WEBVTT - HECs - what just happened to your bill? 0:00:10.920 --> 0:00:14.120 Hello, and welcome to The Australian's Money Puzzle podcast. I'm 0:00:14.200 --> 0:00:18.520 James Kirkby, editor at The Australian. Welcome aboard everybody. Lots 0:00:18.640 --> 0:00:22.160 happening on the markets as we speak, because it is 0:00:22.160 --> 0:00:27.840 the morning after Donald Trump's resounding, resounding, clear victory, only 0:00:27.880 --> 0:00:30.880 the second time in a century that a US president 0:00:30.960 --> 0:00:34.239 who lost an election came back to win again. And 0:00:34.280 --> 0:00:36.640 what's really interesting from an investment point of view, and 0:00:36.640 --> 0:00:39.160 we're not talking much about this today. If you guys 0:00:39.200 --> 0:00:40.879 want us to do something on this, we will go 0:00:40.920 --> 0:00:43.320 deeper into it another day. But what's really interesting is 0:00:44.440 --> 0:00:46.720 that the US market went up three and a half 0:00:46.760 --> 0:00:51.360 percent last night. And that's all fine and dandy, and 0:00:51.560 --> 0:00:53.800 if you see a day where the US goes of 0:00:53.880 --> 0:00:56.440 three and a half percent, then the ASEX as a 0:00:56.520 --> 0:00:59.480 rule runs up behind it. But it didn't happen this morning. 0:01:00.000 --> 0:01:02.480 The market's only open an hour or so and it 0:01:02.600 --> 0:01:06.759 is flat zero, nothing, no response. And I'll tell you why, 0:01:07.200 --> 0:01:10.320 because there's a certain point which we can't keep going 0:01:10.400 --> 0:01:13.640 up on the back of a market in the US 0:01:13.800 --> 0:01:17.520 which is thriving on the basis that it's going to 0:01:17.520 --> 0:01:20.040 be protectionist and it's going to turn in on itself, 0:01:20.200 --> 0:01:22.640 and it's particularly going to turn hard on China because 0:01:22.640 --> 0:01:26.319 we're a China proxy on the AX and global markets. 0:01:26.440 --> 0:01:28.679 And that is what all the institutional disks around the 0:01:28.680 --> 0:01:31.480 world would say this morning. Don't know about the ASEX anymore, 0:01:31.600 --> 0:01:34.479 don't know about that Under a Trump regime, we will 0:01:34.520 --> 0:01:38.800 be talking about that as we go. But actually, folks, 0:01:39.000 --> 0:01:42.040 I imagine I hope at least that most of you 0:01:42.160 --> 0:01:44.880 have a more burning issue in mind, which is how 0:01:44.959 --> 0:01:47.559 much you have, how much you have in the bank, 0:01:47.720 --> 0:01:50.800 how much you're going to make in your life, and 0:01:50.840 --> 0:01:54.080 how you're going to achieve the elementary what do you 0:01:54.120 --> 0:01:59.120 might on the elementary targets in wealth building, which might be, 0:01:59.280 --> 0:02:01.800 for instance, to own your own home, which might be 0:02:01.920 --> 0:02:05.280 to have some decent amount of super as a start, 0:02:06.160 --> 0:02:08.600 and then to do wider things that you might wish 0:02:08.639 --> 0:02:12.600 to do. And dragging I imagine on that is hex 0:02:12.760 --> 0:02:15.680 Your hex bill now, the average hex bill is twenty 0:02:15.720 --> 0:02:20.680 seven thousand dollars twenty six five hundred. Many people listening 0:02:20.680 --> 0:02:23.440 to this show, I know from the demographic, from the 0:02:23.480 --> 0:02:26.240 demographics that we see, will have hex bills and they 0:02:26.280 --> 0:02:29.880 will be twenty seven thousand dollars or thirty seven or 0:02:29.919 --> 0:02:32.679 forty seven or higher. And we had some really big 0:02:32.720 --> 0:02:35.760 news this week, which I hope didn't get lost in 0:02:35.800 --> 0:02:39.680 our distraction on the US, which is that the government 0:02:39.760 --> 0:02:43.200 has announced quite remarkable I think the biggest thing that's 0:02:43.240 --> 0:02:46.320 happened to Hex for many years. Number One, all HEX 0:02:46.320 --> 0:02:49.480 bills are going to be cut by twenty percent. Number two, 0:02:50.400 --> 0:02:52.720 the way you pay Hex and how much you have 0:02:52.760 --> 0:02:55.399 to pay is going to be as simple as that, 0:02:55.600 --> 0:02:58.160 and a few other things as well. My guest today 0:02:58.320 --> 0:03:01.080 is a regular on the show, is also in the 0:03:01.120 --> 0:03:04.800 top reaches of the top Advisor's list, and one of 0:03:04.800 --> 0:03:07.480 the youngest at the top of that list. I don't 0:03:07.520 --> 0:03:09.720 know if he has a X bill. It's Hugh Robertson 0:03:09.760 --> 0:03:12.720 of Centaur. How are you, Hugh, have you got an 0:03:12.840 --> 0:03:13.160 X bill? 0:03:13.320 --> 0:03:13.760 I do not. 0:03:13.880 --> 0:03:15.200 You paid it off? 0:03:15.200 --> 0:03:18.440 You do not? You paid it off? And now you say, 0:03:18.520 --> 0:03:20.000 why did I pay it off? I could have had 0:03:20.000 --> 0:03:21.960 a twenty percent discount exactly. 0:03:23.120 --> 0:03:23.280 That. 0:03:23.360 --> 0:03:27.000 Yes, I wonder what percentage of the population have paid 0:03:27.000 --> 0:03:30.360 off their expill I wonder that's not a figure I'm 0:03:30.400 --> 0:03:33.440 familiar with. Okay, when people come into you, I'm going 0:03:33.480 --> 0:03:35.480 to talk to you, both as an individual and as 0:03:35.520 --> 0:03:38.800 an advisor. Let's first of all tell people, explain to 0:03:38.840 --> 0:03:42.080 people what is due to happen. Now. This is important 0:03:42.200 --> 0:03:47.280 because the mechanics of how you pay is going to change, 0:03:48.280 --> 0:03:51.800 and the twenty percent discount is due to kick in 0:03:51.880 --> 0:03:56.000 on June one next year. The mechanics of how you 0:03:56.040 --> 0:03:58.920 pay is going to change from July one next year. 0:03:59.000 --> 0:04:02.120 This is a typical complications and there each thing is 0:04:02.480 --> 0:04:04.440 makes sense in and of itself, but the course as 0:04:04.440 --> 0:04:08.520 a whole it looks, as usual ridiculously complicated. In any event, 0:04:08.840 --> 0:04:11.400 that's the plan, but of course the government, that is 0:04:11.400 --> 0:04:15.000 the alp Albanesi government will have to win to implement this. 0:04:15.440 --> 0:04:17.799 But Hugh, could you first of all, would you explain 0:04:18.040 --> 0:04:20.200 if I came into your office and said, as part 0:04:20.200 --> 0:04:22.000 of my plans, I've got a hex bit of fifty 0:04:22.000 --> 0:04:23.880 grand and there's some big changes. What should I do? 0:04:23.960 --> 0:04:24.719 What would you say? 0:04:25.360 --> 0:04:28.440 The first one is the twenty percent one off. Interestingly, 0:04:28.480 --> 0:04:32.480 it wasn't a recommendation of the University a chord panel, 0:04:32.520 --> 0:04:37.520 so this is comeing independently of that, which probably is 0:04:37.600 --> 0:04:39.920 curious as to the timing. So that's going to cost 0:04:39.920 --> 0:04:43.000 about twelve thirteen billion, might even be as much as 0:04:43.080 --> 0:04:44.640 sixteen billion when I was trying to look at the 0:04:44.720 --> 0:04:47.080 numbers that they're going to give us the one off. 0:04:47.160 --> 0:04:50.080 So if you've got the average hextead of around twenty 0:04:50.080 --> 0:04:53.120 seven and a half thousy twenty seven thousand, six hundred thereabouts, 0:04:53.560 --> 0:04:55.960 that will reduce to twenty two thy eight hundred. So 0:04:56.640 --> 0:05:00.560 the idea of that is to help with to help 0:05:00.560 --> 0:05:03.000 with debt and to help with cost of living pressures. 0:05:03.040 --> 0:05:06.160 So there might not be a direct correlation there, but 0:05:06.839 --> 0:05:10.200 the and that will be applied before the indexation as well, 0:05:10.279 --> 0:05:11.800 So I think that's probably interesting. 0:05:12.480 --> 0:05:15.440 Yeah, that's a very important point. So listeners, I'm sure 0:05:15.440 --> 0:05:18.159 they'd remember there was always this thing, you know, don't 0:05:18.160 --> 0:05:20.279 worry about your hex bill. You don't have to pay interest, 0:05:20.680 --> 0:05:23.080 and that was all fine. That did not mean it 0:05:23.080 --> 0:05:25.400 didn't go up. People thought it did. There was no 0:05:25.440 --> 0:05:28.960 inflation for so many years it didn't matter. Suddenly we've 0:05:28.960 --> 0:05:31.920 had I think it was a seven percent followed by 0:05:31.960 --> 0:05:34.520 a four percent lift in hex and that the way 0:05:34.600 --> 0:05:36.560 we're going this year, I would think it's coming in 0:05:36.600 --> 0:05:39.600 at about three and a half. That really kicks up 0:05:39.640 --> 0:05:42.720 your bill. So when you mentioned the indexation. He's talking 0:05:42.760 --> 0:05:45.440 about the fact that the government have also promised that 0:05:45.480 --> 0:05:48.320 this twenty percent cup will come before they kick in 0:05:48.360 --> 0:05:51.560 the indexation, and the indexation's on June every year, and 0:05:51.600 --> 0:05:53.480 that's why this part of the plant is due to 0:05:53.560 --> 0:05:57.520 coming on June one next year. Okay, So that's the 0:05:57.560 --> 0:05:58.080 big thing. 0:05:58.960 --> 0:06:01.520 So that that comes in the office is going to 0:06:01.520 --> 0:06:03.960 be better by five and a half thousand dollars, which 0:06:04.040 --> 0:06:06.200 is good. And then we've got the change in the 0:06:06.279 --> 0:06:10.400 minimum incun levels, so this is really overdue, coming in 0:06:10.440 --> 0:06:12.600 for a twenty five twenty six financial year, so that's 0:06:12.640 --> 0:06:15.920 going to move up. Everyone's wages have moved up, so 0:06:16.279 --> 0:06:18.720 that's going to go from fifty four, four hundred and 0:06:18.720 --> 0:06:22.400 thirty five thousand up to sixty seven thousand. So if 0:06:22.440 --> 0:06:26.000 you earn less than that sixty seven thousand, you don't 0:06:26.040 --> 0:06:27.679 have to make any repayments. 0:06:28.200 --> 0:06:30.479 You yes, if you are in less than sixty seven 0:06:30.520 --> 0:06:33.600 thousand a year, you don't have to make any repair. 0:06:33.640 --> 0:06:37.720 That doesn't mean that's just kicking your bill down the road, right, 0:06:37.880 --> 0:06:40.599 You make the repayments, but your bill is going to 0:06:40.680 --> 0:06:41.159 keep going on. 0:06:41.240 --> 0:06:43.880 So this is where the financial planning element comes in. 0:06:43.960 --> 0:06:47.520 When you start being given these things. Even thinking about 0:06:47.560 --> 0:06:52.000 this debt reduction that people have been given or not 0:06:52.240 --> 0:06:55.479 needing to make more as much in repayments, people tend 0:06:55.520 --> 0:06:57.920 to treat it as a bonus. And if they treat 0:06:57.920 --> 0:06:59.520 it as a bonus and they spend it and they 0:06:59.520 --> 0:07:02.680 blow it. I was looking at just from our hundred thousand, 0:07:02.760 --> 0:07:04.599 So say you had an income of one hundred thousand 0:07:04.680 --> 0:07:09.480 dollars that currently you'd be paying five thousand, five hundred, 0:07:09.960 --> 0:07:12.440 and with the changes, it's going to be four nine 0:07:12.520 --> 0:07:16.720 hundred and fifty, so five hundred and fifty dollars more 0:07:16.800 --> 0:07:19.840 in your pocket. So really, with then saying what would 0:07:19.840 --> 0:07:21.920 they do with that with an extra ten dollars a week, 0:07:22.320 --> 0:07:25.120 most people probably aren't going to look to do something 0:07:25.120 --> 0:07:27.640 substantial with that. But you've got to really make sure 0:07:27.680 --> 0:07:32.400 that you're not just leaving these debts debts outstanding. 0:07:32.640 --> 0:07:36.600 Okay, And there's another thing which everyone should be aware of. 0:07:37.840 --> 0:07:40.000 I haven't done the maths on this, but hey, I've 0:07:40.000 --> 0:07:42.440 got a think that's advisor on the show, and I'm 0:07:42.480 --> 0:07:47.280 sure he's really numerous. That doesn't mean that's just straight away, 0:07:47.320 --> 0:07:51.040 but here's the thing. The other change is they're introducing 0:07:51.280 --> 0:07:55.840 a system called marginal repayment, which was recommended. And what 0:07:55.880 --> 0:08:00.960 it means is you in the up to now you 0:08:01.160 --> 0:08:05.440 paid what was the interest on your bill, whatever that 0:08:05.440 --> 0:08:09.160 bill might be. From July one next year, you pay 0:08:09.480 --> 0:08:14.360 the interest on your bill above the threshold. So if 0:08:14.360 --> 0:08:20.600 you have a seventy thousand, how does it can can 0:08:20.640 --> 0:08:25.360 you bring us through? It's whatever you're over sixty seven thousand? 0:08:25.400 --> 0:08:27.800 Is that how it will actually come to pass? 0:08:28.080 --> 0:08:32.920 The rates are fifteen cents in the dollar up until 0:08:32.960 --> 0:08:34.440 I think it might have been one hundred and twenty 0:08:34.480 --> 0:08:35.640 thousand dollars. 0:08:35.840 --> 0:08:40.800 And then above that, well that no change from that perspective. 0:08:41.640 --> 0:08:43.440 You know, we still want to incentivize people to go 0:08:43.480 --> 0:08:46.480 out there and work, but then in terms of years 0:08:46.520 --> 0:08:49.040 to pay off with the new amounts because of the 0:08:49.120 --> 0:08:52.320 reduction that they're giving. To say, this example of the 0:08:52.480 --> 0:08:56.880 twenty seven thousand dollars average, with the twenty percent discount, 0:08:57.559 --> 0:09:00.640 it's now takes the debt to twenty two two and 0:09:00.679 --> 0:09:04.640 eighty dollars. And on that person for one hundred thousand, 0:09:04.679 --> 0:09:06.400 we know that they're going to be they're going to 0:09:06.400 --> 0:09:08.880 be paying less because of the changes, but now they'll 0:09:08.920 --> 0:09:11.400 get it paid off in four point four to six 0:09:11.480 --> 0:09:15.080 years versus five point oh two years. So because of 0:09:15.120 --> 0:09:18.280 the twenty percent reduction, they're still going to be painted 0:09:18.320 --> 0:09:20.680 off quicker, which I think is important. 0:09:21.240 --> 0:09:22.959 So what do you say to people, have you got 0:09:22.960 --> 0:09:25.560 a defaud position on Hex? 0:09:26.120 --> 0:09:30.079 Yes, it's we've always left let that run in the background, 0:09:30.080 --> 0:09:33.400 and it's usually a matter of paying off the majority 0:09:33.440 --> 0:09:35.880 of people that are coming to see us, or also 0:09:36.040 --> 0:09:38.959 with a debt with a mortgage, and usually we're just saying, look, 0:09:39.000 --> 0:09:42.839 pay that off more quickly if you have additional repayments, 0:09:43.360 --> 0:09:45.760 pay that off at your principal place of residence. Because 0:09:45.760 --> 0:09:49.640 that's not a tax deductible debt. And the interstright volatility's 0:09:50.280 --> 0:09:53.559 been pretty extreme and it just gives you more capability 0:09:53.600 --> 0:09:55.480 when you're paying down your debt. You can either use 0:09:55.480 --> 0:09:58.760 that to reinvest, you can save up for your kids' education, 0:09:59.080 --> 0:10:01.760 you can you know, use the money to. 0:10:03.400 --> 0:10:06.400 Just pay down debt. In it in an absolute term. 0:10:06.720 --> 0:10:09.040 And you're comparing it to to tax deductible debt, which 0:10:09.080 --> 0:10:11.880 is you're saying you had an investment property versus HEX 0:10:12.280 --> 0:10:15.079 at least with the investment properties tax deductible. What about 0:10:15.080 --> 0:10:18.560 the home itself? What about if you have a mortgage. 0:10:18.280 --> 0:10:21.880 Probably the interest rate differential the interstrate is higher on 0:10:21.960 --> 0:10:25.120 your home loan than it is on the indexed amount 0:10:25.160 --> 0:10:28.280 of the debt with HEX. I think that that important 0:10:28.320 --> 0:10:30.960 point that you raised is that people really do need 0:10:31.000 --> 0:10:34.719 to understand that the HEXT does go up and you're 0:10:34.760 --> 0:10:38.959 forced to repay. So with those repayments years gone by, 0:10:39.040 --> 0:10:40.920 you do you remember when they used to be there 0:10:40.960 --> 0:10:43.640 was benefiting pain it off at a quicker rate, the 0:10:43.679 --> 0:10:44.920 government incentivized it. 0:10:45.640 --> 0:10:50.000 Well, yeah, there was in this whole package that was announced. 0:10:50.440 --> 0:10:54.520 There is no incentive whatsoever that I can detect to 0:10:54.600 --> 0:10:56.360 pay it off earlier. And there used to be Was 0:10:56.400 --> 0:11:00.400 it a ten percent discount if you paid early? And 0:11:00.960 --> 0:11:03.800 they dropped that in two o nine and there's no incentive. 0:11:03.880 --> 0:11:05.360 Is there an incentive if I've missed it? 0:11:05.840 --> 0:11:06.040 No? 0:11:06.200 --> 0:11:09.160 And I think for the majority of people they're happy 0:11:09.200 --> 0:11:11.920 just to take on the debt. There's talk about different 0:11:11.960 --> 0:11:15.800 degrees having different costs associated with Obviously, a medical degree 0:11:15.840 --> 0:11:18.760 is going to give you a very clear career pathway, 0:11:18.880 --> 0:11:21.920 and there's conversation that they should pay more, and there's 0:11:21.960 --> 0:11:25.840 people that maybe do an arts degree that probably pay less. 0:11:26.200 --> 0:11:28.400 It's difficult that the advice that you would give someone 0:11:28.440 --> 0:11:30.640 who's going to university is just make sure the degree 0:11:30.679 --> 0:11:32.400 is relevant and it's something that you're going to need. 0:11:32.800 --> 0:11:34.800 Don't take on a debt that you don't need. If 0:11:34.840 --> 0:11:38.079 you're thinking about postgraduate studies and your mid career, make 0:11:38.120 --> 0:11:41.880 sure it's really applicable to you, because it's going to 0:11:41.880 --> 0:11:42.680 be with you a long time. 0:11:42.720 --> 0:11:43.080 The debt. 0:11:43.720 --> 0:11:46.880 It's interesting though the academic see and the studies show 0:11:47.120 --> 0:11:51.559 that essentially what OC code when the Coalition did something 0:11:51.600 --> 0:11:53.520 that had never been done before, which is they tried 0:11:53.520 --> 0:12:03.040 to price education in a fashion that tilted the market 0:12:03.120 --> 0:12:10.760 towards maths and science. And the evidence so far is 0:12:10.800 --> 0:12:15.959 that there is no evidence that people change their mind. 0:12:16.280 --> 0:12:22.480 If I'm going to do medieval art history and someone says, hey, 0:12:22.800 --> 0:12:26.520 accountancy is much better value, you should do that, I'm 0:12:26.559 --> 0:12:29.280 not going to change my mind. And I think that's 0:12:29.320 --> 0:12:31.880 one point I just want to make to listeners. The 0:12:31.960 --> 0:12:34.520 other thing is which or if I was really interesting, 0:12:34.679 --> 0:12:38.680 is someone was doing some modeling on this. This is 0:12:39.040 --> 0:12:40.280 the hex as it stands. 0:12:40.320 --> 0:12:40.760 By the way. 0:12:40.760 --> 0:12:43.000 Her name is Alison Preston. I haven't talked to her. 0:12:43.320 --> 0:12:48.079 She's an economist University of Western Australia, and she says 0:12:48.440 --> 0:12:53.040 that in terms of paying off hets sorry, this is 0:12:53.120 --> 0:12:55.640 post if the government's thing comes through. If the government's 0:12:55.679 --> 0:12:59.959 plan comes through and the twenty percent comes through that men, 0:13:00.559 --> 0:13:03.880 this is interesting. Men on average will have their student 0:13:04.000 --> 0:13:07.560 loans paid off at thirty six, I will have none 0:13:07.600 --> 0:13:11.400 left and women will still be repaying theirs until the 0:13:11.400 --> 0:13:14.560 age of fifty. And if you think about it, if 0:13:14.559 --> 0:13:17.520 you think about it, that's actually instantly explained from an 0:13:17.600 --> 0:13:20.680 economic rational point of view, because A they earn less. 0:13:20.920 --> 0:13:23.440 B the. 0:13:25.960 --> 0:13:31.160 Higher earning some higher earning professions are more dominated by 0:13:31.280 --> 0:13:36.320 men at this point. Still though it's bad. It's a 0:13:36.360 --> 0:13:39.040 hell of a gap. So that's something too to think about. 0:13:39.280 --> 0:13:43.120 That's great research done and interesting. Really got a factor 0:13:43.160 --> 0:13:47.800 in that family. Absolutely how you have some equality there? 0:13:48.240 --> 0:13:53.400 Yeah, it's certainly something that wasn't considered. Just one last thing. 0:13:55.600 --> 0:13:57.760 If I said to you, is there any is there 0:13:57.800 --> 0:14:01.320 anything better than X? Aunts to that, there probably isn't, 0:14:01.400 --> 0:14:02.920 is there? Since at the end of the day it's 0:14:03.000 --> 0:14:04.280 interest free. 0:14:04.600 --> 0:14:05.120 That's right. 0:14:05.280 --> 0:14:07.240 We looked at obviously when I had it, I looked 0:14:07.240 --> 0:14:12.160 at it a lot more detail, and there really isn't it. 0:14:12.160 --> 0:14:15.040 It's one of those necessary evils. I think in some 0:14:15.080 --> 0:14:19.080 ways we're very fortunate the amount the inflation applied to 0:14:19.520 --> 0:14:22.040 our debt has been more generous, and say over in 0:14:22.040 --> 0:14:24.760 the UK or New Zealand or other systems, when in 0:14:25.720 --> 0:14:27.240 America there's very much. 0:14:27.040 --> 0:14:30.680 That family savings or people just borrow money. We're kind 0:14:30.680 --> 0:14:31.040 of lucky. 0:14:31.080 --> 0:14:33.440 You get an interest free loan from the government for 0:14:33.480 --> 0:14:36.680 your education. We're still the lucky country in many ways, 0:14:37.760 --> 0:14:39.800 and there's nothing that we can say about it. 0:14:39.840 --> 0:14:41.480 I'm happy with the income. 0:14:41.440 --> 0:14:44.280 Above the threshold that that was overdue, and that's something 0:14:44.320 --> 0:14:46.120 that when you start your career and you're trying to 0:14:46.160 --> 0:14:49.640 get your wealth creation engine going, that the more money 0:14:49.680 --> 0:14:52.480 you've got, the better you're also combined to that now 0:14:52.520 --> 0:14:54.400 with the cost of rent straight away, when I saw 0:14:54.840 --> 0:14:58.080 maybe an extra couple of bucks ten twenty dollars in 0:14:58.160 --> 0:15:02.200 someone's pocket a week, that helps with the cost of 0:15:02.240 --> 0:15:04.840 living and rent. The one thing that I did question 0:15:05.640 --> 0:15:10.040 when we're allocating sixteen billion in a budget to an area, 0:15:11.120 --> 0:15:13.280 I probably think that we could have helped more people. 0:15:13.760 --> 0:15:15.800 The numbers here is that you're going to help three 0:15:15.880 --> 0:15:19.560 million people, which is great, but I reckon with sixteen 0:15:19.560 --> 0:15:20.920 billion we could have helped more people. 0:15:22.440 --> 0:15:27.440 Yes, And of course anyone who's paid off says, oh, 0:15:28.320 --> 0:15:30.880 you know, I would have liked that, and anyone who's 0:15:30.920 --> 0:15:35.400 coming in the future obviously they just simply get the reset. 0:15:35.760 --> 0:15:37.880 Can I ask you just one thing, one last thing, 0:15:38.200 --> 0:15:41.560 which is just looking at it more generally, Does it 0:15:41.720 --> 0:15:44.960 change your view in any way about the speed at 0:15:45.000 --> 0:15:50.280 which people should do it and should people not bother 0:15:50.400 --> 0:15:52.680 to pay a damn thing till this comes through? 0:15:52.720 --> 0:15:56.040 Why would you one hundred percent? I would hold off. 0:15:56.160 --> 0:15:59.400 And I think if you're looking at debt, it it's 0:15:59.440 --> 0:16:00.040 going to take you. 0:16:00.040 --> 0:16:01.440 You on the average when. 0:16:01.360 --> 0:16:03.200 You look at the average tables, if you had the 0:16:03.240 --> 0:16:06.440 average amount of debt you're looking at the and you 0:16:06.600 --> 0:16:09.760 currently have that I should say six six four and 0:16:09.800 --> 0:16:11.640 a half, six and a half years to pay it down. 0:16:12.080 --> 0:16:14.000 There's no benefit in paying it off quicker than that. 0:16:14.040 --> 0:16:16.840 You'd get a better benefit, better bang for buck paying 0:16:16.880 --> 0:16:19.480 down your home loan or saving a deposit. And no 0:16:19.920 --> 0:16:22.720 benefit for parents to offer to pay down their kids either. 0:16:23.600 --> 0:16:26.280 No, because there's no incentive. As I said at the start, 0:16:26.360 --> 0:16:30.440 that's right now. Yeah, that's a really really glaring error. 0:16:30.800 --> 0:16:33.440 I think in what they did Okay, we'll be back 0:16:33.480 --> 0:16:48.600 in a moment. Folks. Hello, welcome back to The Australian's 0:16:48.640 --> 0:16:51.360 Money Puzzle podcast. I'm talking to Hugh Robertson of The 0:16:51.440 --> 0:16:56.840 Center or ce NTAU or Group Financial Advisor regular on 0:16:56.960 --> 0:17:00.560 the show. Now, Hugh, before we got questions on Trump 0:17:00.600 --> 0:17:04.320 and the election, I did make the point at the 0:17:04.440 --> 0:17:06.960 start that the US markets went out three and a 0:17:07.000 --> 0:17:10.040 half percent and the Australian markets didn't follow that. They 0:17:10.040 --> 0:17:15.159 didn't follow that because why would they. Because this particular 0:17:15.200 --> 0:17:20.040 regime that has been elected is protectionist and is particularly 0:17:20.119 --> 0:17:22.399 so in relation to China. We are seeing as a 0:17:22.480 --> 0:17:25.720 China proxy on global markets. You can see that straight away. 0:17:25.720 --> 0:17:27.840 That's why the dollar is going the wrong way this morning. 0:17:29.119 --> 0:17:33.200 But what do you say to clients who say, is 0:17:33.720 --> 0:17:38.440 there any broad guidance you can give as to allocation 0:17:39.840 --> 0:17:43.640 for investors in the view of this new presidency? 0:17:44.280 --> 0:17:44.600 Great? 0:17:45.119 --> 0:17:48.359 Yes, the Dow going up three point five point seven 0:17:48.600 --> 0:17:52.600 last night is definitely a pro US story. Are you 0:17:52.640 --> 0:17:55.720 saying there is going to be greater protectionism? Trump's gonna 0:17:56.200 --> 0:17:59.520 implement all the Republicans are going to tax cuts for 0:17:59.600 --> 0:18:03.159 corporate There's going to be higher tariffs, tieder immigration, so 0:18:03.200 --> 0:18:06.159 we're really Trump two point zero is that continuation of 0:18:06.200 --> 0:18:08.159 the anti globalization perspective. 0:18:09.119 --> 0:18:11.720 So from our perspective, it does. 0:18:12.600 --> 0:18:14.760 It's a worry for Australia from that perspective, so you 0:18:14.800 --> 0:18:17.119 really need to take a global outlook when you invest. 0:18:17.880 --> 0:18:20.040 I think we've seen, and I think we've talked about 0:18:20.040 --> 0:18:23.760 it previously, the rise and rise of index funds, not 0:18:23.800 --> 0:18:26.600 giving financial advice, but now we're really looking to go 0:18:26.680 --> 0:18:30.840 from those market cap weighted index funds that have really 0:18:30.920 --> 0:18:34.560 high concentration risk into more of those equal weighted kind 0:18:34.600 --> 0:18:37.399 of opportunities there because you look at America and the 0:18:37.520 --> 0:18:40.680 S and P five hundred, well we've talked spent a 0:18:40.760 --> 0:18:43.639 year talking about just that magnificent seven. There's four hundred 0:18:43.640 --> 0:18:46.920 and ninety three other companies and when you looked at it, 0:18:47.160 --> 0:18:49.680 I was really curious to see if the Dow beat 0:18:49.680 --> 0:18:53.119 the NASDAK and it did, so I think from a clicktic. 0:18:53.160 --> 0:18:57.000 That's and it doesn't very p So you're seeing you're 0:18:57.040 --> 0:18:59.200 seeing you like equal. 0:18:58.880 --> 0:19:02.440 Weighted US I do, and I think you etf to 0:19:02.480 --> 0:19:04.160 strip out. The big take is that it. 0:19:04.520 --> 0:19:07.000 Yeah, and I think from an Australian perspective, the majority 0:19:07.040 --> 0:19:10.440 of clients we see are very overweighting Aussie and that's 0:19:10.440 --> 0:19:12.040 going to be a real challenge. I think Europe is 0:19:12.040 --> 0:19:15.240 coming out of some pretty rough years, so there's opportunity there. 0:19:15.640 --> 0:19:18.399 I think there's still continued opportunity in America outside of 0:19:18.440 --> 0:19:22.520 that top seven. And from the client perspective, it's really 0:19:22.600 --> 0:19:25.960 to sort of don't be scared of going global because 0:19:25.960 --> 0:19:28.199 it might actually be safer than domestic because we are 0:19:28.240 --> 0:19:31.200 a China proxy and the world we're what two or 0:19:31.240 --> 0:19:34.280 three percent of the world market cap. So unless we've 0:19:34.320 --> 0:19:37.199 got resources doing well or banks doing well, if we 0:19:37.240 --> 0:19:40.000 think that the tail wins the technology through AI or 0:19:40.560 --> 0:19:44.640 healthcare through the GLP ones and all those, then we're 0:19:44.640 --> 0:19:46.600 not getting exposed to that in the Australian market. 0:19:47.359 --> 0:19:52.600 Okay, very good, All right, very interesting. Now the first 0:19:52.640 --> 0:19:55.600 question was actually from Peter said, is if Anthony Albanezi 0:19:55.680 --> 0:19:57.920 is going to cut student debt, it's the only point 0:19:57.920 --> 0:20:00.000 in paying off hex's debt early. I think we answered 0:20:00.000 --> 0:20:02.760 that piece. Certainly, isn't any point in rushington pay it 0:20:02.800 --> 0:20:05.440 off early bit before we see whether this whether this 0:20:05.760 --> 0:20:09.719 gets through on June one next year, which would imply 0:20:09.880 --> 0:20:13.320 that the government must somehow be able to get that 0:20:13.400 --> 0:20:16.919 legislation through, which would suggest that this government would have 0:20:16.920 --> 0:20:19.600 to be re elected or at least told power in 0:20:19.680 --> 0:20:23.760 June one next year. Tim, is it normal that income 0:20:23.800 --> 0:20:27.720 protection By that he means income protection insurance is going 0:20:27.760 --> 0:20:31.119 up twenty percent year on year for the older contracts. 0:20:31.800 --> 0:20:35.760 And is any advisor advising to keep the old terms. 0:20:36.119 --> 0:20:38.439 I bet they are, but you can tell. 0:20:38.359 --> 0:20:40.240 Us you it is. 0:20:41.040 --> 0:20:43.480 This is one of the conversation's advisers are having every 0:20:43.520 --> 0:20:47.000 single day with their clients. Tim might be referring to 0:20:47.359 --> 0:20:51.479 and actually an agreed value income protection policy. These are 0:20:51.520 --> 0:20:54.200 ones that were already marked up a little bit more expensive, 0:20:54.520 --> 0:20:56.560 but you agreed to the value of the on the 0:20:56.640 --> 0:20:59.440 terms at the time when you took the insurance policy 0:20:59.440 --> 0:21:02.040 out as oppos to an indemnity one, which is a 0:21:02.119 --> 0:21:06.400 time of claim you prove what you weren't. But if 0:21:06.440 --> 0:21:09.280 you have an income or a salary that's highly volatile, 0:21:09.280 --> 0:21:12.560 then the agreed value is still important. What we are 0:21:12.640 --> 0:21:16.760 seeing though, is people are really due to the income protection. 0:21:16.960 --> 0:21:19.720 People are really assessing their needs again. And maybe you 0:21:19.800 --> 0:21:21.920 took out the income protection when you had a higher 0:21:22.000 --> 0:21:25.760 level of dead or kids education expenses, so you can 0:21:25.840 --> 0:21:28.399 ensure yourself for up to seventy five percent of what 0:21:28.440 --> 0:21:31.320 you earn, but you don't have to. You can toggle 0:21:31.359 --> 0:21:34.399 around with your waiting period, whether it be thirty days 0:21:34.400 --> 0:21:36.760 and now you've got more money in your offset account 0:21:37.240 --> 0:21:39.760 in your home, you might be able to go ninety days. 0:21:39.760 --> 0:21:41.760