1 00:00:10,920 --> 00:00:14,120 Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm 2 00:00:14,200 --> 00:00:18,520 Speaker 1: James Kirkby, editor at The Australian. Welcome aboard everybody. Lots 3 00:00:18,640 --> 00:00:22,160 Speaker 1: happening on the markets as we speak, because it is 4 00:00:22,160 --> 00:00:27,840 Speaker 1: the morning after Donald Trump's resounding, resounding, clear victory, only 5 00:00:27,880 --> 00:00:30,880 Speaker 1: the second time in a century that a US president 6 00:00:30,960 --> 00:00:34,239 Speaker 1: who lost an election came back to win again. And 7 00:00:34,280 --> 00:00:36,640 Speaker 1: what's really interesting from an investment point of view, and 8 00:00:36,640 --> 00:00:39,160 Speaker 1: we're not talking much about this today. If you guys 9 00:00:39,200 --> 00:00:40,879 Speaker 1: want us to do something on this, we will go 10 00:00:40,920 --> 00:00:43,320 Speaker 1: deeper into it another day. But what's really interesting is 11 00:00:44,440 --> 00:00:46,720 Speaker 1: that the US market went up three and a half 12 00:00:46,760 --> 00:00:51,360 Speaker 1: percent last night. And that's all fine and dandy, and 13 00:00:51,560 --> 00:00:53,800 Speaker 1: if you see a day where the US goes of 14 00:00:53,880 --> 00:00:56,440 Speaker 1: three and a half percent, then the ASEX as a 15 00:00:56,520 --> 00:00:59,480 Speaker 1: rule runs up behind it. But it didn't happen this morning. 16 00:01:00,000 --> 00:01:02,480 Speaker 1: The market's only open an hour or so and it 17 00:01:02,600 --> 00:01:06,759 Speaker 1: is flat zero, nothing, no response. And I'll tell you why, 18 00:01:07,200 --> 00:01:10,320 Speaker 1: because there's a certain point which we can't keep going 19 00:01:10,400 --> 00:01:13,640 Speaker 1: up on the back of a market in the US 20 00:01:13,800 --> 00:01:17,520 Speaker 1: which is thriving on the basis that it's going to 21 00:01:17,520 --> 00:01:20,040 Speaker 1: be protectionist and it's going to turn in on itself, 22 00:01:20,200 --> 00:01:22,640 Speaker 1: and it's particularly going to turn hard on China because 23 00:01:22,640 --> 00:01:26,319 Speaker 1: we're a China proxy on the AX and global markets. 24 00:01:26,440 --> 00:01:28,679 Speaker 1: And that is what all the institutional disks around the 25 00:01:28,680 --> 00:01:31,480 Speaker 1: world would say this morning. Don't know about the ASEX anymore, 26 00:01:31,600 --> 00:01:34,479 Speaker 1: don't know about that Under a Trump regime, we will 27 00:01:34,520 --> 00:01:38,800 Speaker 1: be talking about that as we go. But actually, folks, 28 00:01:39,000 --> 00:01:42,040 Speaker 1: I imagine I hope at least that most of you 29 00:01:42,160 --> 00:01:44,880 Speaker 1: have a more burning issue in mind, which is how 30 00:01:44,959 --> 00:01:47,559 Speaker 1: much you have, how much you have in the bank, 31 00:01:47,720 --> 00:01:50,800 Speaker 1: how much you're going to make in your life, and 32 00:01:50,840 --> 00:01:54,080 Speaker 1: how you're going to achieve the elementary what do you 33 00:01:54,120 --> 00:01:59,120 Speaker 1: might on the elementary targets in wealth building, which might be, 34 00:01:59,280 --> 00:02:01,800 Speaker 1: for instance, to own your own home, which might be 35 00:02:01,920 --> 00:02:05,280 Speaker 1: to have some decent amount of super as a start, 36 00:02:06,160 --> 00:02:08,600 Speaker 1: and then to do wider things that you might wish 37 00:02:08,639 --> 00:02:12,600 Speaker 1: to do. And dragging I imagine on that is hex 38 00:02:12,760 --> 00:02:15,680 Speaker 1: Your hex bill now, the average hex bill is twenty 39 00:02:15,720 --> 00:02:20,680 Speaker 1: seven thousand dollars twenty six five hundred. Many people listening 40 00:02:20,680 --> 00:02:23,440 Speaker 1: to this show, I know from the demographic, from the 41 00:02:23,480 --> 00:02:26,240 Speaker 1: demographics that we see, will have hex bills and they 42 00:02:26,280 --> 00:02:29,880 Speaker 1: will be twenty seven thousand dollars or thirty seven or 43 00:02:29,919 --> 00:02:32,679 Speaker 1: forty seven or higher. And we had some really big 44 00:02:32,720 --> 00:02:35,760 Speaker 1: news this week, which I hope didn't get lost in 45 00:02:35,800 --> 00:02:39,680 Speaker 1: our distraction on the US, which is that the government 46 00:02:39,760 --> 00:02:43,200 Speaker 1: has announced quite remarkable I think the biggest thing that's 47 00:02:43,240 --> 00:02:46,320 Speaker 1: happened to Hex for many years. Number One, all HEX 48 00:02:46,320 --> 00:02:49,480 Speaker 1: bills are going to be cut by twenty percent. Number two, 49 00:02:50,400 --> 00:02:52,720 Speaker 1: the way you pay Hex and how much you have 50 00:02:52,760 --> 00:02:55,399 Speaker 1: to pay is going to be as simple as that, 51 00:02:55,600 --> 00:02:58,160 Speaker 1: and a few other things as well. My guest today 52 00:02:58,320 --> 00:03:01,080 Speaker 1: is a regular on the show, is also in the 53 00:03:01,120 --> 00:03:04,800 Speaker 1: top reaches of the top Advisor's list, and one of 54 00:03:04,800 --> 00:03:07,480 Speaker 1: the youngest at the top of that list. I don't 55 00:03:07,520 --> 00:03:09,720 Speaker 1: know if he has a X bill. It's Hugh Robertson 56 00:03:09,760 --> 00:03:12,720 Speaker 1: of Centaur. How are you, Hugh, have you got an 57 00:03:12,840 --> 00:03:13,160 Speaker 1: X bill? 58 00:03:13,320 --> 00:03:13,760 Speaker 2: I do not. 59 00:03:13,880 --> 00:03:15,200 Speaker 3: You paid it off? 60 00:03:15,200 --> 00:03:18,440 Speaker 1: You do not? You paid it off? And now you say, 61 00:03:18,520 --> 00:03:20,000 Speaker 1: why did I pay it off? I could have had 62 00:03:20,000 --> 00:03:21,960 Speaker 1: a twenty percent discount exactly. 63 00:03:23,120 --> 00:03:23,280 Speaker 3: That. 64 00:03:23,360 --> 00:03:27,000 Speaker 1: Yes, I wonder what percentage of the population have paid 65 00:03:27,000 --> 00:03:30,360 Speaker 1: off their expill I wonder that's not a figure I'm 66 00:03:30,400 --> 00:03:33,440 Speaker 1: familiar with. Okay, when people come into you, I'm going 67 00:03:33,480 --> 00:03:35,480 Speaker 1: to talk to you, both as an individual and as 68 00:03:35,520 --> 00:03:38,800 Speaker 1: an advisor. Let's first of all tell people, explain to 69 00:03:38,840 --> 00:03:42,080 Speaker 1: people what is due to happen. Now. This is important 70 00:03:42,200 --> 00:03:47,280 Speaker 1: because the mechanics of how you pay is going to change, 71 00:03:48,280 --> 00:03:51,800 Speaker 1: and the twenty percent discount is due to kick in 72 00:03:51,880 --> 00:03:56,000 Speaker 1: on June one next year. The mechanics of how you 73 00:03:56,040 --> 00:03:58,920 Speaker 1: pay is going to change from July one next year. 74 00:03:59,000 --> 00:04:02,120 Speaker 1: This is a typical complications and there each thing is 75 00:04:02,480 --> 00:04:04,440 Speaker 1: makes sense in and of itself, but the course as 76 00:04:04,440 --> 00:04:08,520 Speaker 1: a whole it looks, as usual ridiculously complicated. In any event, 77 00:04:08,840 --> 00:04:11,400 Speaker 1: that's the plan, but of course the government, that is 78 00:04:11,400 --> 00:04:15,000 Speaker 1: the alp Albanesi government will have to win to implement this. 79 00:04:15,440 --> 00:04:17,799 Speaker 1: But Hugh, could you first of all, would you explain 80 00:04:18,040 --> 00:04:20,200 Speaker 1: if I came into your office and said, as part 81 00:04:20,200 --> 00:04:22,000 Speaker 1: of my plans, I've got a hex bit of fifty 82 00:04:22,000 --> 00:04:23,880 Speaker 1: grand and there's some big changes. What should I do? 83 00:04:23,960 --> 00:04:24,719 Speaker 1: What would you say? 84 00:04:25,360 --> 00:04:28,440 Speaker 2: The first one is the twenty percent one off. Interestingly, 85 00:04:28,480 --> 00:04:32,480 Speaker 2: it wasn't a recommendation of the University a chord panel, 86 00:04:32,520 --> 00:04:37,520 Speaker 2: so this is comeing independently of that, which probably is 87 00:04:37,600 --> 00:04:39,920 Speaker 2: curious as to the timing. So that's going to cost 88 00:04:39,920 --> 00:04:43,000 Speaker 2: about twelve thirteen billion, might even be as much as 89 00:04:43,080 --> 00:04:44,640 Speaker 2: sixteen billion when I was trying to look at the 90 00:04:44,720 --> 00:04:47,080 Speaker 2: numbers that they're going to give us the one off. 91 00:04:47,160 --> 00:04:50,080 Speaker 2: So if you've got the average hextead of around twenty 92 00:04:50,080 --> 00:04:53,120 Speaker 2: seven and a half thousy twenty seven thousand, six hundred thereabouts, 93 00:04:53,560 --> 00:04:55,960 Speaker 2: that will reduce to twenty two thy eight hundred. So 94 00:04:56,640 --> 00:05:00,560 Speaker 2: the idea of that is to help with to help 95 00:05:00,560 --> 00:05:03,000 Speaker 2: with debt and to help with cost of living pressures. 96 00:05:03,040 --> 00:05:06,160 Speaker 2: So there might not be a direct correlation there, but 97 00:05:06,839 --> 00:05:10,200 Speaker 2: the and that will be applied before the indexation as well, 98 00:05:10,279 --> 00:05:11,800 Speaker 2: So I think that's probably interesting. 99 00:05:12,480 --> 00:05:15,440 Speaker 1: Yeah, that's a very important point. So listeners, I'm sure 100 00:05:15,440 --> 00:05:18,159 Speaker 1: they'd remember there was always this thing, you know, don't 101 00:05:18,160 --> 00:05:20,279 Speaker 1: worry about your hex bill. You don't have to pay interest, 102 00:05:20,680 --> 00:05:23,080 Speaker 1: and that was all fine. That did not mean it 103 00:05:23,080 --> 00:05:25,400 Speaker 1: didn't go up. People thought it did. There was no 104 00:05:25,440 --> 00:05:28,960 Speaker 1: inflation for so many years it didn't matter. Suddenly we've 105 00:05:28,960 --> 00:05:31,920 Speaker 1: had I think it was a seven percent followed by 106 00:05:31,960 --> 00:05:34,520 Speaker 1: a four percent lift in hex and that the way 107 00:05:34,600 --> 00:05:36,560 Speaker 1: we're going this year, I would think it's coming in 108 00:05:36,600 --> 00:05:39,600 Speaker 1: at about three and a half. That really kicks up 109 00:05:39,640 --> 00:05:42,720 Speaker 1: your bill. So when you mentioned the indexation. He's talking 110 00:05:42,760 --> 00:05:45,440 Speaker 1: about the fact that the government have also promised that 111 00:05:45,480 --> 00:05:48,320 Speaker 1: this twenty percent cup will come before they kick in 112 00:05:48,360 --> 00:05:51,560 Speaker 1: the indexation, and the indexation's on June every year, and 113 00:05:51,600 --> 00:05:53,480 Speaker 1: that's why this part of the plant is due to 114 00:05:53,560 --> 00:05:57,520 Speaker 1: coming on June one next year. Okay, So that's the 115 00:05:57,560 --> 00:05:58,080 Speaker 1: big thing. 116 00:05:58,960 --> 00:06:01,520 Speaker 2: So that that comes in the office is going to 117 00:06:01,520 --> 00:06:03,960 Speaker 2: be better by five and a half thousand dollars, which 118 00:06:04,040 --> 00:06:06,200 Speaker 2: is good. And then we've got the change in the 119 00:06:06,279 --> 00:06:10,400 Speaker 2: minimum incun levels, so this is really overdue, coming in 120 00:06:10,440 --> 00:06:12,600 Speaker 2: for a twenty five twenty six financial year, so that's 121 00:06:12,640 --> 00:06:15,920 Speaker 2: going to move up. Everyone's wages have moved up, so 122 00:06:16,279 --> 00:06:18,720 Speaker 2: that's going to go from fifty four, four hundred and 123 00:06:18,720 --> 00:06:22,400 Speaker 2: thirty five thousand up to sixty seven thousand. So if 124 00:06:22,440 --> 00:06:26,000 Speaker 2: you earn less than that sixty seven thousand, you don't 125 00:06:26,040 --> 00:06:27,679 Speaker 2: have to make any repayments. 126 00:06:28,200 --> 00:06:30,479 Speaker 1: You yes, if you are in less than sixty seven 127 00:06:30,520 --> 00:06:33,600 Speaker 1: thousand a year, you don't have to make any repair. 128 00:06:33,640 --> 00:06:37,720 Speaker 1: That doesn't mean that's just kicking your bill down the road, right, 129 00:06:37,880 --> 00:06:40,599 Speaker 1: You make the repayments, but your bill is going to 130 00:06:40,680 --> 00:06:41,159 Speaker 1: keep going on. 131 00:06:41,240 --> 00:06:43,880 Speaker 2: So this is where the financial planning element comes in. 132 00:06:43,960 --> 00:06:47,520 Speaker 2: When you start being given these things. Even thinking about 133 00:06:47,560 --> 00:06:52,000 Speaker 2: this debt reduction that people have been given or not 134 00:06:52,240 --> 00:06:55,479 Speaker 2: needing to make more as much in repayments, people tend 135 00:06:55,520 --> 00:06:57,920 Speaker 2: to treat it as a bonus. And if they treat 136 00:06:57,920 --> 00:06:59,520 Speaker 2: it as a bonus and they spend it and they 137 00:06:59,520 --> 00:07:02,680 Speaker 2: blow it. I was looking at just from our hundred thousand, 138 00:07:02,760 --> 00:07:04,599 Speaker 2: So say you had an income of one hundred thousand 139 00:07:04,680 --> 00:07:09,480 Speaker 2: dollars that currently you'd be paying five thousand, five hundred, 140 00:07:09,960 --> 00:07:12,440 Speaker 2: and with the changes, it's going to be four nine 141 00:07:12,520 --> 00:07:16,720 Speaker 2: hundred and fifty, so five hundred and fifty dollars more 142 00:07:16,800 --> 00:07:19,840 Speaker 2: in your pocket. So really, with then saying what would 143 00:07:19,840 --> 00:07:21,920 Speaker 2: they do with that with an extra ten dollars a week, 144 00:07:22,320 --> 00:07:25,120 Speaker 2: most people probably aren't going to look to do something 145 00:07:25,120 --> 00:07:27,640 Speaker 2: substantial with that. But you've got to really make sure 146 00:07:27,680 --> 00:07:32,400 Speaker 2: that you're not just leaving these debts debts outstanding. 147 00:07:32,640 --> 00:07:36,600 Speaker 1: Okay, And there's another thing which everyone should be aware of. 148 00:07:37,840 --> 00:07:40,000 Speaker 1: I haven't done the maths on this, but hey, I've 149 00:07:40,000 --> 00:07:42,440 Speaker 1: got a think that's advisor on the show, and I'm 150 00:07:42,480 --> 00:07:47,280 Speaker 1: sure he's really numerous. That doesn't mean that's just straight away, 151 00:07:47,320 --> 00:07:51,040 Speaker 1: but here's the thing. The other change is they're introducing 152 00:07:51,280 --> 00:07:55,840 Speaker 1: a system called marginal repayment, which was recommended. And what 153 00:07:55,880 --> 00:08:00,960 Speaker 1: it means is you in the up to now you 154 00:08:01,160 --> 00:08:05,440 Speaker 1: paid what was the interest on your bill, whatever that 155 00:08:05,440 --> 00:08:09,160 Speaker 1: bill might be. From July one next year, you pay 156 00:08:09,480 --> 00:08:14,360 Speaker 1: the interest on your bill above the threshold. So if 157 00:08:14,360 --> 00:08:20,600 Speaker 1: you have a seventy thousand, how does it can can 158 00:08:20,640 --> 00:08:25,360 Speaker 1: you bring us through? It's whatever you're over sixty seven thousand? 159 00:08:25,400 --> 00:08:27,800 Speaker 1: Is that how it will actually come to pass? 160 00:08:28,080 --> 00:08:32,920 Speaker 2: The rates are fifteen cents in the dollar up until 161 00:08:32,960 --> 00:08:34,440 Speaker 2: I think it might have been one hundred and twenty 162 00:08:34,480 --> 00:08:35,640 Speaker 2: thousand dollars. 163 00:08:35,840 --> 00:08:40,800 Speaker 3: And then above that, well that no change from that perspective. 164 00:08:41,640 --> 00:08:43,440 Speaker 2: You know, we still want to incentivize people to go 165 00:08:43,480 --> 00:08:46,480 Speaker 2: out there and work, but then in terms of years 166 00:08:46,520 --> 00:08:49,040 Speaker 2: to pay off with the new amounts because of the 167 00:08:49,120 --> 00:08:52,320 Speaker 2: reduction that they're giving. To say, this example of the 168 00:08:52,480 --> 00:08:56,880 Speaker 2: twenty seven thousand dollars average, with the twenty percent discount, 169 00:08:57,559 --> 00:09:00,640 Speaker 2: it's now takes the debt to twenty two two and 170 00:09:00,679 --> 00:09:04,640 Speaker 2: eighty dollars. And on that person for one hundred thousand, 171 00:09:04,679 --> 00:09:06,400 Speaker 2: we know that they're going to be they're going to 172 00:09:06,400 --> 00:09:08,880 Speaker 2: be paying less because of the changes, but now they'll 173 00:09:08,920 --> 00:09:11,400 Speaker 2: get it paid off in four point four to six 174 00:09:11,480 --> 00:09:15,080 Speaker 2: years versus five point oh two years. So because of 175 00:09:15,120 --> 00:09:18,280 Speaker 2: the twenty percent reduction, they're still going to be painted 176 00:09:18,320 --> 00:09:20,680 Speaker 2: off quicker, which I think is important. 177 00:09:21,240 --> 00:09:22,959 Speaker 1: So what do you say to people, have you got 178 00:09:22,960 --> 00:09:25,560 Speaker 1: a defaud position on Hex? 179 00:09:26,120 --> 00:09:30,079 Speaker 2: Yes, it's we've always left let that run in the background, 180 00:09:30,080 --> 00:09:33,400 Speaker 2: and it's usually a matter of paying off the majority 181 00:09:33,440 --> 00:09:35,880 Speaker 2: of people that are coming to see us, or also 182 00:09:36,040 --> 00:09:38,959 Speaker 2: with a debt with a mortgage, and usually we're just saying, look, 183 00:09:39,000 --> 00:09:42,839 Speaker 2: pay that off more quickly if you have additional repayments, 184 00:09:43,360 --> 00:09:45,760 Speaker 2: pay that off at your principal place of residence. Because 185 00:09:45,760 --> 00:09:49,640 Speaker 2: that's not a tax deductible debt. And the interstright volatility's 186 00:09:50,280 --> 00:09:53,559 Speaker 2: been pretty extreme and it just gives you more capability 187 00:09:53,600 --> 00:09:55,480 Speaker 2: when you're paying down your debt. You can either use 188 00:09:55,480 --> 00:09:58,760 Speaker 2: that to reinvest, you can save up for your kids' education, 189 00:09:59,080 --> 00:10:01,760 Speaker 2: you can you know, use the money to. 190 00:10:03,400 --> 00:10:06,400 Speaker 3: Just pay down debt. In it in an absolute term. 191 00:10:06,720 --> 00:10:09,040 Speaker 1: And you're comparing it to to tax deductible debt, which 192 00:10:09,080 --> 00:10:11,880 Speaker 1: is you're saying you had an investment property versus HEX 193 00:10:12,280 --> 00:10:15,079 Speaker 1: at least with the investment properties tax deductible. What about 194 00:10:15,080 --> 00:10:18,560 Speaker 1: the home itself? What about if you have a mortgage. 195 00:10:18,280 --> 00:10:21,880 Speaker 2: Probably the interest rate differential the interstrate is higher on 196 00:10:21,960 --> 00:10:25,120 Speaker 2: your home loan than it is on the indexed amount 197 00:10:25,160 --> 00:10:28,280 Speaker 2: of the debt with HEX. I think that that important 198 00:10:28,320 --> 00:10:30,960 Speaker 2: point that you raised is that people really do need 199 00:10:31,000 --> 00:10:34,719 Speaker 2: to understand that the HEXT does go up and you're 200 00:10:34,760 --> 00:10:38,959 Speaker 2: forced to repay. So with those repayments years gone by, 201 00:10:39,040 --> 00:10:40,920 Speaker 2: you do you remember when they used to be there 202 00:10:40,960 --> 00:10:43,640 Speaker 2: was benefiting pain it off at a quicker rate, the 203 00:10:43,679 --> 00:10:44,920 Speaker 2: government incentivized it. 204 00:10:45,640 --> 00:10:50,000 Speaker 1: Well, yeah, there was in this whole package that was announced. 205 00:10:50,440 --> 00:10:54,520 Speaker 1: There is no incentive whatsoever that I can detect to 206 00:10:54,600 --> 00:10:56,360 Speaker 1: pay it off earlier. And there used to be Was 207 00:10:56,400 --> 00:11:00,400 Speaker 1: it a ten percent discount if you paid early? And 208 00:11:00,960 --> 00:11:03,800 Speaker 1: they dropped that in two o nine and there's no incentive. 209 00:11:03,880 --> 00:11:05,360 Speaker 1: Is there an incentive if I've missed it? 210 00:11:05,840 --> 00:11:06,040 Speaker 3: No? 211 00:11:06,200 --> 00:11:09,160 Speaker 2: And I think for the majority of people they're happy 212 00:11:09,200 --> 00:11:11,920 Speaker 2: just to take on the debt. There's talk about different 213 00:11:11,960 --> 00:11:15,800 Speaker 2: degrees having different costs associated with Obviously, a medical degree 214 00:11:15,840 --> 00:11:18,760 Speaker 2: is going to give you a very clear career pathway, 215 00:11:18,880 --> 00:11:21,920 Speaker 2: and there's conversation that they should pay more, and there's 216 00:11:21,960 --> 00:11:25,840 Speaker 2: people that maybe do an arts degree that probably pay less. 217 00:11:26,200 --> 00:11:28,400 Speaker 2: It's difficult that the advice that you would give someone 218 00:11:28,440 --> 00:11:30,640 Speaker 2: who's going to university is just make sure the degree 219 00:11:30,679 --> 00:11:32,400 Speaker 2: is relevant and it's something that you're going to need. 220 00:11:32,800 --> 00:11:34,800 Speaker 2: Don't take on a debt that you don't need. If 221 00:11:34,840 --> 00:11:38,079 Speaker 2: you're thinking about postgraduate studies and your mid career, make 222 00:11:38,120 --> 00:11:41,880 Speaker 2: sure it's really applicable to you, because it's going to 223 00:11:41,880 --> 00:11:42,680 Speaker 2: be with you a long time. 224 00:11:42,720 --> 00:11:43,080 Speaker 3: The debt. 225 00:11:43,720 --> 00:11:46,880 Speaker 1: It's interesting though the academic see and the studies show 226 00:11:47,120 --> 00:11:51,559 Speaker 1: that essentially what OC code when the Coalition did something 227 00:11:51,600 --> 00:11:53,520 Speaker 1: that had never been done before, which is they tried 228 00:11:53,520 --> 00:12:03,040 Speaker 1: to price education in a fashion that tilted the market 229 00:12:03,120 --> 00:12:10,760 Speaker 1: towards maths and science. And the evidence so far is 230 00:12:10,800 --> 00:12:15,959 Speaker 1: that there is no evidence that people change their mind. 231 00:12:16,280 --> 00:12:22,480 Speaker 1: If I'm going to do medieval art history and someone says, hey, 232 00:12:22,800 --> 00:12:26,520 Speaker 1: accountancy is much better value, you should do that, I'm 233 00:12:26,559 --> 00:12:29,280 Speaker 1: not going to change my mind. And I think that's 234 00:12:29,320 --> 00:12:31,880 Speaker 1: one point I just want to make to listeners. The 235 00:12:31,960 --> 00:12:34,520 Speaker 1: other thing is which or if I was really interesting, 236 00:12:34,679 --> 00:12:38,680 Speaker 1: is someone was doing some modeling on this. This is 237 00:12:39,040 --> 00:12:40,280 Speaker 1: the hex as it stands. 238 00:12:40,320 --> 00:12:40,760 Speaker 3: By the way. 239 00:12:40,760 --> 00:12:43,000 Speaker 1: Her name is Alison Preston. I haven't talked to her. 240 00:12:43,320 --> 00:12:48,079 Speaker 1: She's an economist University of Western Australia, and she says 241 00:12:48,440 --> 00:12:53,040 Speaker 1: that in terms of paying off hets sorry, this is 242 00:12:53,120 --> 00:12:55,640 Speaker 1: post if the government's thing comes through. If the government's 243 00:12:55,679 --> 00:12:59,959 Speaker 1: plan comes through and the twenty percent comes through that men, 244 00:13:00,559 --> 00:13:03,880 Speaker 1: this is interesting. Men on average will have their student 245 00:13:04,000 --> 00:13:07,560 Speaker 1: loans paid off at thirty six, I will have none 246 00:13:07,600 --> 00:13:11,400 Speaker 1: left and women will still be repaying theirs until the 247 00:13:11,400 --> 00:13:14,560 Speaker 1: age of fifty. And if you think about it, if 248 00:13:14,559 --> 00:13:17,520 Speaker 1: you think about it, that's actually instantly explained from an 249 00:13:17,600 --> 00:13:20,680 Speaker 1: economic rational point of view, because A they earn less. 250 00:13:20,920 --> 00:13:23,440 Speaker 2: B the. 251 00:13:25,960 --> 00:13:31,160 Speaker 1: Higher earning some higher earning professions are more dominated by 252 00:13:31,280 --> 00:13:36,320 Speaker 1: men at this point. Still though it's bad. It's a 253 00:13:36,360 --> 00:13:39,040 Speaker 1: hell of a gap. So that's something too to think about. 254 00:13:39,280 --> 00:13:43,120 Speaker 2: That's great research done and interesting. Really got a factor 255 00:13:43,160 --> 00:13:47,800 Speaker 2: in that family. Absolutely how you have some equality there? 256 00:13:48,240 --> 00:13:53,400 Speaker 1: Yeah, it's certainly something that wasn't considered. Just one last thing. 257 00:13:55,600 --> 00:13:57,760 Speaker 1: If I said to you, is there any is there 258 00:13:57,800 --> 00:14:01,320 Speaker 1: anything better than X? Aunts to that, there probably isn't, 259 00:14:01,400 --> 00:14:02,920 Speaker 1: is there? Since at the end of the day it's 260 00:14:03,000 --> 00:14:04,280 Speaker 1: interest free. 261 00:14:04,600 --> 00:14:05,120 Speaker 3: That's right. 262 00:14:05,280 --> 00:14:07,240 Speaker 2: We looked at obviously when I had it, I looked 263 00:14:07,240 --> 00:14:12,160 Speaker 2: at it a lot more detail, and there really isn't it. 264 00:14:12,160 --> 00:14:15,040 Speaker 2: It's one of those necessary evils. I think in some 265 00:14:15,080 --> 00:14:19,080 Speaker 2: ways we're very fortunate the amount the inflation applied to 266 00:14:19,520 --> 00:14:22,040 Speaker 2: our debt has been more generous, and say over in 267 00:14:22,040 --> 00:14:24,760 Speaker 2: the UK or New Zealand or other systems, when in 268 00:14:25,720 --> 00:14:27,240 Speaker 2: America there's very much. 269 00:14:27,040 --> 00:14:30,680 Speaker 3: That family savings or people just borrow money. We're kind 270 00:14:30,680 --> 00:14:31,040 Speaker 3: of lucky. 271 00:14:31,080 --> 00:14:33,440 Speaker 2: You get an interest free loan from the government for 272 00:14:33,480 --> 00:14:36,680 Speaker 2: your education. We're still the lucky country in many ways, 273 00:14:37,760 --> 00:14:39,800 Speaker 2: and there's nothing that we can say about it. 274 00:14:39,840 --> 00:14:41,480 Speaker 3: I'm happy with the income. 275 00:14:41,440 --> 00:14:44,280 Speaker 2: Above the threshold that that was overdue, and that's something 276 00:14:44,320 --> 00:14:46,120 Speaker 2: that when you start your career and you're trying to 277 00:14:46,160 --> 00:14:49,640 Speaker 2: get your wealth creation engine going, that the more money 278 00:14:49,680 --> 00:14:52,480 Speaker 2: you've got, the better you're also combined to that now 279 00:14:52,520 --> 00:14:54,400 Speaker 2: with the cost of rent straight away, when I saw 280 00:14:54,840 --> 00:14:58,080 Speaker 2: maybe an extra couple of bucks ten twenty dollars in 281 00:14:58,160 --> 00:15:02,200 Speaker 2: someone's pocket a week, that helps with the cost of 282 00:15:02,240 --> 00:15:04,840 Speaker 2: living and rent. The one thing that I did question 283 00:15:05,640 --> 00:15:10,040 Speaker 2: when we're allocating sixteen billion in a budget to an area, 284 00:15:11,120 --> 00:15:13,280 Speaker 2: I probably think that we could have helped more people. 285 00:15:13,760 --> 00:15:15,800 Speaker 2: The numbers here is that you're going to help three 286 00:15:15,880 --> 00:15:19,560 Speaker 2: million people, which is great, but I reckon with sixteen 287 00:15:19,560 --> 00:15:20,920 Speaker 2: billion we could have helped more people. 288 00:15:22,440 --> 00:15:27,440 Speaker 1: Yes, And of course anyone who's paid off says, oh, 289 00:15:28,320 --> 00:15:30,880 Speaker 1: you know, I would have liked that, and anyone who's 290 00:15:30,920 --> 00:15:35,400 Speaker 1: coming in the future obviously they just simply get the reset. 291 00:15:35,760 --> 00:15:37,880 Speaker 1: Can I ask you just one thing, one last thing, 292 00:15:38,200 --> 00:15:41,560 Speaker 1: which is just looking at it more generally, Does it 293 00:15:41,720 --> 00:15:44,960 Speaker 1: change your view in any way about the speed at 294 00:15:45,000 --> 00:15:50,280 Speaker 1: which people should do it and should people not bother 295 00:15:50,400 --> 00:15:52,680 Speaker 1: to pay a damn thing till this comes through? 296 00:15:52,720 --> 00:15:56,040 Speaker 3: Why would you one hundred percent? I would hold off. 297 00:15:56,160 --> 00:15:59,400 Speaker 2: And I think if you're looking at debt, it it's 298 00:15:59,440 --> 00:16:00,040 Speaker 2: going to take you. 299 00:16:00,040 --> 00:16:01,440 Speaker 3: You on the average when. 300 00:16:01,360 --> 00:16:03,200 Speaker 2: You look at the average tables, if you had the 301 00:16:03,240 --> 00:16:06,440 Speaker 2: average amount of debt you're looking at the and you 302 00:16:06,600 --> 00:16:09,760 Speaker 2: currently have that I should say six six four and 303 00:16:09,800 --> 00:16:11,640 Speaker 2: a half, six and a half years to pay it down. 304 00:16:12,080 --> 00:16:14,000 Speaker 2: There's no benefit in paying it off quicker than that. 305 00:16:14,040 --> 00:16:16,840 Speaker 2: You'd get a better benefit, better bang for buck paying 306 00:16:16,880 --> 00:16:19,480 Speaker 2: down your home loan or saving a deposit. And no 307 00:16:19,920 --> 00:16:22,720 Speaker 2: benefit for parents to offer to pay down their kids either. 308 00:16:23,600 --> 00:16:26,280 Speaker 1: No, because there's no incentive. As I said at the start, 309 00:16:26,360 --> 00:16:30,440 Speaker 1: that's right now. Yeah, that's a really really glaring error. 310 00:16:30,800 --> 00:16:33,440 Speaker 1: I think in what they did Okay, we'll be back 311 00:16:33,480 --> 00:16:48,600 Speaker 1: in a moment. Folks. Hello, welcome back to The Australian's 312 00:16:48,640 --> 00:16:51,360 Speaker 1: Money Puzzle podcast. I'm talking to Hugh Robertson of The 313 00:16:51,440 --> 00:16:56,840 Speaker 1: Center or ce NTAU or Group Financial Advisor regular on 314 00:16:56,960 --> 00:17:00,560 Speaker 1: the show. Now, Hugh, before we got questions on Trump 315 00:17:00,600 --> 00:17:04,320 Speaker 1: and the election, I did make the point at the 316 00:17:04,440 --> 00:17:06,960 Speaker 1: start that the US markets went out three and a 317 00:17:07,000 --> 00:17:10,040 Speaker 1: half percent and the Australian markets didn't follow that. They 318 00:17:10,040 --> 00:17:15,159 Speaker 1: didn't follow that because why would they. Because this particular 319 00:17:15,200 --> 00:17:20,040 Speaker 1: regime that has been elected is protectionist and is particularly 320 00:17:20,119 --> 00:17:22,399 Speaker 1: so in relation to China. We are seeing as a 321 00:17:22,480 --> 00:17:25,720 Speaker 1: China proxy on global markets. You can see that straight away. 322 00:17:25,720 --> 00:17:27,840 Speaker 1: That's why the dollar is going the wrong way this morning. 323 00:17:29,119 --> 00:17:33,200 Speaker 1: But what do you say to clients who say, is 324 00:17:33,720 --> 00:17:38,440 Speaker 1: there any broad guidance you can give as to allocation 325 00:17:39,840 --> 00:17:43,640 Speaker 1: for investors in the view of this new presidency? 326 00:17:44,280 --> 00:17:44,600 Speaker 3: Great? 327 00:17:45,119 --> 00:17:48,359 Speaker 2: Yes, the Dow going up three point five point seven 328 00:17:48,600 --> 00:17:52,600 Speaker 2: last night is definitely a pro US story. Are you 329 00:17:52,640 --> 00:17:55,720 Speaker 2: saying there is going to be greater protectionism? Trump's gonna 330 00:17:56,200 --> 00:17:59,520 Speaker 2: implement all the Republicans are going to tax cuts for 331 00:17:59,600 --> 00:18:03,159 Speaker 2: corporate There's going to be higher tariffs, tieder immigration, so 332 00:18:03,200 --> 00:18:06,159 Speaker 2: we're really Trump two point zero is that continuation of 333 00:18:06,200 --> 00:18:08,159 Speaker 2: the anti globalization perspective. 334 00:18:09,119 --> 00:18:11,720 Speaker 3: So from our perspective, it does. 335 00:18:12,600 --> 00:18:14,760 Speaker 2: It's a worry for Australia from that perspective, so you 336 00:18:14,800 --> 00:18:17,119 Speaker 2: really need to take a global outlook when you invest. 337 00:18:17,880 --> 00:18:20,040 Speaker 2: I think we've seen, and I think we've talked about 338 00:18:20,040 --> 00:18:23,760 Speaker 2: it previously, the rise and rise of index funds, not 339 00:18:23,800 --> 00:18:26,600 Speaker 2: giving financial advice, but now we're really looking to go 340 00:18:26,680 --> 00:18:30,840 Speaker 2: from those market cap weighted index funds that have really 341 00:18:30,920 --> 00:18:34,560 Speaker 2: high concentration risk into more of those equal weighted kind 342 00:18:34,600 --> 00:18:37,399 Speaker 2: of opportunities there because you look at America and the 343 00:18:37,520 --> 00:18:40,680 Speaker 2: S and P five hundred, well we've talked spent a 344 00:18:40,760 --> 00:18:43,639 Speaker 2: year talking about just that magnificent seven. There's four hundred 345 00:18:43,640 --> 00:18:46,920 Speaker 2: and ninety three other companies and when you looked at it, 346 00:18:47,160 --> 00:18:49,680 Speaker 2: I was really curious to see if the Dow beat 347 00:18:49,680 --> 00:18:53,119 Speaker 2: the NASDAK and it did, so I think from a clicktic. 348 00:18:53,160 --> 00:18:57,000 Speaker 1: That's and it doesn't very p So you're seeing you're 349 00:18:57,040 --> 00:18:59,200 Speaker 1: seeing you like equal. 350 00:18:58,880 --> 00:19:02,440 Speaker 3: Weighted US I do, and I think you etf to 351 00:19:02,480 --> 00:19:04,160 Speaker 3: strip out. The big take is that it. 352 00:19:04,520 --> 00:19:07,000 Speaker 2: Yeah, and I think from an Australian perspective, the majority 353 00:19:07,040 --> 00:19:10,440 Speaker 2: of clients we see are very overweighting Aussie and that's 354 00:19:10,440 --> 00:19:12,040 Speaker 2: going to be a real challenge. I think Europe is 355 00:19:12,040 --> 00:19:15,240 Speaker 2: coming out of some pretty rough years, so there's opportunity there. 356 00:19:15,640 --> 00:19:18,399 Speaker 2: I think there's still continued opportunity in America outside of 357 00:19:18,440 --> 00:19:22,520 Speaker 2: that top seven. And from the client perspective, it's really 358 00:19:22,600 --> 00:19:25,960 Speaker 2: to sort of don't be scared of going global because 359 00:19:25,960 --> 00:19:28,199 Speaker 2: it might actually be safer than domestic because we are 360 00:19:28,240 --> 00:19:31,200 Speaker 2: a China proxy and the world we're what two or 361 00:19:31,240 --> 00:19:34,280 Speaker 2: three percent of the world market cap. So unless we've 362 00:19:34,320 --> 00:19:37,199 Speaker 2: got resources doing well or banks doing well, if we 363 00:19:37,240 --> 00:19:40,000 Speaker 2: think that the tail wins the technology through AI or 364 00:19:40,560 --> 00:19:44,640 Speaker 2: healthcare through the GLP ones and all those, then we're 365 00:19:44,640 --> 00:19:46,600 Speaker 2: not getting exposed to that in the Australian market. 366 00:19:47,359 --> 00:19:52,600 Speaker 1: Okay, very good, All right, very interesting. Now the first 367 00:19:52,640 --> 00:19:55,600 Speaker 1: question was actually from Peter said, is if Anthony Albanezi 368 00:19:55,680 --> 00:19:57,920 Speaker 1: is going to cut student debt, it's the only point 369 00:19:57,920 --> 00:20:00,000 Speaker 1: in paying off hex's debt early. I think we answered 370 00:20:00,000 --> 00:20:02,760 Speaker 1: that piece. Certainly, isn't any point in rushington pay it 371 00:20:02,800 --> 00:20:05,440 Speaker 1: off early bit before we see whether this whether this 372 00:20:05,760 --> 00:20:09,719 Speaker 1: gets through on June one next year, which would imply 373 00:20:09,880 --> 00:20:13,320 Speaker 1: that the government must somehow be able to get that 374 00:20:13,400 --> 00:20:16,919 Speaker 1: legislation through, which would suggest that this government would have 375 00:20:16,920 --> 00:20:19,600 Speaker 1: to be re elected or at least told power in 376 00:20:19,680 --> 00:20:23,760 Speaker 1: June one next year. Tim, is it normal that income 377 00:20:23,800 --> 00:20:27,720 Speaker 1: protection By that he means income protection insurance is going 378 00:20:27,760 --> 00:20:31,119 Speaker 1: up twenty percent year on year for the older contracts. 379 00:20:31,800 --> 00:20:35,760 Speaker 1: And is any advisor advising to keep the old terms. 380 00:20:36,119 --> 00:20:38,439 Speaker 1: I bet they are, but you can tell. 381 00:20:38,359 --> 00:20:40,240 Speaker 3: Us you it is. 382 00:20:41,040 --> 00:20:43,480 Speaker 2: This is one of the conversation's advisers are having every 383 00:20:43,520 --> 00:20:47,000 Speaker 2: single day with their clients. Tim might be referring to 384 00:20:47,359 --> 00:20:51,479 Speaker 2: and actually an agreed value income protection policy. These are 385 00:20:51,520 --> 00:20:54,200 Speaker 2: ones that were already marked up a little bit more expensive, 386 00:20:54,520 --> 00:20:56,560 Speaker 2: but you agreed to the value of the on the 387 00:20:56,640 --> 00:20:59,440 Speaker 2: terms at the time when you took the insurance policy 388 00:20:59,440 --> 00:21:02,040 Speaker 2: out as oppos to an indemnity one, which is a 389 00:21:02,119 --> 00:21:06,400 Speaker 2: time of claim you prove what you weren't. But if 390 00:21:06,440 --> 00:21:09,280 Speaker 2: you have an income or a salary that's highly volatile, 391 00:21:09,280 --> 00:21:12,560 Speaker 2: then the agreed value is still important. What we are 392 00:21:12,640 --> 00:21:16,760 Speaker 2: seeing though, is people are really due to the income protection. 393 00:21:16,960 --> 00:21:19,720 Speaker 2: People are really assessing their needs again. And maybe you 394 00:21:19,800 --> 00:21:21,920 Speaker 2: took out the income protection when you had a higher 395 00:21:22,000 --> 00:21:25,760 Speaker 2: level of dead or kids education expenses, so you can 396 00:21:25,840 --> 00:21:28,399 Speaker 2: ensure yourself for up to seventy five percent of what 397 00:21:28,440 --> 00:21:31,320 Speaker 2: you earn, but you don't have to. You can toggle 398 00:21:31,359 --> 00:21:34,399 Speaker 2: around with your waiting period, whether it be thirty days 399 00:21:34,400 --> 00:21:36,760 Speaker 2: and now you've got more money in your offset account 400 00:21:37,240 --> 00:21:39,760 Speaker 2: in your home, you might be able to go ninety days. 401 00:21:39,760 --> 00:21:41,760 Speaker 2: You might be able to go a couple of six 402 00:21:41,800 --> 00:21:45,200 Speaker 2: months a year without needing to claim on your income protection. 403 00:21:45,400 --> 00:21:48,000 Speaker 2: So you could use your home loan, or you can 404 00:21:48,200 --> 00:21:50,600 Speaker 2: offset account, or you can use sick leave at work. 405 00:21:50,680 --> 00:21:53,359 Speaker 2: So you've got to be clever around building your plan 406 00:21:53,440 --> 00:21:56,720 Speaker 2: onto what your lever is how much financial risk are 407 00:21:56,720 --> 00:21:59,000 Speaker 2: you're going to transfer to you personally and be self 408 00:21:59,000 --> 00:22:03,640 Speaker 2: insured versus the insurance. So that's the things we've changed 409 00:22:03,640 --> 00:22:05,399 Speaker 2: a lot. We look at the waiting period, we look 410 00:22:05,400 --> 00:22:07,840 Speaker 2: at the benefit period. Most people don't need to get 411 00:22:07,840 --> 00:22:09,840 Speaker 2: paid till sixty five. It might only be a two 412 00:22:09,880 --> 00:22:12,560 Speaker 2: year benefit period, and the actual sum insurance you might 413 00:22:12,600 --> 00:22:14,760 Speaker 2: not need a full seventy five percent of what you own. 414 00:22:14,840 --> 00:22:17,840 Speaker 2: We're not seeing people cancel it, but we're definitely modifying 415 00:22:18,560 --> 00:22:20,879 Speaker 2: a lot. And the stuff that we're always cautious of 416 00:22:21,040 --> 00:22:24,560 Speaker 2: is don't just go to something that's cheap, because you know, 417 00:22:25,200 --> 00:22:27,280 Speaker 2: if you get a cheap policy, you might get a 418 00:22:27,359 --> 00:22:29,080 Speaker 2: cheap outcome. We just want to make sure you get 419 00:22:29,080 --> 00:22:32,080 Speaker 2: something that's appropriate to you. So definitely that's a sec 420 00:22:32,119 --> 00:22:32,919 Speaker 2: advice part. 421 00:22:33,560 --> 00:22:36,520 Speaker 1: That's a really good answer. Okay, very interesting. Interesting, isn't 422 00:22:36,560 --> 00:22:40,080 Speaker 1: it that crosses over in all insurances. I did something 423 00:22:40,119 --> 00:22:44,440 Speaker 1: on private insurance, private health insurance that is, and four 424 00:22:44,520 --> 00:22:48,879 Speaker 1: hundred thousand people in the last two years downgraded their 425 00:22:48,960 --> 00:22:52,280 Speaker 1: health insurance from gold to silver or whatever, silver to brands. 426 00:22:52,560 --> 00:22:55,040 Speaker 1: Same thing. They say, Okay, I'm not going to drop it, 427 00:22:55,119 --> 00:22:57,639 Speaker 1: but you know, really look at it and say is 428 00:22:57,680 --> 00:23:01,240 Speaker 1: it applicable to me? Just means that once a year, 429 00:23:01,280 --> 00:23:04,359 Speaker 1: having a damn hard look at it. Okay, Rob says, 430 00:23:04,400 --> 00:23:06,920 Speaker 1: would it make a big difference to government deficiency if 431 00:23:06,920 --> 00:23:11,639 Speaker 1: all public servants traveled economy always? Are they our servants 432 00:23:12,000 --> 00:23:19,600 Speaker 1: or are we the increasingly vexed public there? Yes, okay, 433 00:23:19,920 --> 00:23:22,040 Speaker 1: this is that we're keeping away from politics. 434 00:23:22,119 --> 00:23:22,359 Speaker 3: Rob. 435 00:23:22,960 --> 00:23:25,720 Speaker 1: Yeah, I don't know. They all seem to They all 436 00:23:25,800 --> 00:23:28,000 Speaker 1: like to treat themselves. It seems to me on all 437 00:23:28,040 --> 00:23:30,560 Speaker 1: sides of parliament. That's all I have to say. 438 00:23:30,920 --> 00:23:34,399 Speaker 2: Did I say the Singapore Prime minister recently traveling in 439 00:23:34,440 --> 00:23:37,400 Speaker 2: a planing, he always flies economy. 440 00:23:37,760 --> 00:23:38,560 Speaker 3: Did I say that. 441 00:23:39,640 --> 00:23:43,840 Speaker 1: If economy isn't he great? Reminds me of the wonderful 442 00:23:43,920 --> 00:23:48,159 Speaker 1: Chuck Feeney who was the Atlantic philanthropy's man, who was 443 00:23:48,160 --> 00:23:51,440 Speaker 1: a billionaire, gave all his money to charity later on 444 00:23:52,240 --> 00:23:56,399 Speaker 1: huge benefacture of universities around the world, and he created 445 00:23:56,480 --> 00:23:58,439 Speaker 1: basically he didn't create Judy Free, but he was the 446 00:23:58,440 --> 00:24:02,320 Speaker 1: first billionaire and the free business in the US. Chuck Feeney, 447 00:24:03,280 --> 00:24:08,040 Speaker 1: who died recently, and he always traveled economy and when 448 00:24:08,040 --> 00:24:11,080 Speaker 1: he was asked why, he said, we all arrive at 449 00:24:11,080 --> 00:24:15,800 Speaker 1: the same time. Okay, Now I've got some very good 450 00:24:15,840 --> 00:24:19,480 Speaker 1: questions coming up from doctor Joseph, from and from Augustin 451 00:24:20,040 --> 00:24:34,679 Speaker 1: and we'll be back in a moment. Hello, Welcome back 452 00:24:34,720 --> 00:24:37,720 Speaker 1: to the Australian's Money Puzzle. Hugh Robertson of the Centaur 453 00:24:38,320 --> 00:24:42,800 Speaker 1: Financial Advice Group, speaking on the show today. First question 454 00:24:43,119 --> 00:24:47,360 Speaker 1: is from doctor Joseph. I have exposure to the artificial 455 00:24:47,440 --> 00:24:51,719 Speaker 1: intelligence AI opportunities by being invested in the US megacap 456 00:24:51,800 --> 00:24:55,440 Speaker 1: tech giants as well as Copper. You've thought it through, 457 00:24:55,480 --> 00:25:00,480 Speaker 1: Doctor Joseph, would having exposure to international data centers overkill 458 00:25:01,440 --> 00:25:04,520 Speaker 1: or is this necessary to capture the full opportunity? Okay, 459 00:25:04,680 --> 00:25:07,400 Speaker 1: number one, we don't advise. Number two, We certainly don't 460 00:25:07,400 --> 00:25:10,480 Speaker 1: talk individual advice. It's as information only. But I will 461 00:25:10,520 --> 00:25:15,640 Speaker 1: say that I would include data centers certainly in the 462 00:25:15,680 --> 00:25:19,960 Speaker 1: AI opportunity for sure, and the big super fronts for 463 00:25:20,000 --> 00:25:21,840 Speaker 1: sure are including it. If you think of what they've 464 00:25:21,840 --> 00:25:25,840 Speaker 1: paid for air Trunk recently. You see this CDC auction 465 00:25:26,000 --> 00:25:29,919 Speaker 1: coming up now as well, and obviously the share price 466 00:25:30,040 --> 00:25:36,320 Speaker 1: hot share price of next DC and also Mcquarie that 467 00:25:36,400 --> 00:25:38,880 Speaker 1: is the Mcquarie Technology Group as opposed to Mcquarie Bank. 468 00:25:39,320 --> 00:25:42,160 Speaker 2: What do you think you the idea Yes, yes, says 469 00:25:42,440 --> 00:25:46,639 Speaker 2: over exposure, but yeah, you're investing in that thematic and 470 00:25:47,040 --> 00:25:49,639 Speaker 2: there is a diversification benefit there. I do like the 471 00:25:49,640 --> 00:25:53,080 Speaker 2: concept of when everyone's digging for gold, sell the shovels, 472 00:25:53,760 --> 00:25:56,520 Speaker 2: and I think our data centers are that sor it's 473 00:25:56,560 --> 00:25:59,720 Speaker 2: a nice little infrastructure play. You're not going to get 474 00:25:59,800 --> 00:26:02,600 Speaker 2: the same returns that you're going to get in a 475 00:26:02,600 --> 00:26:07,920 Speaker 2: AI leading kind of invention like a chat GPT of 476 00:26:08,000 --> 00:26:11,240 Speaker 2: the world. But it's appropriate whether you be in all 477 00:26:11,280 --> 00:26:14,320 Speaker 2: three of those. Again, if it's I do think that 478 00:26:14,480 --> 00:26:16,880 Speaker 2: AI is going to be that once in a generation 479 00:26:17,040 --> 00:26:20,000 Speaker 2: opportunity that we get from an investment perspective, and you 480 00:26:20,119 --> 00:26:22,480 Speaker 2: just don't know which area is going to hit. I 481 00:26:22,520 --> 00:26:25,160 Speaker 2: was just spent time at M I, T, and Harvard 482 00:26:25,440 --> 00:26:28,080 Speaker 2: a couple of months ago, and hearing them talk about 483 00:26:28,320 --> 00:26:32,080 Speaker 2: how they're what they're doing with AI just absolutely blew 484 00:26:32,160 --> 00:26:35,359 Speaker 2: my mind. And some people have spent over a billion 485 00:26:35,400 --> 00:26:37,560 Speaker 2: dollars and they've made never made a dollar of revenue. 486 00:26:37,760 --> 00:26:40,960 Speaker 2: So depends where you're at what you want from your 487 00:26:41,080 --> 00:26:42,000 Speaker 2: from your investment. 488 00:26:42,680 --> 00:26:46,120 Speaker 1: Did did though, I'm sure it was all wonderful. Did 489 00:26:46,160 --> 00:26:50,720 Speaker 1: you come away with any specific investment lessons? 490 00:26:51,000 --> 00:26:54,760 Speaker 2: No, there's out of AI. It's going to be there's 491 00:26:54,760 --> 00:26:56,919 Speaker 2: going to be a lot of failures. There's going to 492 00:26:56,920 --> 00:26:59,000 Speaker 2: be a lot that are commercializing. You're going to hear 493 00:26:59,040 --> 00:27:01,240 Speaker 2: a lot of really good star stories and good narratives 494 00:27:01,680 --> 00:27:05,000 Speaker 2: that just won't come through. So for me, it's still 495 00:27:05,840 --> 00:27:08,600 Speaker 2: allocate money to it, but know the risks that you're 496 00:27:08,640 --> 00:27:11,119 Speaker 2: taking in that area. I think a lot of the 497 00:27:11,200 --> 00:27:13,600 Speaker 2: really great ones are going to be via private equity. 498 00:27:13,640 --> 00:27:17,040 Speaker 2: They won't be public for some time, so I'd rather 499 00:27:17,080 --> 00:27:19,680 Speaker 2: take something that's a little bit more established, like the 500 00:27:20,040 --> 00:27:22,359 Speaker 2: data centers, for example. I think that's appropriate. 501 00:27:23,520 --> 00:27:26,640 Speaker 1: Yeah, okay, it's interesting. I covered a corresponds upon a time, 502 00:27:26,720 --> 00:27:30,320 Speaker 1: the dot com boom, and I was actually technology editor 503 00:27:30,680 --> 00:27:34,240 Speaker 1: of a business of what was then Business Review weekly magazine, 504 00:27:35,320 --> 00:27:40,760 Speaker 1: and I must have met, I don't know, fifty one 505 00:27:40,840 --> 00:27:45,359 Speaker 1: hundred dot com companies. They were just queuing off basically, 506 00:27:46,040 --> 00:27:51,320 Speaker 1: and as you say, they are great stories, marvelous stories, 507 00:27:51,359 --> 00:27:56,080 Speaker 1: great ideas, and three three came through in the end. 508 00:27:56,200 --> 00:27:59,159 Speaker 1: There are only three that I know of that are 509 00:27:59,240 --> 00:28:02,720 Speaker 1: still there today. One completely went onto the radar and 510 00:28:02,720 --> 00:28:05,000 Speaker 1: I missed it completely, and most people did, which was 511 00:28:05,080 --> 00:28:08,640 Speaker 1: car Sales, which is a leader to the readestate dot 512 00:28:08,640 --> 00:28:12,800 Speaker 1: com dot U Norea, part of NewsCorp, Disclosure and Seek. 513 00:28:13,359 --> 00:28:15,959 Speaker 1: The Bassett brothers, I can remember them coming in and 514 00:28:16,000 --> 00:28:18,760 Speaker 1: talking and they were just another They were just another 515 00:28:18,840 --> 00:28:21,520 Speaker 1: couple of young guys jumping around the office, excited about 516 00:28:21,520 --> 00:28:23,879 Speaker 1: what they were planning. And I had seen so many, 517 00:28:25,680 --> 00:28:28,480 Speaker 1: but they were one. But they were one for everyone 518 00:28:28,520 --> 00:28:31,560 Speaker 1: that worked. There was thirty forty that that didn't work, 519 00:28:31,920 --> 00:28:32,840 Speaker 1: So keep that in mind. 520 00:28:32,880 --> 00:28:36,880 Speaker 2: But AI, this is how I always talk about Mark 521 00:28:36,960 --> 00:28:39,959 Speaker 2: Zuckerberg and you think, okay, he made Facebook, but there 522 00:28:40,000 --> 00:28:42,640 Speaker 2: was a million people trying to do exactly what he did, 523 00:28:43,000 --> 00:28:44,400 Speaker 2: so you go. So it's not I want to be 524 00:28:44,440 --> 00:28:47,680 Speaker 2: the next Mark Zuckerberg. There was hundreds and thousands of 525 00:28:47,680 --> 00:28:50,400 Speaker 2: people trying to do that exact same thing. So there's 526 00:28:50,400 --> 00:28:52,480 Speaker 2: always the element of luck. And that's why you don't 527 00:28:52,480 --> 00:28:56,040 Speaker 2: go into just one. You diversify. And if you think, okay, 528 00:28:56,640 --> 00:29:00,880 Speaker 2: like that venture capital world, that AI world, that's really risky. 529 00:29:01,320 --> 00:29:03,040 Speaker 3: I think if you can just come back a few. 530 00:29:02,880 --> 00:29:06,120 Speaker 2: Degrees of risk, you just need to let the risk 531 00:29:06,160 --> 00:29:07,200 Speaker 2: takers go for it. 532 00:29:07,560 --> 00:29:08,640 Speaker 3: But you can still pick it up. 533 00:29:08,680 --> 00:29:10,600 Speaker 2: And if even if you had a got sick ten 534 00:29:10,680 --> 00:29:13,120 Speaker 2: years ago, real estate dot com ten years ago, you're 535 00:29:13,120 --> 00:29:15,920 Speaker 2: going to be pretty happy with the return that you've got. 536 00:29:16,080 --> 00:29:21,680 Speaker 1: Yes, yes, absolutely, yes, very true, very true. So you're 537 00:29:21,680 --> 00:29:23,880 Speaker 1: saying to me, let other people make the mistakes first, 538 00:29:24,080 --> 00:29:28,960 Speaker 1: aren't you. Yeah, of course that's right. The innovators don't 539 00:29:29,000 --> 00:29:31,760 Speaker 1: always aren't always the ones that make all the money, 540 00:29:31,800 --> 00:29:36,280 Speaker 1: as we know. Okay, final question, Augustin, amazing podcast. I 541 00:29:36,320 --> 00:29:39,840 Speaker 1: never miss it. Thank you, Augustin. I read your article 542 00:29:40,120 --> 00:29:44,200 Speaker 1: in The Australian about the This was actually an article 543 00:29:44,200 --> 00:29:46,560 Speaker 1: I commissioned on four oh one K plans and whether 544 00:29:46,640 --> 00:29:52,800 Speaker 1: the Angus Taylor, the opposition finance person, had floated in 545 00:29:52,840 --> 00:29:57,280 Speaker 1: a single sentence to me I see in an address 546 00:29:57,320 --> 00:30:01,640 Speaker 1: a few weeks ago the single the words US style 547 00:30:01,720 --> 00:30:05,400 Speaker 1: four oh one K plans, and he rattled a few 548 00:30:05,440 --> 00:30:09,040 Speaker 1: cages and some of the industry funds were instantly saying, no, 549 00:30:09,120 --> 00:30:14,040 Speaker 1: we can't have four oh one ks. But Auguston asks 550 00:30:14,080 --> 00:30:16,800 Speaker 1: how do they work? And why are they being considered 551 00:30:16,840 --> 00:30:20,640 Speaker 1: for Australia's superannuation system. Now it's the extent that they're 552 00:30:20,680 --> 00:30:24,560 Speaker 1: being considered. All Anger Sailor said was that our superannuation 553 00:30:24,600 --> 00:30:27,320 Speaker 1: system should be more aligned to global systems such as 554 00:30:27,320 --> 00:30:30,080 Speaker 1: four oh one K. There's all sorts of aspects of 555 00:30:30,080 --> 00:30:31,600 Speaker 1: four oh one K, one of which is that it's 556 00:30:31,680 --> 00:30:36,800 Speaker 1: voluntary and that's very different than our system, which is mandatory. However, 557 00:30:37,000 --> 00:30:39,360 Speaker 1: it does have some really interesting things, and one of 558 00:30:39,360 --> 00:30:42,960 Speaker 1: them is that you don't pay taxes. You accumulate, you 559 00:30:43,120 --> 00:30:46,200 Speaker 1: pay tax that you start to tap it. And I 560 00:30:46,440 --> 00:30:49,560 Speaker 1: like that because it gives everyone a fair chance. If 561 00:30:49,600 --> 00:30:52,080 Speaker 1: I inherit a whole bag of money and I just 562 00:30:52,160 --> 00:30:56,120 Speaker 1: drop it into super every year, it just kind of stagnates. 563 00:30:56,200 --> 00:31:00,360 Speaker 1: I think in terms of wealth building and entrepreneurialism. But 564 00:31:00,640 --> 00:31:04,000 Speaker 1: if as I accumulate, if I in my working life, 565 00:31:04,080 --> 00:31:06,720 Speaker 1: if I am able to put more into SUPER, that's 566 00:31:06,760 --> 00:31:09,760 Speaker 1: when I want the tax bricks more. And I think 567 00:31:09,800 --> 00:31:13,240 Speaker 1: our system is tilted towards older Australians, and most older 568 00:31:13,280 --> 00:31:15,960 Speaker 1: Australians if we put them in a room and interrogated 569 00:31:15,960 --> 00:31:17,720 Speaker 1: them hard with a big bright lamp over their head, 570 00:31:17,720 --> 00:31:21,600 Speaker 1: would probably eventually say, yeah, it's true. Have you ever 571 00:31:21,600 --> 00:31:25,680 Speaker 1: looked at for a one case do you what do 572 00:31:25,680 --> 00:31:26,520 Speaker 1: you think of them? 573 00:31:27,040 --> 00:31:29,240 Speaker 3: Yeah? The nuances there's different. 574 00:31:29,400 --> 00:31:33,640 Speaker 2: Usually you've got employers match the contributions as well. So 575 00:31:34,200 --> 00:31:37,760 Speaker 2: I like the idea if you're going to pay welfare 576 00:31:37,800 --> 00:31:39,240 Speaker 2: to someone at the end of the day because they 577 00:31:39,240 --> 00:31:42,800 Speaker 2: don't accumulate enough capital, then it's worth giving up the 578 00:31:42,840 --> 00:31:46,239 Speaker 2: fifteen percent tax on earnings now so they can have 579 00:31:46,320 --> 00:31:47,360 Speaker 2: that self determination. 580 00:31:47,960 --> 00:31:50,400 Speaker 3: So I feel we've always said. 581 00:31:50,240 --> 00:31:54,880 Speaker 2: That supers a concessionally tax vehicle versus starting to seed 582 00:31:54,920 --> 00:31:58,120 Speaker 2: as the wealth creation vehicle, and then you could tax 583 00:31:58,160 --> 00:32:00,600 Speaker 2: it at the end when there is a big bulk 584 00:32:00,640 --> 00:32:02,480 Speaker 2: of money. I think the four to one case probably 585 00:32:02,520 --> 00:32:05,280 Speaker 2: a bit better from the tax advantage there because if 586 00:32:05,320 --> 00:32:08,120 Speaker 2: I have, if we've got clients that generate one hundred 587 00:32:08,120 --> 00:32:11,000 Speaker 2: thousand dollars er income out of their pension, would they 588 00:32:11,040 --> 00:32:15,200 Speaker 2: mind paying tax? Not really, they want they want Australia's 589 00:32:15,240 --> 00:32:17,840 Speaker 2: future better for their kids and grandkids, and they're happy 590 00:32:17,880 --> 00:32:18,640 Speaker 2: to pay the tax. 591 00:32:19,080 --> 00:32:20,640 Speaker 3: I just listen to. 592 00:32:20,680 --> 00:32:23,400 Speaker 2: Your point there around do we feel the systems more 593 00:32:23,440 --> 00:32:27,320 Speaker 2: built for those nearing retirement? That's one hundred percent sure, 594 00:32:27,320 --> 00:32:28,560 Speaker 2: and I think it would be great. 595 00:32:29,120 --> 00:32:33,760 Speaker 1: Well in retirement. I think you in it. Yeah. The 596 00:32:34,120 --> 00:32:38,320 Speaker 1: the issue that the amount you can put into super 597 00:32:38,400 --> 00:32:42,080 Speaker 1: now on a tax efficient basis is more or less 598 00:32:42,080 --> 00:32:44,240 Speaker 1: back only back to where it was about ten years ago, 599 00:32:44,320 --> 00:32:46,640 Speaker 1: I think I certainly. I think that's that should be reviewed. 600 00:32:47,040 --> 00:32:49,920 Speaker 1: I hope that was in some way useful to you, Augustin, 601 00:32:49,960 --> 00:32:52,280 Speaker 1: and I hope it puts it into context as well. 602 00:32:52,800 --> 00:32:56,000 Speaker 1: I think that there could be a lot more review 603 00:32:56,080 --> 00:32:59,239 Speaker 1: of how it all works, and there could be there 604 00:32:59,280 --> 00:33:02,560 Speaker 1: could be your review of our big super works as well. 605 00:33:02,720 --> 00:33:06,400 Speaker 1: Because if the r b A and the and ASSIC 606 00:33:06,600 --> 00:33:10,200 Speaker 1: and the IMF are all lining up with the things 607 00:33:10,240 --> 00:33:12,680 Speaker 1: they want to check and examine investigate, I think it's 608 00:33:12,720 --> 00:33:15,080 Speaker 1: time for a broader review of how big super works, 609 00:33:15,080 --> 00:33:19,920 Speaker 1: particularly in the context of some big funds. Okay, terrific, 610 00:33:20,400 --> 00:33:22,440 Speaker 1: Thanks very much, Hugh. Great to have you on. I 611 00:33:22,480 --> 00:33:24,320 Speaker 1: knew it would be good, it always is. 612 00:33:24,440 --> 00:33:25,280 Speaker 3: Thank you very much. 613 00:33:25,400 --> 00:33:26,560 Speaker 1: He picked a good day to come on. 614 00:33:27,080 --> 00:33:30,440 Speaker 2: Yes, excited and you know we could have gone before 615 00:33:30,440 --> 00:33:32,239 Speaker 2: the Melbourne Cups. We could have got some tips. You've 616 00:33:32,320 --> 00:33:33,920 Speaker 2: kind of covered off on everything this week. 617 00:33:35,000 --> 00:33:37,040 Speaker 1: Yeah, yeah, it's been a it's been a it's a 618 00:33:37,080 --> 00:33:39,920 Speaker 1: been a curious week. But thanks very much for coming 619 00:33:39,920 --> 00:33:42,360 Speaker 1: on the show, and thank you everybody for listening. Let's 620 00:33:42,400 --> 00:33:45,920 Speaker 1: have some more emails the Money Puzzle at the Australian 621 00:33:46,120 --> 00:33:48,200 Speaker 1: dot com dot au. Talk to you soon.