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Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm

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Speaker 1: James Kirby, the Wealth editor at The Australian.

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Speaker 2: Welcome aboard. If you're an investor, you're going.

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Speaker 1: To want to know about rates. I don't just mean

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Speaker 1: official cash rates and I'm sure you know there are

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Speaker 1: four point three five percent and have been for a

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Speaker 1: long time, folks, but all the rates in the market,

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Speaker 1: because you want to know if you're a saver, and

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Speaker 1: I'm sure you're a saver, I'm sure you've got some

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Speaker 1: cash somewhere, you want to optimize that and have the

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Speaker 1: best rates you can get out there. Similarly, if you're borrowing,

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Speaker 1: you need to know there's quite a range, you know,

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Speaker 1: even on the even on savings, I mean, honestly, the

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Speaker 1: range is about five percent, that is, from nothing to

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Speaker 1: five percent on cash, and then when you're borrowing there.

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Speaker 1: First of all, there's different rate benchmarks for investors, private investors,

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Speaker 1: or property investors or SMSF investors who get app solutely

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Speaker 1: sort of smushed with the hardest highest rates that are

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Speaker 1: out there, but it's worth knowing someone who could actually

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Speaker 1: borrow through them is right across that. And a guest

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Speaker 1: I have had on the show before is Sally Tindall.

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Speaker 1: She's the inside director at the can Star Group and

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Speaker 1: she is going to help us today set the scene

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Speaker 1: for the year ahead.

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Speaker 3: How are you, Sally, I'm great, James, how are you good?

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Speaker 2: Thank you?

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Speaker 1: Thanks for coming on again. Great to have you on.

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Speaker 1: It was very good session the last time. It was

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Speaker 1: very informative. I thought I might just start on that

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Speaker 1: before we talk about borrowing.

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Speaker 2: Everybody's got some cash.

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Speaker 1: If you're an investor, you've got you're obvious accumulating cash

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Speaker 1: so you can invest. If you've got your own SMSF,

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Speaker 1: of course you've probably got more. They'll always tell you you've

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Speaker 1: got more cash than you should have in your SMSF,

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Speaker 1: but there are times that's very useful and you probably

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Speaker 1: have that in the linked account and it's quite a

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Speaker 1: job to switch them around. But let's just start with that.

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Speaker 1: So we know that cash rates and official cash rates

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Speaker 1: are four point three five. We know that the rates

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Speaker 1: official rates haven't changed for over a year, and we

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Speaker 1: are aware that they are supposed to go down. That

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Speaker 1: is everyone's guest at the moment, but who knows about that?

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Speaker 1: Tell us basically where we're out first of all, as

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Speaker 1: to very broadly what you might expect if you were

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Speaker 1: and you had cash, what's the sort of range you

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Speaker 1: could expect, and what's a good rate and what's a

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Speaker 1: bad rate.

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Speaker 3: When it comes to savings, it can be such a

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Speaker 3: great disparity between a good and bad rate. And one

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Speaker 3: of the primary reasons behind that is that on the

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Speaker 3: way up with those thirteen rate heights, four of which

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Speaker 3: let's not forget we're doubles, the banks by and large

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Speaker 3: picked and chose which savings account's got a boost, and

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Speaker 3: which term deposits might have got a boost, and which

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Speaker 3: missed out. And so we also saw banks opting to

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Speaker 3: put any boost onto things like the bonus rate rather

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Speaker 3: than the base rate. So if you didn't meet the

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Speaker 3: monthly conditions one month, you might miss out. So right now, yes,

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Speaker 3: I can provide you evidence of rates that are below

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Speaker 3: one percent, But if we look at the big four banks,

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Speaker 3: one of the lowest rates out there is from Westpac

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Speaker 3: East Saber. It's sitting at one point one zero percent

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Speaker 3: for its existing customers when the cash rate is at

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Speaker 3: four point three five. As you said before, it's astonishing

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Speaker 3: to think that it is so low and that there's

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Speaker 3: some savers out there just copying that. On the other

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Speaker 3: end of the scale, it is quite competitive still, which

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Speaker 3: is fantastic to see for an ongoing rate, so I'm

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Speaker 3: exploding those introductory rates that last for three to five

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Speaker 3: months for the ongoing rates. The highest on our database

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Speaker 3: is five point five zero percent. That's from four different banks.

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Speaker 3: I think it's ig move, U Bank and Bank of Queensland.

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Speaker 3: You do have to meet monthly terms and conditions in

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Speaker 3: order to qualify for that maximum rate. There are things

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Speaker 3: like balance caps, so if you go over a certain ballots,

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Speaker 3: suddenly your rate will drop thereafter. There are even age

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Speaker 3: caps on some of these accounts. That Bank of Queensland one.

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Speaker 3: If you're over thirty five, which unfortunately is May, I'm sorry,

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Speaker 3: but you don't qualify for that account. So it's really

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Speaker 3: important to read the blind grit.

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Speaker 1: Oh I find this so impuriating. I really do you know,

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Speaker 1: you're driving down the highway, it's bigg at. It says,

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Speaker 1: you know, cash five five five percent, you know, and

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Speaker 1: it gives the distinct impression that that it's available.

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Speaker 2: With no strings attached.

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Speaker 1: And there's a little asterisk now on the corner and

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Speaker 1: it's you know, for the first four months or something,

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Speaker 1: and I just say, damn it, I'm not I'm not going.

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Speaker 1: I'm not going to all the trouble of switching money

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Speaker 1: because I don't know what's going to happen after the

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Speaker 1: four months. Do you keep a record of what's what's

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Speaker 1: what are good cash rates that have no strings attached whatsoever?

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Speaker 2: Oh?

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Speaker 3: Absolutely, It's one of my favorite things to look at,

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Speaker 3: because you know, when it comes to being a savings account,

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Speaker 3: you know, you've got to look at your savings goals.

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Speaker 3: You've got to look at how much money you actually have,

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Speaker 3: how much you're regularly putting in, but also your lifestyle

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Speaker 3: and your personality. If you are really finicky and you

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Speaker 3: would happily meet the terms and conditions with glee every

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Speaker 3: single month, without breaking into a cold sweat in the

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Speaker 3: last day of the month, you know, stressing about whether

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Speaker 3: you've made you met the terms and conditions for that month,

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Speaker 3: and then all go for it. You know, get that

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Speaker 3: really high ongoing rate of five point five percent if

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Speaker 3: you qualify. But for those people that just tend to

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Speaker 3: want to set and forget, it's better looking at once

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Speaker 3: with no strings attached, and so in the highest rates

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Speaker 3: in that regard, we're looking at something like mcquarie Bank.

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Speaker 3: It's offering five percent and an ongoing rate, no strings attached.

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Speaker 3: In fact, it's actually got an introductory rate of I

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Speaker 3: think five point three five memory for the first four months,

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Speaker 3: but then it reverts to five percent for balances of

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Speaker 3: up to two hundred and fifty thousand dollars. You know,

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Speaker 3: So that's a pretty decent rate.

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Speaker 1: Right, So they are there, and as you see, but

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Speaker 1: even in that case there was not so much a

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Speaker 1: string attached.

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Speaker 2: But it's like it's not a pure offer. There's a

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Speaker 2: variation built in and they're very hard to escape, rightn't there.

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Speaker 4: There's a variation built into almost anything. Because I'm looking

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Speaker 4: at my notes. There's two others that are offering an

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Speaker 4: ongoing rate of five percent. But Australian Unity is Freedom

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Speaker 4: Saver that's capped at fifty thousand dollars and A and

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Speaker 4: Z's plus Flex Saver offers you five percent, no strings

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Speaker 4: attached up to five thousand dollars.

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Speaker 3: That's not much good always.

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Speaker 1: It, Maybe grumpy servers, let me better accept that these days,

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Speaker 1: you've just got to you've just got to accept that

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Speaker 1: they're all up to it, and you've got to thread

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Speaker 1: your way through because no one is offering a clean

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Speaker 1: no bullshit, you're no rate anymore.

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Speaker 3: No, there is no way out of reading the fine print,

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Speaker 3: if that's what you're asking, James. But the one thing

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Speaker 3: I would say in defense of savings accounts is that

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Speaker 3: it's one of the easier products to switch. You know,

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Speaker 3: you can open an account within say five minutes, if

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Speaker 3: you've got you know, a bank that's really there in

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Speaker 3: that application process, in streamlining it. I remember trying A

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Speaker 3: and Z pluses the other day, and the real delay

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Speaker 3: in the you know, me opening up an account was

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Speaker 3: having to find my driver's license because I didn't know

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Speaker 3: where I had it. But you know, moving your money

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Speaker 3: across is pretty simple too, and typically on those savings accounts,

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Speaker 3: you don't have you know, all your card details stored

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Speaker 3: to make purchases and things like that, so it's not

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Speaker 3: as problematic as say switching a transaction account or switching

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Speaker 3: a credit card.

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Speaker 2: Okay, yes, all right, very good.

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Speaker 1: You were telling me also that we'll take it as

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Speaker 1: read that the consensus in the market is that there

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Speaker 1: will be red cuts this year mid year. Perhaps that's

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Speaker 1: still very much the consensus. So, but you made a

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Speaker 1: point that the banks will we'll kind of go their

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Speaker 1: own way to some extent anyway, won't they on on

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Speaker 1: what happens to efficient reads? And my reading of it

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Speaker 1: obviously is I mean bond markets is where they fund

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Speaker 1: and in the real world through not going down? Are they?

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Speaker 3: No, they're not. It's interesting to watch. Actually, we would

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Speaker 3: have normally seen fixed rates start to come down in

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Speaker 3: a hurry in the lead up to a cash rate cut.

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Speaker 3: We're not seeing that at the moment. We saw fix

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Speaker 3: rates drop like flies back in July, August, September of

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Speaker 3: last year. Things really cooled because wholesale funding costs took

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Speaker 3: a dive back then, but have just popped up lately

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Speaker 3: and have been consistent, you know, in December and January.

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Speaker 3: In fact, in December we saw more lenders hiking fixed

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Speaker 3: rates than cutting. That's not typical behavior in the lead

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Speaker 3: up to a cash rate cut, which really interesting. So

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Speaker 3: when we do finally see a cash rate cut, it

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Speaker 3: will be interesting to see how the banks respond. As

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Speaker 3: you said, they don't have to dance to the beat

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Speaker 3: of the RBA's drum. I cannot see a world where

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Speaker 3: they do not play a ball for at least the

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Speaker 3: first couple of cuts. But if we see a smattering

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Speaker 3: of rb A rate cuts in quick succession, after a while,

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Speaker 3: we might find that some lenders choose to only pass

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Speaker 3: on part of a rate cut, or not pass on

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Speaker 3: that rate cut at all to their variable mortgage customers.

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Speaker 3: It will be interesting times ahead, I think, particularly if

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Speaker 3: we see a large number of cuts.

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Speaker 1: Okay, very good, I think I mean, I mean in

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Speaker 1: a way that's the essence of what you need to know,

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Speaker 1: folks on the on the saving side, and how ridates

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Speaker 1: will will affect your investments. We'll take a short break

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Speaker 1: and then we will come back and we will look

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Speaker 1: at the bigger issue of borrowing and what happening to

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Speaker 1: rates in that area. Back in a moment, Hello, Welcome

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Speaker 1: back to the Australian's Money Puzzle. I'm James Kirby and

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Speaker 1: I'm talking to Sally ten at the Canstar Group.

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Speaker 2: The doyen.

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Speaker 1: There's a male and a female. There's a doyen and

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Speaker 1: a diyena. Did you know that you're a doyenne.

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Speaker 2: Of rates comparison? So tell me about in terms.

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Speaker 1: Of what now if I'm going out to borrow, and

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Speaker 1: obviously many of our listeners and when they think of lending,

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Speaker 1: their thinking for property. So I'm going out to borrow

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Speaker 1: for property, let's say, on a mortgage as opposed to

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Speaker 1: an investment a home.

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Speaker 2: What am I? What should I be? What should I

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Speaker 2: be expecting to pay?

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Speaker 3: Such a good question, and it's a really good one

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Speaker 3: to keep your eye on, particularly if we do see

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Speaker 3: cash right cuts coming down the line. The average owner

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Speaker 3: occupy a variable rate at this point in time is

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Speaker 3: six point three three percent, if for you, and that's

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Speaker 3: by the collected by the RBA they collected from the bank.

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Speaker 3: So it's a fantastic realistic figure of what the average

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Speaker 3: is playing paying. But of course there's people that are

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Speaker 3: above average and below average, and when it comes to

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Speaker 3: the mortgage, you want to be aiming below, not above.

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Speaker 3: For new customers looking as an owner occupier for a

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Speaker 3: variable rate, they're actually getting a little bit lower as

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Speaker 3: an average at six point twenty four percent. What that

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Speaker 3: explains to us, it's lovely evidence that a new customer

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Speaker 3: is more likely to get a better deal from a

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Speaker 3: bank than an existing one, even if they're coming in

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Speaker 3: refinancing or haggling, you know, you really they are chasing

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Speaker 3: new business, particularly new home loans. Now those two averages again,

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Speaker 3: you've still got to go lower. The lowest ongoing variable

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Speaker 3: rate on our database at this point in time, I'm

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Speaker 3: excluding things like green loans here is five point seventy

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Speaker 3: five percent. Now that's significantly lower than six point three

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Speaker 3: three percent, and a lot of people go, oh, but

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Speaker 3: you know it requires a big deposit. I want an

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Speaker 3: offset account. I want a bank that I know, you

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Speaker 3: know that I've heard the name of. Let me tell

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Speaker 3: you there are over thirty five different lenders on our

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Speaker 3: database with at least one variable rate for owner occupiers

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Speaker 3: under the six percent mark, and some of them include

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Speaker 3: offset accounts. Some of them, you know, will cater to

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Speaker 3: loans that have small deposits, some as little as five

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Speaker 3: percent for new buyers. But also no, there's not a

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Speaker 3: big four bank in there, but there are spin offs

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Speaker 3: from the big four banks in there, things like Timely

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Speaker 3: Home Loans which is backed by Bendigo Bank, or on Loan,

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Speaker 3: which is backed by CBA. So you might be able

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Speaker 3: to have your cake and eat it too if you

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Speaker 3: do a bit of research when it comes to a

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Speaker 3: competitive rate.

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Speaker 2: Oh, thank you for that.

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Speaker 1: That's really interesting, and it seems they are competing. They

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Speaker 1: really are competing at the moment to big banks. There's

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Speaker 1: sperits for they're convincingly competing and the spirits for they're not.

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Speaker 1: It seems they really are at the moment. Oh, there's

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Speaker 1: a margin battle going on inside the Big four.

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Speaker 3: They did say at one point that they were walking

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Speaker 3: away from that fight, and we saw that at the

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Speaker 3: end when CBA nab westpact they ended the cash back

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Speaker 3: if you remember that, and they said we're walking away

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Speaker 3: from this fire. They've come straight back in as far

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Speaker 3: as I can hell. A and Z still has its

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Speaker 3: cash back on some of its loans. But CBA and

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Speaker 3: A and Z really competing in that digital mortgage space.

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Speaker 3: So CBA's got their Digi homelan, A and Z's got

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Speaker 3: their A and Z plus home loan. The other day

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Speaker 3: we saw A and Z. You know, it already had

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Speaker 3: the lowest advertised bearable rate out of the big four banks.

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Speaker 3: It cut even further down to six point oh nine percent.

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Speaker 3: I think it is right now, and I've just realized

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Speaker 3: also it comes with an offset account. It's only available

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Speaker 3: to refinances and you have to apply online. You can't

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Speaker 3: really apply through a broker, but at six point oh

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Speaker 3: nine percent, that's highly competitive from a big four bank.

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Speaker 1: Have you ever looked at in terms of, you know,

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Speaker 1: on loan as you say, come Bank, U Bank, which

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Speaker 1: is actually NAB and you mentioned the one that's actually

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Speaker 1: Bendy Gore.

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Speaker 2: What was that one again?

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Speaker 3: Timely Homelans. Yeah, used to be called TikTok, but now

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Speaker 3: it's called Timely. Yeah.

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Speaker 1: I noticed my daughter her a circle. They're familiar with

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Speaker 1: all these banks and they never know that they're they're

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Speaker 1: backed by the Big four and they're unaware of that

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Speaker 1: and they think they're different banks.

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Speaker 2: Does that matter? Do you think to people who are borrowing?

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Speaker 3: Oh, look, as long as you're comfortable with who you are,

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Speaker 3: you know, the bank that you're, the lender that you're

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Speaker 3: borrowing from. You know, as long as you're happy with

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Speaker 3: the customer service, as long as you're happy with the

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Speaker 3: features in your home loan, go out there and get

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Speaker 3: a competitive rate. Does it really matter that it's a

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Speaker 3: big full bank or not? Or does it matter that

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Speaker 3: you know that it's back by a big full bank.

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Speaker 3: It's interesting to see the different strategies with someone like

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Speaker 3: Timely homelan. You really have to look in the fine

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Speaker 3: print to see that it's backed by Bendigo and Adelaid Bank.

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Speaker 3: But for our loan, their strategy absolutely is to say, hey,

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Speaker 3: we are part of CBA, We're a division of CBA

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Speaker 3: that you know, and that they're hoping is going to

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Speaker 3: bring people in with a cracking rate that's under six

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Speaker 3: percent with that you know CBA logo in the corner.

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Speaker 3: I think it's five point ninety nine at this point.

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Speaker 3: And they give you a discount for every year that

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Speaker 3: you have the loan with them, so it can drop

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Speaker 3: quite you know, over the coast of line.

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Speaker 1: But yeah, so it seems to be a different attitude

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Speaker 1: inside the banks too, to this issue that some of

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Speaker 1: them say, yes, you know, we should go on the

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Speaker 1: front foot and say who we are, and others say,

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Speaker 1: let's not, let's not tell them straight away, let's not

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Speaker 1: make it too obvious.

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Speaker 2: It's interesting.

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Speaker 1: I'm sure I don't have to see services to know

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Speaker 1: that the it's a younger demographic would go with the

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Speaker 1: online only spin offs of the big four because they

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Speaker 1: don't need that comfort that older investors seem to want

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Speaker 1: when they're in the market. Because you mentioned there you

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Speaker 1: mentioned that you mentioned a panel of rates there a

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Speaker 1: few minutes ago, and you said, yes, there is no

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Speaker 1: I didn't ask you, but you said, yes, there is

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Speaker 1: no big.

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Speaker 2: Four bank in there.

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Speaker 1: So it's still it's still an issue for people, whether

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Speaker 1: they are dealing with them or not. So okay, that

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Speaker 1: was the home buyer, the investor then, and the SMSF investor.

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Speaker 1: What would investor going out to buy their first property,

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Speaker 1: what should they be, what should they be aiming for?

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Speaker 1: What's the average and much? And then we'll know what

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Speaker 1: they should be aiming for.

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Speaker 3: So six point five to nine percent is the average

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Speaker 3: of investor owner occupiers across the board. Yeah, and that

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Speaker 3: we see that quite consistently through the rates. Some people

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Speaker 3: have a lot smaller margins for investors, some have a

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Speaker 3: handful have the same rate for investors and own occupies.

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Speaker 3: The lowest on our database at this point in time

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Speaker 3: is five point nine four percent for an investor on

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Speaker 3: a variable rate. And I could only find three lenders

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Speaker 3: that were offering investors at least one variable rate under

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Speaker 3: that magical six percent mark, So you know, it's a

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Speaker 3: lot significantly higher. And if you're aiming to get something

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Speaker 3: under six percent you really, you know, go to be

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Speaker 3: hamstrung for choice there, but just above six percent, we've

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Speaker 3: still got a decent smattering of competitive rates even if

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Speaker 3: you want interest only termed, because I think the banks

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Speaker 3: recognize that, yeah, you might pay slightly more for interest only,

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Speaker 3: but they know that's what a lot of investors are

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Speaker 3: looking for.

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Speaker 2: They are quite available. Are there two investors interest only?

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Speaker 3: Absolutely, you do see a much greater proportion of investors

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Speaker 3: taking out that interest only option. I was actually looking

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Speaker 3: at the ABRA data just before this to see the

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Speaker 3: mix in terms of interest only across the board, across

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Speaker 3: the whole loan book. It's sitting at around ten percent,

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Speaker 3: which is incredibly low. We keep looking at this data

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Speaker 3: to see the signs of strets because one of the

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Speaker 3: things if you were struggling to pay the mortgage would

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Speaker 3: be to switch to interest only. We haven't seen a

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Speaker 3: big uptick in interest only loans. It's squarely in that

351
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Speaker 3: investor space that you're looking for interest only loan terms.

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Speaker 3: The banks typically only give it to you for five

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Speaker 3: years at a time, that they might extend that after.

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Speaker 1: That, And it's ten percent of the loans out there

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Speaker 1: are interests only and that's law you're seeing as a

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Speaker 1: portion as that is, because I would have thought if

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Speaker 1: you could get an interest only loan, why wouldn't you

358
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Speaker 1: This is always a debate I have with people, but

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Speaker 1: I think, like, why on are they would you pay?

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Speaker 1: Principle if it's an investment and you intend to buy

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Speaker 1: it in set it in five ten years time.

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Speaker 3: Well, it's ten percent across the whole loan book, so

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00:18:09,840 --> 00:18:14,280
Speaker 3: that's owner, occupiers and investors combined, So higher percentage when

364
00:18:14,280 --> 00:18:16,600
Speaker 3: it comes to investors. But you're right, some banks will

365
00:18:16,640 --> 00:18:18,920
Speaker 3: start nudging you after a while and say, okay, Jones,

366
00:18:18,960 --> 00:18:21,640
Speaker 3: it's time to start paying down your debt and not

367
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Speaker 3: just treading water. But it is a popular strategy among investors,

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Speaker 3: that's for sure.

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Speaker 1: And as you also alluded to there, if on the

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Speaker 1: reverse of all that, if people are starting to have

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Speaker 1: trouble paying, then what they do often is they extend.

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Speaker 2: If they could move to interest.

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Speaker 1: Only, or they could make the mortgage longer, move it

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Speaker 1: from twenty five years to thirty years, so thirty to

375
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Speaker 1: thirty five. That's another thing people are doing, isn't it.

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Speaker 3: It is a strategy, it's one. It's one of my

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Speaker 3: least favorite strategies.

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Speaker 2: So explain why you don't like it.

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Speaker 3: Okay, So, if you are struggling to pay the mortgage,

380
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Speaker 3: you bring your bank up. What are my options the

381
00:18:54,520 --> 00:18:57,600
Speaker 3: best Well, one of the best ways would probably be

382
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Speaker 3: to ask for a brake cut. And I would suggests

383
00:19:00,480 --> 00:19:02,040
Speaker 3: you call up your bank and ask for a rate

384
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Speaker 3: cut first before you tell them anything else.

385
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Speaker 2: So elementary smart, Yeah, go.

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Speaker 3: And get yourself on the lowest possible rate. You probably

387
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Speaker 3: can't refinance at that point if you're in hot water financially.

388
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Speaker 3: I don't think a new lend is going to take

389
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Speaker 3: you on. But you know, in that initial phone call

390
00:19:18,359 --> 00:19:19,960
Speaker 3: they don't need to know that. You just go and

391
00:19:19,960 --> 00:19:22,720
Speaker 3: get yourself the most cracking rate you can by haggling

392
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Speaker 3: with your current bank, and you can use interest rates

393
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Speaker 3: and examples from other banks in that negotiation process, as

394
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Speaker 3: you know, perhaps a tactic. But then call them back

395
00:19:33,400 --> 00:19:35,200
Speaker 3: and say, well, even after that rate cut, I'm still

396
00:19:35,200 --> 00:19:37,480
Speaker 3: struggling to pay the mortgage. What can you do? And

397
00:19:37,520 --> 00:19:39,679
Speaker 3: so they could move you on to interest only, they

398
00:19:39,680 --> 00:19:41,600
Speaker 3: could extend out your loan term, or you could go

399
00:19:41,680 --> 00:19:44,560
Speaker 3: for part payments. These are three strategies. I'm sure that

400
00:19:44,600 --> 00:19:48,000
Speaker 3: there are more if you're moving on to interest only terms,

401
00:19:48,000 --> 00:19:50,199
Speaker 3: they might charge you a slightly higher rate for the

402
00:19:50,200 --> 00:19:53,480
Speaker 3: privilege of switching to interest only, but you'll see a

403
00:19:53,520 --> 00:19:56,520
Speaker 3: significant drop in your monthly repayments, so you should. I

404
00:19:56,520 --> 00:19:58,840
Speaker 3: don't have the numbers quite handy, but the long term

405
00:19:58,920 --> 00:20:01,199
Speaker 3: damage of being on in only for a couple of

406
00:20:01,280 --> 00:20:07,400
Speaker 3: years isn't that perilous when you look at you know,

407
00:20:07,520 --> 00:20:10,120
Speaker 3: extending out your loan term, for example, So you might

408
00:20:10,200 --> 00:20:12,560
Speaker 3: be five years into a thirty year term and the

409
00:20:12,560 --> 00:20:15,760
Speaker 3: bank says, okay, well, James, instead you could extend out

410
00:20:15,760 --> 00:20:18,760
Speaker 3: your loan term for another five years. It will see

411
00:20:19,440 --> 00:20:23,240
Speaker 3: a relatively minor drop in your monthly repayments, but the

412
00:20:23,359 --> 00:20:26,240
Speaker 3: long term damage of paying interest to your bank for

413
00:20:26,320 --> 00:20:29,399
Speaker 3: five extra years can sometimes run.

414
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Speaker 2: You're going to pay them a lot more, yeah.

415
00:20:31,800 --> 00:20:35,160
Speaker 3: Into the ten sometimes hundreds of thousands of dollars, even

416
00:20:35,200 --> 00:20:37,480
Speaker 3: on a you know, say six hundred, seven hundred thousand

417
00:20:37,520 --> 00:20:39,600
Speaker 3: dollar loan. I wish I had the figures for you

418
00:20:39,640 --> 00:20:41,320
Speaker 3: to pull it out, but it is astounding.

419
00:20:41,840 --> 00:20:44,159
Speaker 1: I'm familiar with them. In fact, Sally, I've written on this,

420
00:20:44,240 --> 00:20:48,040
Speaker 1: and I've showed how how much it costs over a

421
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Speaker 1: long period of time. And it's true. What you pay

422
00:20:50,880 --> 00:20:54,919
Speaker 1: less per month is really it's really not much. You know,

423
00:20:55,440 --> 00:20:57,800
Speaker 1: you're talking, you know, something the order of thirty dollars

424
00:20:57,840 --> 00:21:00,560
Speaker 1: or something, and then you look at the home you pay.

425
00:21:00,720 --> 00:21:02,800
Speaker 1: How much more you pay the bank over the fullness

426
00:21:02,800 --> 00:21:04,440
Speaker 1: of time because you went on for five more years

427
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Speaker 1: and it's enormous cost as you say, so a very

428
00:21:07,119 --> 00:21:07,879
Speaker 1: good point.

429
00:21:07,880 --> 00:21:08,400
Speaker 2: Very good point.

430
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Speaker 1: And I thought the best point of all was folks,

431
00:21:10,800 --> 00:21:14,359
Speaker 1: it's true. I mean, ring, pick up the phone and

432
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Speaker 1: ring the bank. And you can haggle. I'm not a

433
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Speaker 1: great haggler, sally, but when it really matters, I'll do it. Loans, salary, cars,

434
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Speaker 1: that's about it. I'd probably be exhausted about that. I

435
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Speaker 1: want to haggle in the shop about the price of

436
00:21:29,560 --> 00:21:31,240
Speaker 1: a carpet, I couldn't be bothered.

437
00:21:31,320 --> 00:21:31,840
Speaker 2: That's not me.

438
00:21:32,000 --> 00:21:34,880
Speaker 1: But wherea's big ticket items, and I am. I've done

439
00:21:34,880 --> 00:21:37,600
Speaker 1: it several times and it has worked, and I've been.

440
00:21:37,520 --> 00:21:38,480
Speaker 2: Amazed that they do.

441
00:21:38,720 --> 00:21:41,560
Speaker 1: They will work these days, the banks will. They have

442
00:21:41,600 --> 00:21:44,760
Speaker 1: the capacity to do that. You don't have to talk

443
00:21:44,800 --> 00:21:48,119
Speaker 1: to the chief of lending or whatever. They have the

444
00:21:48,119 --> 00:21:52,119
Speaker 1: individual capacity to make it better deal. And they remember

445
00:21:52,520 --> 00:21:54,880
Speaker 1: they don't want to lose you. Keep that in mind, folks,

446
00:21:55,080 --> 00:21:56,679
Speaker 1: they do not want to lose you. It's a lot

447
00:21:56,720 --> 00:21:59,200
Speaker 1: of trouble for them because because you, because you're it's

448
00:21:59,640 --> 00:22:01,400
Speaker 1: it's a big deal. If you go out the door

449
00:22:01,960 --> 00:22:04,239
Speaker 1: and if you if you sound like you're serious, then

450
00:22:04,280 --> 00:22:06,640
Speaker 1: they will take you seriously and act seriously. All Right,

451
00:22:06,800 --> 00:22:08,520
Speaker 1: we might go to questions now because we have some

452
00:22:08,560 --> 00:22:26,240
Speaker 1: great questions. We'll be back in a moment. Hello and

453
00:22:26,280 --> 00:22:29,159
Speaker 1: welcome back to The Australian's Money Puzzle. I'm James Kirby.

454
00:22:29,760 --> 00:22:33,000
Speaker 1: I'm talking to Sally Tindall at can Star. We're talking rates,

455
00:22:33,240 --> 00:22:38,760
Speaker 1: financing loans, savings rates a cant Star as you know

456
00:22:38,800 --> 00:22:40,720
Speaker 1: as a rate comparison group, so they're very good on

457
00:22:40,760 --> 00:22:42,720
Speaker 1: this sort of thing, as you can imagine. I'm want

458
00:22:42,760 --> 00:22:45,720
Speaker 1: to move to questions now. The first question, I think,

459
00:22:45,720 --> 00:22:48,840
Speaker 1: what's what would have been beyond both of us Sally,

460
00:22:49,200 --> 00:22:51,840
Speaker 1: So I took the I took the precaution of asking

461
00:22:51,920 --> 00:22:55,680
Speaker 1: James Gerard, a financial advisor who's regularly on the show,

462
00:22:55,720 --> 00:22:57,240
Speaker 1: could the answer this one. But it is from a

463
00:22:57,280 --> 00:23:02,360
Speaker 1: property investor, Scott. It's from Scott who says, let's say

464
00:23:02,359 --> 00:23:05,159
Speaker 1: we bought a freestanding house in New South Wales for

465
00:23:05,200 --> 00:23:07,520
Speaker 1: half a million that has its own mortgage and is

466
00:23:07,520 --> 00:23:10,680
Speaker 1: an investment property. We then spent two years and three

467
00:23:10,760 --> 00:23:13,480
Speaker 1: hundred thousand building a secondary dwelling on the site. It

468
00:23:13,600 --> 00:23:17,280
Speaker 1: remains a single title. This was financed through an equity release,

469
00:23:19,320 --> 00:23:23,520
Speaker 1: establishing an additional mortgage secured at the two year mark.

470
00:23:24,000 --> 00:23:26,040
Speaker 1: Let's say the property is now valued at a million

471
00:23:26,080 --> 00:23:28,720
Speaker 1: and we sold. This is all hypothetical, folks, and the

472
00:23:28,760 --> 00:23:31,040
Speaker 1: answer will not be advised. It'll be information to keep

473
00:23:31,040 --> 00:23:35,080
Speaker 1: that in mind. Scott says, My assumption is the capital

474
00:23:35,119 --> 00:23:37,359
Speaker 1: gain here is about half a million, and based on

475
00:23:37,400 --> 00:23:39,879
Speaker 1: the purchase price and new sale price, or am I

476
00:23:39,920 --> 00:23:43,159
Speaker 1: missing some complexity about this investment and the cost of

477
00:23:43,160 --> 00:23:46,840
Speaker 1: the additional bild. I assume there is no scenario where

478
00:23:46,880 --> 00:23:49,800
Speaker 1: the gain is as little as two hundred k Okay

479
00:23:49,880 --> 00:23:53,040
Speaker 1: James says, it's more of an accounting question. My guess

480
00:23:53,119 --> 00:23:55,959
Speaker 1: is that the capital gain would be assessed based on

481
00:23:56,000 --> 00:23:59,399
Speaker 1: the cost base, which includes the half million purchase price,

482
00:24:00,000 --> 00:24:03,960
Speaker 1: three hundred thousand building costs and other expenses as for

483
00:24:04,040 --> 00:24:08,679
Speaker 1: discounted capital games. The portion of the gain attributable to

484
00:24:08,760 --> 00:24:12,119
Speaker 1: the initial dwelling would qualify for the discount as it

485
00:24:12,160 --> 00:24:14,560
Speaker 1: was held for more than twelve months. However, the portion

486
00:24:14,640 --> 00:24:17,400
Speaker 1: of the attributable to the new dwelling min I qualified

487
00:24:17,400 --> 00:24:19,959
Speaker 1: for the discount since it was sold within twelve months.

488
00:24:20,560 --> 00:24:24,920
Speaker 1: And even James the advisor suggests, I would suggest specialist

489
00:24:24,920 --> 00:24:29,360
Speaker 1: accounting advice for keep in mind, keeping detailed costs at

490
00:24:29,359 --> 00:24:33,240
Speaker 1: all levels of the construction would have been crucial. Great answer, James,

491
00:24:33,240 --> 00:24:36,480
Speaker 1: Thank you very much. Okay, now, Sally, what else have

492
00:24:36,520 --> 00:24:37,119
Speaker 1: we got here?

493
00:24:37,280 --> 00:24:37,840
Speaker 2: From Anna?

494
00:24:38,520 --> 00:24:41,280
Speaker 1: I read that the majority of home mortgages are now

495
00:24:41,320 --> 00:24:42,840
Speaker 1: sold through mortgage brokers?

496
00:24:43,040 --> 00:24:47,200
Speaker 2: Is this true? And will it ever change? Oh? It's

497
00:24:47,400 --> 00:24:48,439
Speaker 2: more and more true, isn't it.

498
00:24:48,480 --> 00:24:52,800
Speaker 1: I think it's it's seventy percent now something like that,

499
00:24:52,920 --> 00:24:53,480
Speaker 1: of course.

500
00:24:53,400 --> 00:24:56,800
Speaker 3: So I looked up the stats from the Opera Quarterly

501
00:24:57,320 --> 00:25:01,160
Speaker 3: Property Exposure Statistics otherwise known as my favorite data set

502
00:25:01,160 --> 00:25:04,200
Speaker 3: each quarter. It's the treasure trove of information in there.

503
00:25:04,320 --> 00:25:07,800
Speaker 3: They do have third party originated loans in there, and

504
00:25:08,000 --> 00:25:10,359
Speaker 3: when you do it as a proportion of all term loans,

505
00:25:10,400 --> 00:25:13,200
Speaker 3: which we do, it's sitting at sixty two percent. That's

506
00:25:13,200 --> 00:25:17,399
Speaker 3: from OPRA. It's risen in recent quarters. I think it

507
00:25:17,480 --> 00:25:21,160
Speaker 3: was about fifty something back in when rates were at

508
00:25:21,920 --> 00:25:24,920
Speaker 3: record lows, so it was sitting at we get this right,

509
00:25:24,920 --> 00:25:27,840
Speaker 3: December twenty twenty quarter it was sitting at fifty five percent,

510
00:25:27,880 --> 00:25:30,760
Speaker 3: So it's risen since then, I think because a lot

511
00:25:30,760 --> 00:25:33,840
Speaker 3: of people were opting for those ultra low fixed rate

512
00:25:34,440 --> 00:25:37,520
Speaker 3: loans and probably doing it themselves straight so a bank,

513
00:25:37,840 --> 00:25:40,359
Speaker 3: particularly because the big ballbanks were offering it as this

514
00:25:41,000 --> 00:25:46,920
Speaker 3: easy fixed advertised rate. Brokers can be incredibly handy, Let's

515
00:25:46,920 --> 00:25:49,360
Speaker 3: be clear about that. Particularly if you're a first home

516
00:25:49,400 --> 00:25:52,919
Speaker 3: buyer and you're nervous about entering the mortgage market for

517
00:25:52,920 --> 00:25:56,000
Speaker 3: the first time, they can really hold your hand and

518
00:25:56,040 --> 00:25:58,800
Speaker 3: do the paperwork for you. But if you are a

519
00:25:58,840 --> 00:26:02,280
Speaker 3: nervous haggler, can pick up the phone and negotiate with

520
00:26:02,400 --> 00:26:05,200
Speaker 3: your existing bank for you and help you out that way,

521
00:26:05,640 --> 00:26:08,720
Speaker 3: or they if you are someone who hates paperwork and

522
00:26:09,200 --> 00:26:12,280
Speaker 3: those deep within yourself that you need to refinance but

523
00:26:12,359 --> 00:26:15,600
Speaker 3: haven't yet, again, they can be a fantastic resource where

524
00:26:15,920 --> 00:26:18,159
Speaker 3: they're really prodding you for pay slips and all the

525
00:26:18,160 --> 00:26:21,560
Speaker 3: information that you might need to refinance, and then sorting

526
00:26:21,600 --> 00:26:23,680
Speaker 3: it all out and liaising with the bank for you.

527
00:26:23,760 --> 00:26:26,280
Speaker 3: So they really do make things happen.

528
00:26:26,840 --> 00:26:29,080
Speaker 2: That's the prouse what would the cons be.

529
00:26:30,280 --> 00:26:32,720
Speaker 3: So the cons would be I think that they have

530
00:26:32,760 --> 00:26:35,320
Speaker 3: a limited number of people on their panels. Their panels

531
00:26:35,320 --> 00:26:36,600
Speaker 3: are getting increasingly bigger.

532
00:26:36,840 --> 00:26:38,520
Speaker 1: They don't have all the banks do they like they

533
00:26:38,520 --> 00:26:40,840
Speaker 1: give them don't give you the best loan out there,

534
00:26:40,880 --> 00:26:42,320
Speaker 1: but they're just going to give you the best loan

535
00:26:42,400 --> 00:26:45,880
Speaker 1: from the card that they have, which might be quite

536
00:26:45,920 --> 00:26:48,320
Speaker 1: a lot of banks, but it will be every product

537
00:26:48,520 --> 00:26:49,159
Speaker 1: in the market.

538
00:26:49,400 --> 00:26:51,840
Speaker 3: Yeah, but also when they work out what is right

539
00:26:51,880 --> 00:26:54,320
Speaker 3: for you, they will look at, you know, features that

540
00:26:54,320 --> 00:26:56,919
Speaker 3: you might want in a home loan, your goals, your strategies,

541
00:26:56,920 --> 00:26:58,720
Speaker 3: that type of thing as well. So they're not just

542
00:26:58,840 --> 00:27:01,840
Speaker 3: going to the laws rate you know in their book either.

543
00:27:01,840 --> 00:27:05,000
Speaker 3: They're looking and they're taking a holistic approach. But they

544
00:27:05,040 --> 00:27:08,199
Speaker 3: don't have access to every single rate. So for example,

545
00:27:08,200 --> 00:27:11,240
Speaker 3: when I mentioned those digital loans, particularly from like you know,

546
00:27:11,320 --> 00:27:14,479
Speaker 3: CBA's unloan and CBAS Digit loan, they're not available by

547
00:27:14,520 --> 00:27:17,159
Speaker 3: a broker, so you have to apply direct to the bank.

548
00:27:17,359 --> 00:27:20,640
Speaker 3: I think that's just CBA's way to kind of create

549
00:27:21,800 --> 00:27:25,120
Speaker 3: a mortgage pathway that's lower cost for them because obviously

550
00:27:25,119 --> 00:27:27,480
Speaker 3: the banks are paying the broker's commission. It's important to

551
00:27:27,560 --> 00:27:31,040
Speaker 3: understand how brokers get paid as well. But the other

552
00:27:31,080 --> 00:27:34,160
Speaker 3: thing I would say, and this is absolutely not specific

553
00:27:34,160 --> 00:27:38,639
Speaker 3: to brokers whatsoever, is that with any financial advice, go

554
00:27:38,680 --> 00:27:41,080
Speaker 3: and get a second opinion. Just go and sense check

555
00:27:41,119 --> 00:27:43,639
Speaker 3: everything while you're doing it. So before you pick up

556
00:27:43,640 --> 00:27:45,920
Speaker 3: the phone to a broker, and I highly recommend doing that,

557
00:27:46,200 --> 00:27:48,280
Speaker 3: have a look at what a competitive rate looks like.

558
00:27:48,400 --> 00:27:50,199
Speaker 3: Have a look at, you know, kind of some of

559
00:27:50,200 --> 00:27:51,879
Speaker 3: the office that you might be able to go and

560
00:27:51,920 --> 00:27:53,760
Speaker 3: get from the bank, because then you can have an

561
00:27:53,840 --> 00:27:57,000
Speaker 3: informed conversation with your broker about what might not suit

562
00:27:57,040 --> 00:27:58,880
Speaker 3: you and what might not suit you, and they can

563
00:27:58,920 --> 00:28:01,639
Speaker 3: tell you, well, look, Jane, your you know your strategy

564
00:28:01,680 --> 00:28:03,600
Speaker 3: is X. So you really need to be looking at

565
00:28:03,640 --> 00:28:06,080
Speaker 3: these options in order to shape that and then you

566
00:28:06,119 --> 00:28:08,280
Speaker 3: will understand and be able to follow that conversation.

567
00:28:09,160 --> 00:28:10,360
Speaker 2: Yes, okay, very good.

568
00:28:10,480 --> 00:28:14,359
Speaker 1: Yeah, So don't don't ring them knowing nothing. Listen to

569
00:28:14,400 --> 00:28:16,800
Speaker 1: this show for instance, and then ring them. You see,

570
00:28:16,800 --> 00:28:18,760
Speaker 1: that will give you to be perfect. It would be

571
00:28:18,800 --> 00:28:22,280
Speaker 1: a perfect own trade. Okay, folks. Now, one or two

572
00:28:22,280 --> 00:28:24,479
Speaker 1: other questions. This one is I'm surprised you don't get

573
00:28:24,520 --> 00:28:27,040
Speaker 1: it more often, but it's co It's from Darren, and

574
00:28:27,080 --> 00:28:29,720
Speaker 1: he says, very simply, can you explain that division two

575
00:28:30,160 --> 00:28:32,480
Speaker 1: nine to three tax? It sounds to me like an

576
00:28:32,520 --> 00:28:36,760
Speaker 1: additional tax. Aren't earnings in excess of two hundred and

577
00:28:36,760 --> 00:28:37,760
Speaker 1: fifty thousand a year?

578
00:28:37,800 --> 00:28:39,040
Speaker 2: Is this correct? Yes?

579
00:28:39,360 --> 00:28:42,080
Speaker 1: First of all, Darren's completely correct. So if you hear

580
00:28:42,120 --> 00:28:44,680
Speaker 1: anyone complaining about the division two nine three tacks, well, folks,

581
00:28:44,680 --> 00:28:46,600
Speaker 1: you'll know they're on more than two hundred and fifty

582
00:28:46,880 --> 00:28:50,560
Speaker 1: because they'll be What happens is, to be precise, you

583
00:28:50,600 --> 00:28:55,640
Speaker 1: do your let's say you're doing your Super contributions and

584
00:28:55,720 --> 00:28:59,040
Speaker 1: you want to get the concessional tax rate pre tax rate,

585
00:28:59,080 --> 00:29:02,200
Speaker 1: which is thirty You can in thirty grand pre pretext

586
00:29:02,240 --> 00:29:06,080
Speaker 1: as they say. Now what happens is the tax office

587
00:29:06,280 --> 00:29:09,720
Speaker 1: you see, comes along and says, ah, you are more

588
00:29:09,720 --> 00:29:14,360
Speaker 1: than two fifty, and so the claw back some would

589
00:29:14,400 --> 00:29:14,760
Speaker 1: you believe?

590
00:29:14,840 --> 00:29:16,920
Speaker 2: Would you believe the bit of.

591
00:29:16,880 --> 00:29:19,680
Speaker 1: Advantage you get in putting the money into Super, which

592
00:29:19,760 --> 00:29:22,600
Speaker 1: is by no means marvelous, but it's something. They close

593
00:29:22,600 --> 00:29:26,160
Speaker 1: it back on a scale basis. Once you're over a threshold,

594
00:29:26,240 --> 00:29:28,600
Speaker 1: and that's division two nine three, and Darren, you're just

595
00:29:28,600 --> 00:29:31,440
Speaker 1: completely right. Nothing else to say there. We can go

596
00:29:31,480 --> 00:29:33,120
Speaker 1: into detail, but that's basically it.

597
00:29:33,600 --> 00:29:34,080
Speaker 2: Okay.

598
00:29:34,480 --> 00:29:38,479
Speaker 1: Now, the final piece of correspondence is from Bruce, and

599
00:29:38,760 --> 00:29:41,000
Speaker 1: it's sort of the nature of a question, but I

600
00:29:41,040 --> 00:29:44,040
Speaker 1: will read it once I've asked Sally whether she's aware

601
00:29:44,040 --> 00:29:47,000
Speaker 1: of fire and the fire movement. Are you familiar with

602
00:29:47,040 --> 00:29:47,840
Speaker 1: the whole thing?

603
00:29:48,000 --> 00:29:48,320
Speaker 2: Sally?

604
00:29:49,400 --> 00:29:51,640
Speaker 3: I am. You gave me a little bit of a

605
00:29:51,680 --> 00:29:53,640
Speaker 3: heads up though, as well, and so I read up

606
00:29:53,640 --> 00:29:55,920
Speaker 3: on it even further before this conversation.

607
00:29:56,160 --> 00:29:57,440
Speaker 2: It's what do you think, what do you think of?

608
00:29:57,560 --> 00:29:58,160
Speaker 2: What do you think of?

609
00:29:58,240 --> 00:30:03,040
Speaker 1: What's your initial got reaction to it? Financial independence early?

610
00:30:03,240 --> 00:30:06,800
Speaker 3: It sounds fabulous, but let's it's not going to suit everyone,

611
00:30:06,840 --> 00:30:10,120
Speaker 3: and it's not achievable for everyone. So I think about

612
00:30:10,120 --> 00:30:14,120
Speaker 3: my mother who's well over seventy and still working and

613
00:30:15,160 --> 00:30:19,760
Speaker 3: it fulfills her and her work is a large part

614
00:30:19,760 --> 00:30:23,040
Speaker 3: of her identity and has really you know, if she

615
00:30:23,080 --> 00:30:26,120
Speaker 3: had retired early, I think that would have actually been

616
00:30:26,120 --> 00:30:28,640
Speaker 3: a negative outcome for her. I think it's been really

617
00:30:28,720 --> 00:30:32,280
Speaker 3: positive that she's continued working well into her seventy So

618
00:30:32,320 --> 00:30:34,480
Speaker 3: it's not for everyone. There's a lot of people that

619
00:30:34,640 --> 00:30:36,840
Speaker 3: know exactly what they're going to do with that extra

620
00:30:36,880 --> 00:30:39,680
Speaker 3: spare time and they're going to have a fantastic time.

621
00:30:39,720 --> 00:30:42,360
Speaker 3: And if they've got the finances to fund it, that's fantastic.

622
00:30:42,760 --> 00:30:45,440
Speaker 3: But other people will find that they don't like retirement

623
00:30:45,480 --> 00:30:46,640
Speaker 3: as much as they thought they did.

624
00:30:46,880 --> 00:30:48,080
Speaker 2: Yeah, I'm a bit like you.

625
00:30:48,160 --> 00:30:48,720
Speaker 1: I like the.

626
00:30:50,200 --> 00:30:57,440
Speaker 2: First part financial independence. Sure, yes, go for it, retiring early.

627
00:30:57,480 --> 00:30:59,680
Speaker 2: I don't know that's up to that's up to everybody

628
00:31:00,080 --> 00:31:00,520
Speaker 2: want to do.

629
00:31:00,760 --> 00:31:02,680
Speaker 1: But I suppose a positive way to read it would

630
00:31:02,680 --> 00:31:05,280
Speaker 1: be that if you had financial independence, then your attitude

631
00:31:05,320 --> 00:31:07,960
Speaker 1: towards your job would be quite different than if you didn't.

632
00:31:08,600 --> 00:31:10,520
Speaker 1: And there's no two ways about it. If you have that,

633
00:31:10,760 --> 00:31:12,880
Speaker 1: if you have that financial in dependence and the ability

634
00:31:12,920 --> 00:31:16,120
Speaker 1: to say get lost, I can walk away from here anytime.

635
00:31:16,680 --> 00:31:20,040
Speaker 1: I don't need to see any psychiatric evaluations or surveys

636
00:31:20,040 --> 00:31:22,440
Speaker 1: to know that that is so much better and people

637
00:31:22,440 --> 00:31:24,280
Speaker 1: are in such a better frame of mind, and maybe

638
00:31:24,320 --> 00:31:26,960
Speaker 1: for that alone, the Fire movement is worth is worth

639
00:31:27,080 --> 00:31:29,520
Speaker 1: checking out. So that's the Fire Movement, folks. I want

640
00:31:29,520 --> 00:31:32,840
Speaker 1: to read just I'll read an ex tract only from

641
00:31:32,880 --> 00:31:35,000
Speaker 1: something we got from Bruce. But it's very thoughtful and

642
00:31:35,040 --> 00:31:37,160
Speaker 1: we have had lots of correspondence on fire, so this

643
00:31:37,280 --> 00:31:39,400
Speaker 1: is this one. Just hear me out here. It's just

644
00:31:39,480 --> 00:31:42,760
Speaker 1: about four paragraphs. Thanks for the recent program on the

645
00:31:42,760 --> 00:31:46,080
Speaker 1: Fire movement. I retired sort of earlier, fifty five, almost

646
00:31:46,160 --> 00:31:48,280
Speaker 1: nineteen years ago. That is not so early in terms

647
00:31:48,320 --> 00:31:51,480
Speaker 1: of say what Joe the Minx did, Joe the Minx

648
00:31:51,520 --> 00:31:54,000
Speaker 1: being the author of the famous book, but early enough

649
00:31:54,000 --> 00:31:56,360
Speaker 1: for me, and certainly much earlier than what I had

650
00:31:56,480 --> 00:31:58,880
Speaker 1: envisaged when I started work at the age fifteen. You see,

651
00:31:58,880 --> 00:32:02,400
Speaker 1: he started at fifteen. It's quite different to retire at

652
00:32:02,440 --> 00:32:06,040
Speaker 1: sixty or sixty five if you start at fifteen, compared

653
00:32:06,040 --> 00:32:08,920
Speaker 1: to the current generation who've probably done third level, probably

654
00:32:08,960 --> 00:32:12,200
Speaker 1: don't start work till they're twenty two, three or four. However,

655
00:32:12,400 --> 00:32:15,760
Speaker 1: after reading Your Money or Your Life by Joe the

656
00:32:15,840 --> 00:32:19,520
Speaker 1: Minx and Vicki Robin, I read many other books in

657
00:32:19,560 --> 00:32:23,120
Speaker 1: similar but slightly different veins, and decided fifty five was

658
00:32:23,160 --> 00:32:26,840
Speaker 1: the age for me. I've never regretted the decision. However,

659
00:32:26,880 --> 00:32:29,840
Speaker 1: here's three comments won the book might have started the movement.

660
00:32:29,880 --> 00:32:32,360
Speaker 1: I recalled that Joe's philosophy was all about investing in

661
00:32:32,440 --> 00:32:35,400
Speaker 1: government bonds and holding them to maturity. And living on

662
00:32:35,440 --> 00:32:38,520
Speaker 1: the dividends of these bonds. This approach took risk out

663
00:32:38,520 --> 00:32:42,160
Speaker 1: of the equation. Two subsequent books by other author has

664
00:32:42,160 --> 00:32:46,080
Speaker 1: looked at survivability of portfolios of twenty percent cash and

665
00:32:46,120 --> 00:32:50,400
Speaker 1: eighty percent shares, looking at the performance all the way

666
00:32:50,440 --> 00:32:53,239
Speaker 1: back to the US Civil War. The thesis was that

667
00:32:53,280 --> 00:32:57,760
Speaker 1: by taking not more than four percent living expenses, the

668
00:32:57,800 --> 00:33:00,600
Speaker 1: funds would never run out, and folks probably where they

669
00:33:00,600 --> 00:33:03,720
Speaker 1: got the four percent draw down. You know, for retirees

670
00:33:03,720 --> 00:33:06,760
Speaker 1: in Australia to think about it, it's no coincidence. And

671
00:33:06,800 --> 00:33:11,480
Speaker 1: the third point from Bruce is the retire early strategy

672
00:33:11,560 --> 00:33:14,200
Speaker 1: worked well for Joe de Mink because he retired at

673
00:33:14,240 --> 00:33:14,760
Speaker 1: thirty one.

674
00:33:15,040 --> 00:33:16,160
Speaker 2: He died at fifty eight.

675
00:33:16,560 --> 00:33:18,840
Speaker 1: Had he planned to retire at sixty five, he would

676
00:33:18,880 --> 00:33:22,480
Speaker 1: have missed out retirement completely. A lot of other interesting

677
00:33:22,520 --> 00:33:25,120
Speaker 1: points from Bruce. The last part of it, this is

678
00:33:25,160 --> 00:33:27,040
Speaker 1: the best book I have found of the whole lot,

679
00:33:27,080 --> 00:33:30,960
Speaker 1: was The Joy of Not Working by Ernie Zelenski. That's

680
00:33:31,080 --> 00:33:34,760
Speaker 1: Ernie Zelenski z e l I n Ski and he

681
00:33:34,840 --> 00:33:37,680
Speaker 1: says the truth is in my retirement, I never found

682
00:33:37,840 --> 00:33:39,600
Speaker 1: enough time to do all the things I want to do,

683
00:33:40,160 --> 00:33:42,520
Speaker 1: and none of that includes travels. Since I had a

684
00:33:42,520 --> 00:33:44,720
Speaker 1: long career, I did so much travel. I was a

685
00:33:44,800 --> 00:33:48,680
Speaker 1: Quantus Platinum flat frequent flyer, and the novelty of traveling

686
00:33:48,720 --> 00:33:51,080
Speaker 1: war off many years ago. However, there are tons of

687
00:33:51,080 --> 00:33:53,520
Speaker 1: pursuits that cash up retarities can enjoy if they do

688
00:33:53,600 --> 00:33:57,400
Speaker 1: a little analysis. Thank you, Bruce. Very good piece of correspondence.

689
00:33:57,480 --> 00:34:00,360
Speaker 1: Very nice way to end the show. And that's something

690
00:34:00,400 --> 00:34:02,680
Speaker 1: I imagine we will come back to. I could give

691
00:34:02,720 --> 00:34:05,280
Speaker 1: you a piece of corresponds from about the Fire movement

692
00:34:05,360 --> 00:34:07,640
Speaker 1: every week if we wanted to, because people don't. It's

693
00:34:07,680 --> 00:34:09,480
Speaker 1: just captured people's imaginations.

694
00:34:09,480 --> 00:34:10,960
Speaker 2: Sally. That's no bad thing.

695
00:34:11,320 --> 00:34:14,080
Speaker 1: If it gets people's imaginations, gets them talking, gainst them thinking.

696
00:34:14,520 --> 00:34:19,040
Speaker 3: Yeah, thinking about financial independence too. I love that it's

697
00:34:19,160 --> 00:34:22,680
Speaker 3: you know, breaking free of your job, if you choose

698
00:34:22,719 --> 00:34:26,120
Speaker 3: to breaking you know, not having a mortgage to be shackled,

699
00:34:26,120 --> 00:34:29,120
Speaker 3: to having enough for your savings to be able to

700
00:34:29,120 --> 00:34:32,439
Speaker 3: cope with any kind of emergency. It's fantastic feeling.

701
00:34:32,880 --> 00:34:36,239
Speaker 1: Yes, of course, and we can't recall those stresses if

702
00:34:36,280 --> 00:34:39,360
Speaker 1: you've managed to climb out of that particular phase of life.

703
00:34:39,520 --> 00:34:42,920
Speaker 1: But it's something that everyone should aspire to. Okay, terrific folks.

704
00:34:43,080 --> 00:34:46,719
Speaker 1: Keep the emails coming. The money puzzle at the Australian

705
00:34:46,760 --> 00:34:50,160
Speaker 1: dot Com Dot You. Today's guest was Sally Tendal of cancer.

706
00:34:50,200 --> 00:34:52,000
Speaker 1: I thank you, Sally, really good as always, love you

707
00:34:52,040 --> 00:34:52,360
Speaker 1: to talk to.

708
00:34:52,360 --> 00:34:55,320
Speaker 3: You, Thank you for having me. James love being here.

709
00:34:55,520 --> 00:34:58,839
Speaker 1: And thanks too to Leah Samba GLU for producing today's show.

710
00:34:58,920 --> 00:34:59,520
Speaker 2: Talk to You Soon.

711
00:35:01,160 --> 00:35:06,840
Speaker 3: Really the fast sum the plant so