that foundational stuff. Anyway, from twenty to twenty five.
Speaker 2: It's sort of sounds a bit late, but really it's
Speaker 2: difficult to sit an eighteen year old down and get
Speaker 2: them to think about supernuation and salary sacrificing in the
Speaker 2: benefits they'll get at age sixty when they're thinking about
Speaker 2: going to the next tailor swift.
Speaker 1: That's right, Well that was I suppose you can kick
Speaker 1: it around forever. But that was the brilliance, in some
Speaker 1: ways of the Paul Kating move of the SGC. I mean,
Speaker 1: here we are saying, you know, you can actually tap
Speaker 1: it for your super on the same show. But there's
Speaker 1: no two ways about it. I mean, it's in your
Speaker 1: twenties that you really really got to get started to
Speaker 1: get the compounding, and it's in your twenties that you
Speaker 1: really really really don't care two jots for super because
Speaker 1: you think you're going to live forever, et cetera. So
Speaker 1: one other thing I thought I just thought I might
Speaker 1: mention to John is that in my dealings with very
Speaker 1: very wealthy families, and we've had advisers on the show,
Speaker 1: you know who don't say this on the show, but
Speaker 1: they won't deal with people that have you know, they
Speaker 1: they have to deal with people with ten million. I've had.
Speaker 1: There's one advisory, there's two advisors on the show that
Speaker 1: basically that's their range. They just have a small squad
Speaker 1: of clients and these people are very very wealthy. That's
Speaker 1: all they do.
Speaker 2: Uh. And and.
Speaker 1: What they tell me is how these matriarchs and patriarchs
Speaker 1: at seriously wealthy families, how they get their kids. More
Speaker 1: difficult in sub cases for them because you can't really
Speaker 1: convince the kids that they're going to ever need money,
Speaker 1: that they're going to have to pay the mortgage and
Speaker 1: blah blah blah, because they know they're not going to
Speaker 1: because they know there's just so much there. And so
Speaker 1: the issue becomes imperative. Uh And what and their way
Speaker 1: in is philanthropy. So they say, well, you know, you
Speaker 1: you want to achieve something in climate, climate change, or
Speaker 1: you want to make a difference in some way, get
Speaker 1: involved in the Family Investment Committee and have your place
Speaker 1: at the table, and then we'll see if we can
Speaker 1: do what you wanted to do. That's actually a way
Speaker 1: in as I imagine that, imagine that it works for
Speaker 1: all families, at all ages and all types of families.
Speaker 1: It's that the figures are smaller. Perhaps all right, maybe
Speaker 1: believe it at that terrific great great answers and and
Speaker 1: and really good on all those issues. And thank you
Speaker 1: everybody for listening to the show. Okay emails the money
Speaker 1: Puzzle at the Australian dot com dot a U Okay,
Speaker 1: talk to you soon.