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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. Welcome aboard everybody.

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Speaker 1: I imagine you're galloping towards the end of the year.

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Speaker 1: Certainly I am, and so is the show. We have

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Speaker 1: a few episodes left. And also, of course, folks remember

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Speaker 1: that over the summer break we will be running the

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Speaker 1: series on the Outlook for twenty twenty five and we

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Speaker 1: will cover all aspects of what you need to know

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Speaker 1: next year with shares and ETF and property and super

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Speaker 1: It's a very good series. I'm able to tell you

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Speaker 1: that because we're halfway through recording it and look out

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Speaker 1: for that. Now today, I want to just talk about

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Speaker 1: I imagine looking back over this year, you've had a

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Speaker 1: couple of issues. I'm sure in your efforts to build

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Speaker 1: wealth and create a portfolio, create an investment portfolio for

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Speaker 1: you and for anyone else that is linked with you,

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Speaker 1: and it's the same for advisors. And I wanted to

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Speaker 1: talk to a regular guest on the show, Tim McKay

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Speaker 1: of Quantum Financial, about the key issues that's come up

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Speaker 1: for him and for advisors this year. And I imagine

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Speaker 1: that will give you some insights and useful pointers for

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Speaker 1: your own endeavors. How are you, Tim H.

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Speaker 2: Jones? Thank you very much for having me.

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Speaker 1: Lovely to have you on the show. So I don't

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Speaker 1: want to guess, right, I mean, I sent you some

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Speaker 1: notes where I guessed what derusions might be. But I'm

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Speaker 1: thinking for an advisor like yourself, just tell me about

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Speaker 1: how what are people A are people feeling about everything

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Speaker 1: as they come in the door. It's almost like it

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Speaker 1: is the touch of it, it's all too good to

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Speaker 1: be true. Is there an element of that in terms

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Speaker 1: of returns this year?

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Speaker 2: Potentially? I mean Trump two point zero is obviously loomed

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Speaker 2: large over markets throughout the year, even though he wasn't president,

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Speaker 2: in some ways it felt like he was. And his

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Speaker 2: action in November certainly put a rocket under US markets

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Speaker 2: and other markets followed suits. So that has been obviously

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Speaker 2: a key issue through the y plus falling interest rates

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Speaker 2: in the US and Europe, which again has helped support markets.

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Speaker 1: So you have these two enormous sort of thematic issues.

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Speaker 1: Which is a republican president coming in the US, A

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Speaker 1: republican president like quit knobs On, who's going to do.

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Speaker 1: Who's going to do all the things you would expect

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Speaker 1: a Republican president to do, deregulate car taxes, stimulate the market.

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Speaker 1: You wouldn't expect a Republican president necessarily to be procrypto

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Speaker 1: what they are. And also, as you say, just in

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Speaker 1: time for that, you have a sense that US rates

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Speaker 1: will fall, So these things, of course will really push

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Speaker 1: They have pushed markets higher. Is there a risk, as

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Speaker 1: there always is, that everyone's getting too excited too quickly?

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Speaker 2: Undoubtedly. I mean for the last two we've had what

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Speaker 2: the US has had the dollar returns. Is that Can

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Speaker 2: that keep going on forever? No? No, certainly, but there's

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Speaker 2: probably enough drivers for to keep going for you know,

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Speaker 2: probably another six twelve months at least, the optimism around

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Speaker 2: Trump coming in and he, as you said, deregulating lower taxes,

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Speaker 2: Those sorts of significant actions stimulate economic activity.

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Speaker 1: So if I did come into you and said, look,

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Speaker 1: it's great, and I'm delighted, and hey, gosh, I never

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Speaker 1: expected to get, you know, ten percent plus on my

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Speaker 1: Australian shar's total return, and I sure said I didn't

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Speaker 1: expect to get twenty on my US ones. Again, and

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Speaker 1: property has been direct property, that is, residential property has

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Speaker 1: been ticking along solidly. Everything else is going up. Crypto's

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Speaker 1: going through, the roof gold has been going up. My

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Speaker 1: alternative assets perhaps are going up, though I can't see

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Speaker 1: how because it's entirely opaque. I don't mean to be

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Speaker 1: cynical there, But tell me if I said all that

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Speaker 1: to you, what would you say? Would you say to

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Speaker 1: your would you say to clients? Look, this year market,

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Speaker 1: You just said that there. You can't expect it to

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Speaker 1: keep going. So what does somebody do in that? What

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Speaker 1: does someone do about that?

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Speaker 2: We encourage our clients to focus on ass allocation. So

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Speaker 2: if your target ass allocation is, say seventy thirty seventy

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Speaker 2: percent growth and thirty percent offensive assets. If because the

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Speaker 2: markets have gone up, which they have, it's changed your

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Speaker 2: portfolios changed to seventy five twenty five, then take some

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Speaker 2: of that money off the table, so rebalance back to

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Speaker 2: your target. Take some of that cream, and that way

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Speaker 2: sort of de risk your portfolio On an ongoing basis, do.

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Speaker 1: People find it hard to sell a share that's been

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Speaker 1: going great Psychologically?

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Speaker 2: Yes, for the same reason that they when markets fall,

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Speaker 2: they psychologically find it difficult to buy right. So by

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Speaker 2: having a very stringent approach and sticking to it, then

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Speaker 2: you take those emotions out of it. So yes, it

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Speaker 2: feels counterintuitive to be selling when it's high, but that

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Speaker 2: forces you to sell high, and then again when markets fall,

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Speaker 2: it forces you to buy low. So if you can

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Speaker 2: adopt that strategy and adhere to it, come hell or

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Speaker 2: high water, then you'll be better for it in the longer,

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Speaker 2: medium to longer term.

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Speaker 1: So in some ways it's easy to The easy part

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Speaker 1: is to sell. It's what you do with the It's

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Speaker 1: what you do with the money that you've raised. What

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Speaker 1: I know, we can't talk individual terms and everyone's different,

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Speaker 1: but very broadly speaking to our audience, which are active

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Speaker 1: investors in Australia of all ages. If someone was to

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Speaker 1: do that, where would you be looking to reallocate that money?

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Speaker 2: Well, in the defense, if it's going from growth to

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Speaker 2: the defensive, there's only a couple of places it can

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Speaker 2: go to. I mean, some people define hybrid's's defense. I

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Speaker 2: personally don't.

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Speaker 1: Do you mean, but hybrids aren't hope it's gone.

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Speaker 2: Well, exactly right. That was my point that they're being

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Speaker 2: phased out. They're not gone yet, but over the next

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Speaker 2: couple of years they will be phased out. So that's

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Speaker 2: an asset class, an Australian asset class that's disappearing cash. Yes,

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Speaker 2: it's quite attractive rates, but we know for a fact

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Speaker 2: that they're going to go down in the coming years.

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Speaker 2: So it might feel good now, but if you keep

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Speaker 2: it in cash for the next two or three years,

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Speaker 2: you'll probably go backwards. Potentially bonds, if we are in

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Speaker 2: a falling interest rate environment, then potentially bonds could give

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Speaker 2: a higher return than cash on that defensive portion of

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Speaker 2: the portfolio.

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Speaker 1: They're disappointed regularly, haven't they They have.

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Speaker 2: But interest rates have been going up, right, so in

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Speaker 2: recent years until recently when the FED dropped rates. In

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Speaker 2: a rising interest rate environment, bonds are not going to

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Speaker 2: do particularly well. But again, on the flip side, in

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Speaker 2: a falling interestrade environment, they can do better.

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Speaker 1: Right. Do you include bond ETFs in that yes? Okay, yeah?

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Speaker 1: Do you see them as a realistic proxy for actual

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Speaker 1: individual bonds?

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Speaker 2: Bond ETFs aren't necessarily as good as equity ETFs in

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Speaker 2: the sense that an equity ETF will reflect say it,

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Speaker 2: for instance, the S and P five hundred or the

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Speaker 2: ASX two hundred quite well, whereas a bond ETF will

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Speaker 2: only represent a portion of a bond index. So in

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Speaker 2: many ways it's much easier for an active bond manager

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Speaker 2: to outperform the bond index than it is an equity I.

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Speaker 1: Hear what you say. Would you explain to our listeners

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Speaker 1: why that is? Because most of them, I imagine, you know,

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Speaker 1: their first step into ETFs exchange traded funds or index

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Speaker 1: funds as we used to call them, would have been

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Speaker 1: in shares, and now they're probably thinking, oh, you know,

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Speaker 1: these are really good, broaden my diversify. I'm a portfolio.

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Speaker 1: I'll get some bonditfs. Could you explain to listeners why

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Speaker 1: they're not quite so but not as good basically a

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Speaker 1: proposal as a share ETF.

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Speaker 2: But they're good, They're just not as good a proxy

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Speaker 2: in the sense that the IX two hundred is made

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Speaker 2: up of two hundred stocks. So to mimic that with

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Speaker 2: an exchange threaded fund is quite easy. You know, basically

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Speaker 2: you need a spreadsheet. It's not done in a spreadshee.

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Speaker 1: But yeah, it's an incredibly elaborate spreadsheet with hundreds of

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Speaker 1: people employed to run.

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Speaker 2: It exactly right. Christmas Elves Wavering way. But a bond

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Speaker 2: ATF if you think of the bond universe either more

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Speaker 2: far more issuers. The US bond market, for instance, there's

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Speaker 2: thousands of issuers, but then even one issue will issue

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Speaker 2: bonds a different times for different maturities, right, so there's

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Speaker 2: not one. The universe is so much greater. So for

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Speaker 2: a bond ETF they will take a portion of those bonds.

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Speaker 2: They can't replicate the entire universe, and so there will

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Speaker 2: be good bonds in there that they miss out on

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Speaker 2: by definition because they just cannot capture the entire universe.

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Speaker 2: So hence my point that active bond managers have more

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Speaker 2: scope to outperform their index.

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Speaker 1: Because there's more price discrepancies in our attractation, there's more opportunity,

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Speaker 1: more opportunity exactly to pick.

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Speaker 2: But as an individual investor, potentially a bond ETF is

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Speaker 2: better than just buying one or two bonds yourself. At

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Speaker 2: least you get a far degree more diversification at a

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Speaker 2: low cost.

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Speaker 1: And being honest about most Australian investors', retail investors, including

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Speaker 1: listeners to this show, would never have bought bonds anyway.

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Speaker 2: No, it's a cultural thing. In the US, they do

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Speaker 2: buy bonds in the US and smaller in smaller lots,

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Speaker 2: we don't have that cultural sort of approach to having

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Speaker 2: direct bonds in your portfolio.

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Speaker 1: Apart from cash and bonds or bondiefs. What else might

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Speaker 1: someone look at?

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Speaker 2: Is there well, term deposits, but I mean that's a

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Speaker 2: cash proxy. I mean, yeah, you might want to look

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Speaker 2: if your view is that injurest rights are going to

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Speaker 2: fall in the next six to twelve months in Australia

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Speaker 2: as the ABBI feels like it's getting inflation under control,

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Speaker 2: then perhaps locking in money for six to twelve to

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Speaker 2: eighteen months maybe a win if rights are going to.

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Speaker 1: Fall, yes, okay, right, and of course the bank's move.

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Speaker 1: The thing about this, listeners, is the banks move faster

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Speaker 1: than you'll move. Just as you think, just as you think, gosh,

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Speaker 1: I might lock in that term deposit, someone in the

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Speaker 1: bank has already dropped the race in my experience anyway, Yeah, okay,

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Speaker 1: very good. Now on as an advisor again, and I

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Speaker 1: imagine you had a lot of people, not a lot

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Speaker 1: of people, but I imagine you had a significant number

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Speaker 1: of people in all sorts of angst about the potential

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Speaker 1: what seemed at one stage, like the for sure arrival

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Speaker 1: of a new super tax, which was to kick in

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Speaker 1: at the three million level, which was meant to be

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Speaker 1: another fifteen percent on top of the fifteen percent youupee

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Speaker 1: if you're over one point nine million in assets, that

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Speaker 1: is the earnings on assets over that number. One of

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Speaker 1: the things that that also had was a plan to

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Speaker 1: tax on realized games, which was daft, and everyone knew

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Speaker 1: it was daft to mention ghastly and how they might

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Speaker 1: actually practically do it. But here's a million. The other

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Speaker 1: question is that gone or will they try again?

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Speaker 2: In some ways, I liken it to waiting for Gotto,

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Speaker 2: the play where everyone's sitting around waiting for gotto, and

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Speaker 2: Gotto doesn't seem to ever turn up. This tax might

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Speaker 2: turn up ten yes and no. It didn't get passed.

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Speaker 2: It got passed by the lower House, it didn't get

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Speaker 2: passed by the Senate, and that has that has closed

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Speaker 2: for the year now, so their ability to get that

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Speaker 2: past has gone for twenty twenty four. They do have

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Speaker 2: the potential ability in February to pass it, but their

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Speaker 2: focus will more than likely shift to the election, not

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Speaker 2: horse trading with the cross benches over a policy which

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Speaker 2: is probably not one of their high priorities, so it's

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Speaker 2: probably buried but not dead. It remains on the statutes

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Speaker 2: in the sense that it's still in their budget, so

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Speaker 2: they're still projecting the revenues from it, so they're sort

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Speaker 2: of being optimistic. It's still Labor Party policy, and if

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Speaker 2: they win the election, it will probably come back onto

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Speaker 2: the agenda. So there's a lot of ifs in there.

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Speaker 2: But again, if they do win the election, that also

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Speaker 2: presupposes that they control the Senate again, so they could

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Speaker 2: be forced back into the same situation they are now.

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Speaker 1: Yes, that's a very practical observation, Yes, of course, but

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Speaker 1: they could go to the election with it. It could

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Speaker 1: be a number of six hundred and sixty unders.

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Speaker 2: And they could claim a mandate. But then the crossbenches

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Speaker 2: could say the exact same thing we opposed. It went

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Speaker 2: to the election with an opposition to this, and so

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Speaker 2: we have the exact opposite mandate to negotiate in good

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Speaker 2: faith about the things we objected to, being the lack

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Speaker 2: of indexation, being the taxation on unrealized capital gains.

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Speaker 1: Yeah, okay, so I think folks, you can put it

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Speaker 1: in the bottom drawer for the moment because what the

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Speaker 1: government is doing. But don't assume it's gone. I certainly

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Speaker 1: don't assume that new taxes and super are gone because

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Speaker 1: the system is so fabulously rich now that it is

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Speaker 1: a revenue potential revenue earner for any government and will

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Speaker 1: always continue to be so for governments of either stripe.

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Speaker 1: By the way, either stripe and it was the Coalition

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Speaker 1: that brought in the original taxing of super at one

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Speaker 1: point six yes APRO, which was at Morrison government. Okay,

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Speaker 1: take a short break, we'll be back in a moment.

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Speaker 1: Hello and welcome back to The Australian's Money Puzzle podcast.

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

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Speaker 1: talking to Tim McKay of Quantum Financial Advisor. I'm sure

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Speaker 1: many of you know Tim. He is quite a high

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Speaker 1: profile financial advisor, very experienced financial advisor. As I've mentioned

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Speaker 1: on the show before. His sister is a financial advisor

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Speaker 1: and his dad was a financial advisor or second generation

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Speaker 1: financial advisor. We haven't had any of them on the show, Tim,

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Speaker 1: I wanted to ask you about one of the things

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Speaker 1: I imagine people have been bringing up with you, or

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Speaker 1: if they haven't you've been bringing up with them. Is

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Speaker 1: the part that, hey, you're probably paying less tax than

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Speaker 1: you were. What are your plans for it? Did you

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Speaker 1: do anything about it? Because everybody is and some that

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Speaker 1: means you're eight it means you're paying less tax, and

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Speaker 1: b it means tax effective strategies mightn't be as effective

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Speaker 1: because you weren't paying as much tax as you were.

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Speaker 1: Is there anything that we're worth telling listeners about that?

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Speaker 1: Even still because it was still only six months into.

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Speaker 2: It, ye hundred seid I mean, so reminded to listeners.

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Speaker 2: On the first of July the new tax rates came in,

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Speaker 2: the tax cuts across the board. For someone on one

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Speaker 2: hundred thousand dollars, they effectively had a tax saving of

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Speaker 2: just over two thousand dollars a year, which if you

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Speaker 2: equate that to a weekly basis, it's just forty two dollars.

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Speaker 2: So for me, a man, if I had haircuts, it'd

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Speaker 2: be basically a haircut sort of thing. So it's not

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Speaker 2: the largest sum in the world, but my anecdotally and

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Speaker 2: speaking to clients and with regards to their children, most

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Speaker 2: of that money has gone to in a cost of

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Speaker 2: living crisis, has gone to supporting their lifestyle. Most people

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Speaker 2: haven't saved it or invested it. They literally have just

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Speaker 2: used it to prop up their ongoing expenses and inflection.

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Speaker 1: In a way, it says something of a cushion against

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Speaker 1: three three percent infleation from most.

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Speaker 2: People exactly, so supporting so basically treading water.

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Speaker 1: So yeah, to keep the exact same spending power as

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Speaker 1: you had a year ago, it helped.

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Speaker 2: Yeah, and to be honest, it probably stimulated economic growth

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Speaker 2: a little bit as well. So if people are spending it,

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Speaker 2: then it helps the economy.

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Speaker 1: Is there's something that you found yourself continually seeing to

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Speaker 1: tanus this year that is worth telling our audience in

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Speaker 1: terms of opportunities that they may have missed or dangers

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Speaker 1: that they are facing.

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Speaker 2: Two things. A for the last two years, we've had

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Speaker 2: higher US exposure than Australian exposure on our equities portfolios,

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Speaker 2: and that has put our clients in a very good position.

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Speaker 2: Trump is coming in, we know that in January he's

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Speaker 2: being inaugurated. If you believe in the American exceptionalism sort

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Speaker 2: of that sense that America first, then he will implement

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Speaker 2: policies potentially that will protect those companies even more to

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Speaker 2: the detriment of Europe to the detriment of China detriment

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Speaker 2: of Australia. So one thing is to just focus on

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Speaker 2: how much Australian exposure have versus the US. The other

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Speaker 2: key thing to note is try not to panic when

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Speaker 2: geopolitical events happen. If you look at this year, we

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Speaker 2: had some remarkable things happened. We had martial law declared

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Speaker 2: overnight in South Korea.

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Speaker 1: For six hours.

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Speaker 2: Yeah, we had Syria overthrow its government. We had Israel

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Speaker 2: firing missiles at Iran and Iran firing missiles at Israel.

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Speaker 2: In each of those three absolutely bizarre cases, the markets

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Speaker 2: did nothing, if any, and they went up.

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Speaker 1: There was no response, There was no negative response on

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Speaker 1: the market.

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Speaker 2: So next time next year there will be out of

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Speaker 2: the blue events that happen. Don't immediately panic about your investments.

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Speaker 1: It sounds like you're also saying it's not too late

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Speaker 1: to lift your exposure to US series.

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Speaker 2: Well, todate the US. A lot of that growth has

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Speaker 2: come from those magnificent seven tech stocks, right, So the

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Speaker 2: hope of the belief is that growth will then spread

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Speaker 2: across the other stocks. So perhaps don't overindulge in the

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Speaker 2: tech exposure given how well it's done. But certainly the

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Speaker 2: rest of the US economy can probably keep growing quite

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Speaker 2: well under this new deregulated Trump environment.

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Speaker 1: I saw even the most not even the conservatives. The

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Speaker 1: consensus estimates on the six are basically zero plus dividend yield.

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Speaker 1: But the consensus estimate in the US is eight percent.

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Speaker 1: Would only be about a third of what they're going

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Speaker 1: to rump home with this year. But eight percent they

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Speaker 1: have a lotter than nothing.

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Speaker 2: Yeah, exactly. And if you believe that Trump is going

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Speaker 2: to come down hard on China, then that will have

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Speaker 2: an indirect flow through to Australia as well.

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Speaker 1: Right, yeah, right, And in your clients what they normally

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Speaker 1: would it be through passive ETFs are active funds that

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Speaker 1: they go through there?

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Speaker 2: Yeah, both. Well, I've been on a journey. I used

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Speaker 2: to be a seal side analyst for Deutsch and Ubs

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Speaker 2: in London, New York, and so I've come from a

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Speaker 2: completely active background and gone one ady to focusing on

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Speaker 2: passive and asset allocation. So that's been a journey for me.

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Speaker 2: And so most of our clients are invested in you know,

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Speaker 2: broad based ATF's US Australian European unlike.

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Speaker 1: It's funny. I won't say who, but I was reading

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Speaker 1: this morning about a well known important fund manager fund

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Speaker 1: that had fond of funds that had announced that they're

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Speaker 1: going with a certain small to mid cap fund manager.

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Speaker 1: And this particular fund manager was delighted obviously with this,

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Speaker 1: and was announcing this and telling everybody and putting out

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Speaker 1: press statements and had mentioned, you know, also in passing

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Speaker 1: how much what their percentage return was on in their

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Speaker 1: area of activity. And I looked and I said, that's

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Speaker 1: really good. And then I said, yeah, it's more. That's

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Speaker 1: the same as the ETF in the same space. I mean,

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Speaker 1: it's cruel. But you've got to be not just good.

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Speaker 1: You've got to be like dynamite, I think inactive now

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Speaker 1: to be passive.

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Speaker 2: It's even more than that. As an investor, you have

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Speaker 2: to be a brilliant fund manager picker to pick which

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Speaker 2: of those fund managers going to be that a performer.

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Speaker 2: So it almost doubles or reduces your odds by half.

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Speaker 1: How do you think they how do you think you

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Speaker 1: can do that? Is it old people?

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Speaker 2: I think it used to be. Increasingly we're saying with

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Speaker 2: the fall of you know, some of these previously great houses.

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Speaker 2: Perhaps we're starting to see that, you know, they didn't

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Speaker 2: wear the Emperor, didn't wear the clothes that we thought

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Speaker 2: they did.

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Speaker 1: Well, maybe they were. I mean, I think we can

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Speaker 1: name them. I mean, obviously Magellan had Haimish Douglas, who

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Speaker 1: was a marvelous front person for that group, and in

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Speaker 1: its day Platinum At Karen Nelsen, who was a marvelous

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Speaker 1: front person. But I'm not really talking about that where

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Speaker 1: you have a charismatic sort of leader of a fond.

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Speaker 1: I mean, I mean, I think it's teams of spot

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Speaker 1: stop pickers. And there are people who can do it,

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Speaker 1: and there are people who can do it year after year.

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Speaker 1: But how do you find out about them?

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Speaker 2: Well, I suppose you focus on the areas where you

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Speaker 2: think that they can outperform. So, for instance, small caps.

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Speaker 2: You know, again it's hard to mimic an ATF for

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Speaker 2: small caps, so there is a.

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Speaker 1: So you're saying small caps has more chance of a

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Speaker 1: better active manager, an active Andrew has more chance in

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Speaker 1: small caps, just like we were saying about the bonds.

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Speaker 2: And emerging markets is another area where he excentraated funds

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Speaker 2: can't mimic the entire universe, and so there is the

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Speaker 2: ability of active managers to outperform and do so quite well.

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Speaker 1: Yes, that's a very good point. Okay, keep that in mind, folks,

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Speaker 1: and I would tend to completely agree with that. And

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Speaker 1: from the figures I see that we're always saying ETFs

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Speaker 1: are good, and they are, of course they are. But

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Speaker 1: there's always individual shares that are going to beat the

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Speaker 1: daylights out of your ETF and funds, and the likelihood

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Speaker 1: is that those funds will be in areas like Australian

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Speaker 1: small caps, global small caps, emerging markets, and to an extent,

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Speaker 1: bond markets for the very reason that Tim outlined at

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Speaker 1: there a few moments ago. Okay, I think, just while

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Speaker 1: we have you before we go to questions, is there

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Speaker 1: an area of investing that you find that your clients

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Speaker 1: are resistant to and should consider crypto being the obvious

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Speaker 1: one because it is now well it is now the

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Speaker 1: us SEC chief investment is. I mean they're talking about

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Speaker 1: not just kind of ticking the boxes and saying cryptos okay,

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Speaker 1: they're talking about putting it into your strategic reserves and everything.

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Speaker 1: Is it time to is it time to look again

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Speaker 1: with new eyes at this what we have to call

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Speaker 1: an acid class.

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Speaker 2: Well, for younger tech savvy investors, you know a fair

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Speaker 2: few of them already have direct exposure to that. I

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Speaker 2: wouldn't recommend most older, more traditional investors sort of go

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Speaker 2: out and set up a tether account or a bitcoin account.

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Speaker 1: No, but what we have all we have all ages listening,

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Speaker 1: and I will say that the correspondence, I guess, aren't

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Speaker 1: crypto goes it escalates with the price. Yes, when it

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Speaker 1: goes down. Guess what, we don't talk about it as much.

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Speaker 1: But so I go into you, right, and I said,

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Speaker 1: and you've said to me, James, you know crypto, you

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Speaker 1: don't understand it, blah blah blah, you're skeptical about it.

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Speaker 1: So you know. But now I go back into you

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Speaker 1: and I say, okay, yeah, that the Titans of Wars

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Speaker 1: tuots are interested in this. The US SEC Commissioner is

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Speaker 1: pro crypto, so is the President. Should I have it?

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Speaker 2: Well, I suppose in some ways it's like gold, right,

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Speaker 2: So my.

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Speaker 1: Problem I don't think it's like gold. Actually, to be honest,

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Speaker 1: I don't think that because gold, I think is non correlated,

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Speaker 1: and I think bitcoin is correlated.

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Speaker 2: Discuss well, the way I like in it to gold

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Speaker 2: is the sense that neither of them throw off yield. Right,

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Speaker 2: there is no India. Yeah, So traditionally, as a cell

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Speaker 2: side analyst, we'd build valuation models and it would be

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Speaker 2: based on the yield these things would throw off. So

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Speaker 2: if there's no yield, how the hell do you value it?

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Speaker 2: So that's my starting point that that's why I liken

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Speaker 2: it to gold. Having said that, there is obviously an

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Speaker 2: flight to safety for both of those investments, and I

434
00:22:42,960 --> 00:22:45,760
Speaker 2: think a lot of the people who invest in cryptocurrency

435
00:22:45,760 --> 00:22:48,679
Speaker 2: today if it didn't exist, would be invested in gold

436
00:22:48,760 --> 00:22:50,760
Speaker 2: the similar sort of mind frame.

437
00:22:50,920 --> 00:22:54,560
Speaker 1: And you're thinking that that is generational demographic.

438
00:22:55,240 --> 00:22:57,000
Speaker 2: And so if if crypto didn't exist, those people would

439
00:22:57,000 --> 00:23:00,639
Speaker 2: probably be investing in gold. So you can get exposure

440
00:23:00,680 --> 00:23:02,199
Speaker 2: to it via ETFs. I hate to say it, but

441
00:23:02,200 --> 00:23:05,920
Speaker 2: again exchange traded funds here now launched in Australia actively

442
00:23:05,960 --> 00:23:09,760
Speaker 2: on the market. They will hold the bitcoin, you know,

443
00:23:09,760 --> 00:23:12,159
Speaker 2: they'll have a custodium that looks after it. And so

444
00:23:12,440 --> 00:23:14,600
Speaker 2: if you are going to go down that route, that

445
00:23:14,680 --> 00:23:18,679
Speaker 2: would probably be the safest and less tech exposed to

446
00:23:18,720 --> 00:23:22,920
Speaker 2: hacking and the like routes. So for many of our

447
00:23:22,920 --> 00:23:25,639
Speaker 2: clients who operate through a financial plan. You have one

448
00:23:25,680 --> 00:23:28,320
Speaker 2: of those large organizations, that firm will not allow it.

449
00:23:28,320 --> 00:23:30,440
Speaker 2: Their mandate will not allow those people to be put

450
00:23:30,480 --> 00:23:35,560
Speaker 2: into those investments. Yes, but they might not have that

451
00:23:35,640 --> 00:23:38,399
Speaker 2: ETF on their allowed list of approved products, right, so

452
00:23:38,480 --> 00:23:41,399
Speaker 2: it won't be an open gam But of all ETFs allowed,

453
00:23:41,480 --> 00:23:45,480
Speaker 2: so you'll probably find that retail investors are bigger users

454
00:23:45,680 --> 00:23:49,200
Speaker 2: who directly investors than through the large institutions.

455
00:23:49,480 --> 00:23:52,760
Speaker 1: You can put them in your et in your SMSF.

456
00:23:53,560 --> 00:23:57,159
Speaker 2: Depending on your investment strategy if it allows it or not,

457
00:23:57,240 --> 00:23:58,080
Speaker 2: So check that first.

458
00:23:58,080 --> 00:24:01,240
Speaker 1: If it allows an ETF, then it surely allows an

459
00:24:01,240 --> 00:24:02,080
Speaker 1: ETF on crypto.

460
00:24:03,119 --> 00:24:05,760
Speaker 2: No, it depends on the asset class, right, so your

461
00:24:05,800 --> 00:24:08,920
Speaker 2: investment strategy may be written around asset classes rather than

462
00:24:09,480 --> 00:24:12,439
Speaker 2: investment types. For instance, you can get an ETF that

463
00:24:12,440 --> 00:24:13,879
Speaker 2: has one stock in it. You could have in VideA

464
00:24:13,960 --> 00:24:17,200
Speaker 2: in three times leveraged in it. So not all ETFs

465
00:24:17,200 --> 00:24:17,840
Speaker 2: are vanilla.

466
00:24:18,280 --> 00:24:20,520
Speaker 1: Sure I'm talking about.

467
00:24:19,880 --> 00:24:23,520
Speaker 2: Yes, but again I wouldn't describe a cryptocurrency ETF as

468
00:24:23,520 --> 00:24:26,320
Speaker 2: a vanilla ETF. Maybe in ten fifteen years time it

469
00:24:26,359 --> 00:24:28,840
Speaker 2: may be, but at the moment there's still new cabs

470
00:24:28,880 --> 00:24:32,840
Speaker 2: off the rank increasingly accepted from our perspective. Some of

471
00:24:32,840 --> 00:24:35,120
Speaker 2: our younger clients we do it on execution, so they

472
00:24:35,160 --> 00:24:37,560
Speaker 2: want to get that exposure, so we'll facilitate that, but

473
00:24:37,600 --> 00:24:40,080
Speaker 2: we're not actively recommending.

474
00:24:39,600 --> 00:24:44,480
Speaker 1: That you're in the camph You see, if you want

475
00:24:44,520 --> 00:24:46,360
Speaker 1: to do it, we won't stop you. But you're enough

476
00:24:46,600 --> 00:24:47,119
Speaker 1: it will help you.

477
00:24:47,840 --> 00:24:49,400
Speaker 2: On instruction, yes, yeah, under.

478
00:24:49,240 --> 00:24:53,000
Speaker 1: Instruction Yeah, okay, very interesting. Under instruction you see, they're

479
00:24:53,040 --> 00:24:55,879
Speaker 1: the important words there, folks. Okay, we'll take a break

480
00:24:55,920 --> 00:25:00,520
Speaker 1: and we'd have some questions from Lisa and Imran and

481
00:25:00,520 --> 00:25:04,719
Speaker 1: and Lofty Big Chopper whoever Lofty Big Chopper is. Okay,

482
00:25:04,760 --> 00:25:20,240
Speaker 1: back in a moment. Hello, Welcome back to The Australian's

483
00:25:20,240 --> 00:25:23,280
Speaker 1: Money Puzzle podcast. I'm James Kirby Wells edit show at

484
00:25:23,320 --> 00:25:26,240
Speaker 1: The Australian. I'm talking to Tim McKay of Quantum Financial.

485
00:25:26,720 --> 00:25:30,199
Speaker 1: Tim Acourse is financial advisor, well known financial advisor's been

486
00:25:30,200 --> 00:25:32,520
Speaker 1: on the show several times and delighted to have him

487
00:25:32,520 --> 00:25:35,800
Speaker 1: on the show today. Okay, what we might do? Why

488
00:25:35,800 --> 00:25:38,720
Speaker 1: don't we just read them out alternately if you like,

489
00:25:38,800 --> 00:25:42,639
Speaker 1: And I'll read the first one, which is from Lisa. Hello, Lisa,

490
00:25:43,119 --> 00:25:46,520
Speaker 1: I will be looking to invest outside of Super until

491
00:25:46,640 --> 00:25:50,000
Speaker 1: twenty twenty seven. This is a very precise reason for this,

492
00:25:50,040 --> 00:25:52,639
Speaker 1: which Lisa explained. As I mentioned on the last show,

493
00:25:53,040 --> 00:25:55,800
Speaker 1: we have some very long questions which I have to edit,

494
00:25:56,119 --> 00:26:00,080
Speaker 1: so this is just a distillation of Lisa's issue. There

495
00:26:00,119 --> 00:26:02,000
Speaker 1: we go again. I will be looking to invest outside

496
00:26:02,040 --> 00:26:04,720
Speaker 1: of Super until twenty twenty seven, when I can again

497
00:26:04,760 --> 00:26:07,200
Speaker 1: contribute to my SUPER account. I am not in need

498
00:26:07,240 --> 00:26:09,120
Speaker 1: of an income from this amount, as I am still

499
00:26:09,200 --> 00:26:14,480
Speaker 1: able to draw down on an adequate income stream. After

500
00:26:14,520 --> 00:26:18,400
Speaker 1: a recent podcast outlining the history of share market corrections

501
00:26:18,440 --> 00:26:21,120
Speaker 1: and crashes, my gout feeling is to put the cash

502
00:26:21,119 --> 00:26:24,000
Speaker 1: into a savings account, and she mentions one from a

503
00:26:24,040 --> 00:26:26,560
Speaker 1: regional bank where she says she can earn four point

504
00:26:26,800 --> 00:26:31,240
Speaker 1: eight five percent monthly with no terms or conditions. Lisa,

505
00:26:31,400 --> 00:26:34,400
Speaker 1: I would love to know if that has no terms

506
00:26:34,480 --> 00:26:38,679
Speaker 1: or conditions, because that would there would be would be

507
00:26:38,720 --> 00:26:43,400
Speaker 1: a new one for me. But in any event, Lisa's question,

508
00:26:43,480 --> 00:26:46,400
Speaker 1: obviously is having heard the history of crashes and corrections,

509
00:26:46,400 --> 00:26:50,840
Speaker 1: she thinks maybe she should put more into cash. This

510
00:26:50,960 --> 00:26:54,600
Speaker 1: has never advised its information only maybe if you didn't

511
00:26:54,600 --> 00:26:57,879
Speaker 1: know the history of the point of that show was

512
00:26:57,920 --> 00:27:01,439
Speaker 1: to tell people who hadn't recalled experience to crash that

513
00:27:01,520 --> 00:27:05,240
Speaker 1: they happen, and not only can they happen like COVID

514
00:27:05,280 --> 00:27:08,440
Speaker 1: where it's short and sharp, but they can happen over

515
00:27:08,520 --> 00:27:13,080
Speaker 1: an agonizingly long period of time. GFC two or seven

516
00:27:13,080 --> 00:27:15,240
Speaker 1: to two or nine, where our market fell fifty percent,

517
00:27:15,280 --> 00:27:17,439
Speaker 1: but it didn't do it fast. It did it in

518
00:27:17,480 --> 00:27:21,000
Speaker 1: a painfully glacial fashion over two years, and when we

519
00:27:21,080 --> 00:27:23,000
Speaker 1: hit the bottom, we didn't know it hit the bottom either.

520
00:27:23,520 --> 00:27:26,119
Speaker 1: So that was the reason with with Alex Muffett that

521
00:27:26,200 --> 00:27:28,320
Speaker 1: we did that show on the anniversary of the Great

522
00:27:28,400 --> 00:27:30,919
Speaker 1: Crash of eighty seven. But what do you think of

523
00:27:30,960 --> 00:27:34,040
Speaker 1: Lisa's disposition to say, well, I've only got a two

524
00:27:34,119 --> 00:27:36,560
Speaker 1: year timeframe, I have a certain amount of money. I mean,

525
00:27:36,600 --> 00:27:38,320
Speaker 1: you shouldn't do anything. I should put it in cash.

526
00:27:38,560 --> 00:27:41,520
Speaker 2: It's a valid position. But to counter it, I would say,

527
00:27:42,040 --> 00:27:43,720
Speaker 2: over the next two year depends on you whent in

528
00:27:43,760 --> 00:27:47,040
Speaker 2: twenty twenty seven. If it's midyear, when the first of

529
00:27:47,119 --> 00:27:49,359
Speaker 2: July twenty twenty seven, that's two and a half years away.

530
00:27:50,000 --> 00:27:52,320
Speaker 2: Markets will more than likely be up over the next

531
00:27:52,359 --> 00:27:56,440
Speaker 2: two and a half years, whereas we know interest rates

532
00:27:56,440 --> 00:27:58,040
Speaker 2: will likely be down over the next two and a

533
00:27:58,080 --> 00:28:00,239
Speaker 2: half years, right, so four point eight five percent day

534
00:28:00,640 --> 00:28:04,160
Speaker 2: potentially dropping by twenty five BIPs, you know, next quarter after,

535
00:28:04,480 --> 00:28:06,879
Speaker 2: So that four point eight five certainly is not locked

536
00:28:06,920 --> 00:28:11,320
Speaker 2: in over that period. We know if inflation is sort

537
00:28:11,320 --> 00:28:13,280
Speaker 2: of coming under control and interest rates will come down

538
00:28:13,320 --> 00:28:17,760
Speaker 2: and potentially significantly, so potentially that could start going backwards

539
00:28:17,840 --> 00:28:21,119
Speaker 2: at some stage over that and a half year period. Also,

540
00:28:21,160 --> 00:28:23,680
Speaker 2: it's not binary, it's not like that money either needs

541
00:28:23,720 --> 00:28:25,640
Speaker 2: to be in cash or to market. You could put

542
00:28:25,640 --> 00:28:28,160
Speaker 2: a portion of it into the market over the next

543
00:28:28,160 --> 00:28:31,439
Speaker 2: two years and keep some in that cash earning interest.

544
00:28:31,480 --> 00:28:33,679
Speaker 2: So that's not the worst idea in the world. And

545
00:28:33,720 --> 00:28:37,800
Speaker 2: the other point to reiterate is your point about buying

546
00:28:38,000 --> 00:28:41,600
Speaker 2: into the dip. It sounds rational and sounds so sensible,

547
00:28:42,000 --> 00:28:45,240
Speaker 2: But when the market falls, that is the hardest time

548
00:28:45,400 --> 00:28:48,720
Speaker 2: to actually make that emotional decision to invest it, because

549
00:28:48,720 --> 00:28:49,840
Speaker 2: the fear at that time.

550
00:28:49,920 --> 00:28:50,920
Speaker 1: Is that it keep falling.

551
00:28:51,000 --> 00:28:53,960
Speaker 2: It's palpable, yeah, utually, and to make that to remove

552
00:28:53,960 --> 00:28:56,200
Speaker 2: yourself from that fear and just to step around it

553
00:28:56,320 --> 00:28:59,040
Speaker 2: or step over it and make that decision is so hard.

554
00:28:59,320 --> 00:29:01,800
Speaker 2: So it sounds like a wonderful plan, but it's so

555
00:29:01,840 --> 00:29:04,560
Speaker 2: hard to execute when emotions come into the story.

556
00:29:04,680 --> 00:29:07,880
Speaker 1: Okay, very interesting and to Lisa and all the Lisa's

557
00:29:07,880 --> 00:29:14,920
Speaker 1: out there, diversify. It's always a useful way to approach

558
00:29:15,400 --> 00:29:19,480
Speaker 1: any investment amount, be it bigger, small, long term or

559
00:29:19,480 --> 00:29:23,160
Speaker 1: short term. I don't think that's that's individual advice. I

560
00:29:23,200 --> 00:29:27,880
Speaker 1: think that's very instructive general observation and information for everybody. Okay, Imran,

561
00:29:29,240 --> 00:29:31,440
Speaker 1: a financial planner on one of your episodes mentioned that

562
00:29:31,520 --> 00:29:36,240
Speaker 1: some super funds behind the scenes link spouse accounts to

563
00:29:36,360 --> 00:29:40,280
Speaker 1: reduce fees if the combined balance was substantial enough. In

564
00:29:40,320 --> 00:29:42,880
Speaker 1: other words, as a couple, whatever they've got, you know,

565
00:29:42,920 --> 00:29:45,400
Speaker 1: two hundred grand each, suddenly it becomes four hundred grand.

566
00:29:45,400 --> 00:29:48,760
Speaker 1: Their fees drop. But IMA's experience with his industry fund

567
00:29:48,920 --> 00:29:52,400
Speaker 1: and he names UNI super and they had no idea

568
00:29:52,600 --> 00:29:57,920
Speaker 1: about this, and he's wondering what funds do it. Okay, Imran,

569
00:29:58,000 --> 00:30:00,479
Speaker 1: I'll have to come back. You really have to do this.

570
00:30:00,600 --> 00:30:03,280
Speaker 1: But I couldn't immediately record who said it? Tim, do

571
00:30:03,320 --> 00:30:04,200
Speaker 1: you know anything about that?

572
00:30:05,160 --> 00:30:08,440
Speaker 2: Industry funds typically don't offer this service. They have low fees.

573
00:30:08,520 --> 00:30:09,280
Speaker 1: It's not typical.

574
00:30:09,440 --> 00:30:12,240
Speaker 2: No, they don't. Having said that, retail fund Some retail

575
00:30:12,280 --> 00:30:15,240
Speaker 2: funds do so. For instance, Colonial certainly offers it. So

576
00:30:15,400 --> 00:30:19,320
Speaker 2: if you've got you know, a couple with various accounts

577
00:30:19,440 --> 00:30:21,800
Speaker 2: or with their kids, you can link that family group

578
00:30:21,960 --> 00:30:25,320
Speaker 2: and reduce your fees. So that optionality is there, But

579
00:30:25,400 --> 00:30:26,480
Speaker 2: not across the board.

580
00:30:27,440 --> 00:30:30,120
Speaker 1: Why don't they all do it? Is it too hard?

581
00:30:31,080 --> 00:30:35,480
Speaker 2: Well? Industry funds evolved out of employment arrangements. You got

582
00:30:35,520 --> 00:30:37,920
Speaker 2: into Australians because you worked in a particular industry sort

583
00:30:37,920 --> 00:30:41,280
Speaker 2: of thing, so they were never family focused in that sense,

584
00:30:41,320 --> 00:30:44,880
Speaker 2: whereas retail funds made more of an effort to sort

585
00:30:44,880 --> 00:30:46,400
Speaker 2: of serve client groups.

586
00:30:46,880 --> 00:30:48,320
Speaker 1: Do you think there's minimums on that?

587
00:30:48,520 --> 00:30:50,760
Speaker 2: Yes, there is that one hundred percent, so that it's

588
00:30:50,760 --> 00:30:53,160
Speaker 2: an encouragement to put more towards that platform. So it's

589
00:30:53,160 --> 00:30:54,160
Speaker 2: linked to fun is there?

590
00:30:54,160 --> 00:30:57,760
Speaker 1: Amum, Yeah, you don't know what it might be the tope. Okay,

591
00:30:57,920 --> 00:30:59,560
Speaker 1: very good answer to thank you for that, and I

592
00:30:59,560 --> 00:31:02,080
Speaker 1: imagine is you've got to answer their m round from

593
00:31:02,080 --> 00:31:03,960
Speaker 1: Tim from me, which was very good. O.

594
00:31:04,080 --> 00:31:06,720
Speaker 2: Key listener Carl has a wonderful question as well, So

595
00:31:06,720 --> 00:31:09,600
Speaker 2: I'll read that one out. Whenever I buy or sell shares,

596
00:31:10,000 --> 00:31:13,000
Speaker 2: I still receive by post a new holding statement in

597
00:31:13,120 --> 00:31:16,840
Speaker 2: hard copy format. These are dispatched in the month following

598
00:31:16,880 --> 00:31:21,520
Speaker 2: the relevant share transactions. I cannot see the purpose of

599
00:31:21,600 --> 00:31:24,800
Speaker 2: these pieces of paper. They are not proof of current

600
00:31:24,800 --> 00:31:27,680
Speaker 2: share ownership, as there may have been further share trades

601
00:31:27,840 --> 00:31:30,160
Speaker 2: between the last end of month's statement cutoff and the

602
00:31:30,200 --> 00:31:35,480
Speaker 2: current day. Have not computerized share registries accessible online, made

603
00:31:35,480 --> 00:31:40,000
Speaker 2: shareholding statements redundant, just like hard copy bank statements.

604
00:31:40,000 --> 00:31:42,440
Speaker 1: Good on your car. You really want to help those

605
00:31:42,440 --> 00:31:45,440
Speaker 1: broker save money. It's really funny though, it's so true.

606
00:31:45,480 --> 00:31:46,960
Speaker 1: I mean I get them too. They come in on

607
00:31:46,960 --> 00:31:48,680
Speaker 1: the post I look at them, Oh this post Oh yeah,

608
00:31:48,680 --> 00:31:50,840
Speaker 1: well I know that, you know I put them in

609
00:31:50,880 --> 00:31:51,120
Speaker 1: the bin.

610
00:31:51,560 --> 00:31:54,000
Speaker 2: Yeah, it does my head into I mean, if you

611
00:31:54,000 --> 00:31:55,440
Speaker 2: think of the cost of the postage in the printing.

612
00:31:55,520 --> 00:31:57,800
Speaker 2: But I'd put one caveat on that. There are some

613
00:31:58,040 --> 00:32:01,760
Speaker 2: older investors who perhaps not as tech savy, who, if

614
00:32:01,800 --> 00:32:04,080
Speaker 2: you think about it, you place your instructions or your

615
00:32:04,160 --> 00:32:06,640
Speaker 2: orders through your broker. This is coming from a third party.

616
00:32:06,680 --> 00:32:08,560
Speaker 2: This isn't coming from your broker, This is coming from

617
00:32:08,680 --> 00:32:12,920
Speaker 2: the the the registries, right, so in some ways it's

618
00:32:12,920 --> 00:32:16,440
Speaker 2: a third party confirmation of what you've done. Orbit coming

619
00:32:16,520 --> 00:32:19,560
Speaker 2: not via pigeon, but carry pigeon fire the male the

620
00:32:19,600 --> 00:32:22,320
Speaker 2: snail mail. So I think for some of the older

621
00:32:22,320 --> 00:32:24,960
Speaker 2: clients they probably appreciate the validity of what. And to

622
00:32:24,960 --> 00:32:26,120
Speaker 2: be honest, it's really hard to hack.

623
00:32:26,280 --> 00:32:28,040
Speaker 1: Put them on a put them on a nail. What

624
00:32:28,120 --> 00:32:29,960
Speaker 1: they used to call those fires that had the spike

625
00:32:30,040 --> 00:32:31,560
Speaker 1: file exactly spike f parl.

626
00:32:31,960 --> 00:32:33,640
Speaker 2: But it's pretty hard to hack a lesson.

627
00:32:33,720 --> 00:32:36,040
Speaker 1: Yes, it's hard to hack a letter. And you made

628
00:32:36,040 --> 00:32:39,160
Speaker 1: me think of something they're reading about the early days

629
00:32:39,400 --> 00:32:42,959
Speaker 1: of wiki leaks and all that and how they operated

630
00:32:43,080 --> 00:32:48,840
Speaker 1: and often how international clandestine groups do operate. But wikedis

631
00:32:49,080 --> 00:32:51,640
Speaker 1: everyone thinking thinking of it in its day? I've been

632
00:32:51,680 --> 00:32:55,880
Speaker 1: this sort of really interesting high tech. You know, they

633
00:32:55,960 --> 00:32:58,920
Speaker 1: use the post, They use the post to correspond to

634
00:32:58,960 --> 00:33:01,560
Speaker 1: each other. Good nothing beat of the computer, nohing beat

635
00:33:01,560 --> 00:33:06,080
Speaker 1: the posts because because it wasn't intercepted, ah compared to

636
00:33:06,240 --> 00:33:08,240
Speaker 1: over the internet. So there you are. So there is

637
00:33:08,280 --> 00:33:12,120
Speaker 1: a sense to it, Carl. I'm sure the register's enough

638
00:33:12,120 --> 00:33:14,760
Speaker 1: to stop it. I'm sure Australia Post would think it's

639
00:33:14,760 --> 00:33:17,400
Speaker 1: a really good idea that we keep getting those vetters.

640
00:33:17,400 --> 00:33:19,080
Speaker 1: But you can see that, you can see the sense

641
00:33:19,120 --> 00:33:21,400
Speaker 1: of it, but a really good question. Thank you okay

642
00:33:21,440 --> 00:33:24,720
Speaker 1: the last one from Lofty, big chopper, he asks.

643
00:33:25,360 --> 00:33:27,680
Speaker 2: He thanks us for our great show. I have a

644
00:33:27,760 --> 00:33:31,720
Speaker 2: question about tax in super I'm invested primarily in low

645
00:33:31,760 --> 00:33:35,960
Speaker 2: cost index funds Australian and International through an industry superfund.

646
00:33:36,600 --> 00:33:39,280
Speaker 2: I've heard recently that tax is worth held from returns

647
00:33:39,280 --> 00:33:42,280
Speaker 2: to provide for future capital gains. Is this true? And

648
00:33:42,320 --> 00:33:44,800
Speaker 2: would this not cause a measurable tax drag on the

649
00:33:44,840 --> 00:33:47,640
Speaker 2: portfolio over the longer term, enough to make a mockery

650
00:33:47,640 --> 00:33:50,600
Speaker 2: of all the squabbling about saving X basis points investing

651
00:33:50,640 --> 00:33:52,880
Speaker 2: in this fund over this one. I've recently hit one

652
00:33:52,920 --> 00:33:55,560
Speaker 2: hundred five hundred thousand dollars. Well done, and I'm wondering

653
00:33:55,600 --> 00:33:58,760
Speaker 2: if I should start an SMSF to gain more control

654
00:33:58,800 --> 00:34:01,760
Speaker 2: over what is sold and win. It is my understanding

655
00:34:01,760 --> 00:34:04,320
Speaker 2: that if I don't sell anything until pension phase, there

656
00:34:04,360 --> 00:34:06,680
Speaker 2: will be no capital gains tax to pay.

657
00:34:06,960 --> 00:34:11,439
Speaker 1: Yes, okay, well, Lofty, couple of things there. Oh, First

658
00:34:11,440 --> 00:34:12,839
Speaker 1: of all, you've got it all I think you've you've

659
00:34:12,840 --> 00:34:15,160
Speaker 1: got it all right, and he has it squared up

660
00:34:15,520 --> 00:34:18,040
Speaker 1: pretty accurately. Let me tell you something about all this.

661
00:34:18,800 --> 00:34:21,680
Speaker 1: So this is how it goes. In the big industry funds,

662
00:34:22,320 --> 00:34:26,520
Speaker 1: they do snip the ticket, not to step the ticket,

663
00:34:26,560 --> 00:34:32,279
Speaker 1: but they collect what capital gains tax that you may

664
00:34:32,360 --> 00:34:35,279
Speaker 1: be exposed for, and they collect it as you go,

665
00:34:35,400 --> 00:34:37,879
Speaker 1: as the years go by, on the basis that they

666
00:34:37,880 --> 00:34:41,440
Speaker 1: may somehow have to pay it someday. Now, someone awfully

667
00:34:41,440 --> 00:34:43,560
Speaker 1: clever one time came up with this idea, and it

668
00:34:43,719 --> 00:34:50,520
Speaker 1: is common in the big funds. When you go to retire.

669
00:34:51,760 --> 00:34:55,240
Speaker 1: If you say, by the way, look thanks for everything,

670
00:34:55,280 --> 00:34:58,080
Speaker 1: and I'm leaving the fund, they say, oh, that's a pity.

671
00:34:58,160 --> 00:35:01,080
Speaker 1: Oh and also, by the way, we think collecting your

672
00:35:01,120 --> 00:35:06,000
Speaker 1: potential tax capital gath gains tax liability and it's worth whatever.

673
00:35:06,080 --> 00:35:08,560
Speaker 1: Let's pick a number. It's worth six thousand dollars. So

674
00:35:08,640 --> 00:35:11,120
Speaker 1: if you leave us, unfortunately you won't be getting that.

675
00:35:11,239 --> 00:35:14,360
Speaker 1: But if you stay, you'll get it. All perfectly legal,

676
00:35:14,480 --> 00:35:19,000
Speaker 1: all perfectly sensible, and a ruse I reckon which works

677
00:35:19,080 --> 00:35:23,120
Speaker 1: very well for keeping people in funds. It's controversial. I've

678
00:35:23,160 --> 00:35:25,040
Speaker 1: tried to do something about it. I've tried to explain

679
00:35:25,080 --> 00:35:27,600
Speaker 1: to people, I've written stories about it. But that's how

680
00:35:27,600 --> 00:35:28,320
Speaker 1: it works.

681
00:35:28,920 --> 00:35:31,920
Speaker 2: Yeah, it's a switching cost. Effectively, they're trying to make

682
00:35:32,600 --> 00:35:34,919
Speaker 2: it's sticky to stay in their fund.

683
00:35:35,160 --> 00:35:37,400
Speaker 1: Well, who's going to say, I'll tell you what, I

684
00:35:37,400 --> 00:35:39,399
Speaker 1: don't want that six grand I'm going to leave. Who's

685
00:35:39,400 --> 00:35:39,880
Speaker 1: going to say that.

686
00:35:40,560 --> 00:35:42,920
Speaker 2: I mean just to put a caveat on that, in

687
00:35:42,960 --> 00:35:45,319
Speaker 2: the sense that Australian super taxes at the fun level,

688
00:35:45,320 --> 00:35:47,640
Speaker 2: not at the individual level. Right, So that's the key difference.

689
00:35:47,800 --> 00:35:50,239
Speaker 2: Having said that industry funds right there is not I

690
00:35:50,320 --> 00:35:53,480
Speaker 2: raised Australian supers because they and others have a memo

691
00:35:53,480 --> 00:35:56,759
Speaker 2: direct option right where you can invest directly in your

692
00:35:56,760 --> 00:36:00,839
Speaker 2: own shares, your own atfs and like, and in that

693
00:36:00,920 --> 00:36:04,439
Speaker 2: option you do get the direct taxation implications of your

694
00:36:04,480 --> 00:36:07,960
Speaker 2: own transactions. So even within industry funds, they have a

695
00:36:08,040 --> 00:36:09,760
Speaker 2: service that mimics the same.

696
00:36:09,600 --> 00:36:11,040
Speaker 1: Sort of well, but that would be a minority on

697
00:36:12,040 --> 00:36:14,360
Speaker 1: tiny minority, but they're trying to mimic the benefits of

698
00:36:14,400 --> 00:36:15,399
Speaker 1: a self managed super fund.

699
00:36:15,600 --> 00:36:17,239
Speaker 2: So if you think taxation is going to be a

700
00:36:17,320 --> 00:36:19,520
Speaker 2: key driver of your returns for whatever reason you might

701
00:36:19,560 --> 00:36:21,000
Speaker 2: want to invest in a property that's going to have

702
00:36:21,040 --> 00:36:23,759
Speaker 2: a substantial gain, then yes, the self managed super fund

703
00:36:23,800 --> 00:36:27,560
Speaker 2: could be the option to derive some tax savings rather

704
00:36:27,600 --> 00:36:29,319
Speaker 2: than an industry fund. Where you have no control over

705
00:36:29,360 --> 00:36:29,920
Speaker 2: it whatsoever.

706
00:36:30,080 --> 00:36:33,400
Speaker 1: The taxation of your super is hardly a reason to

707
00:36:33,440 --> 00:36:34,600
Speaker 1: switch to SMSF.

708
00:36:35,320 --> 00:36:37,520
Speaker 2: It's the toile wagon the dog if you think tax.

709
00:36:37,360 --> 00:36:39,719
Speaker 1: Yeah, it's you know, if you want to do SMSF

710
00:36:39,840 --> 00:36:43,320
Speaker 1: after you, you want to do it because you reckon

711
00:36:43,840 --> 00:36:46,359
Speaker 1: you can do better than the funds and that you're

712
00:36:46,360 --> 00:36:50,200
Speaker 1: pay less fees, that you'll be more nimble and reactive

713
00:36:50,960 --> 00:36:53,879
Speaker 1: and have more control. And that might be the case,

714
00:36:54,040 --> 00:36:56,880
Speaker 1: or it may not be the case. You're caught, Okay, terrific. Well,

715
00:36:56,880 --> 00:36:59,720
Speaker 1: thank you very much, Tim McKay of Contum Financial for today.

716
00:37:00,080 --> 00:37:01,520
Speaker 1: Lovely to see you, love you to have you in

717
00:37:01,520 --> 00:37:02,000
Speaker 1: the studio.

718
00:37:02,239 --> 00:37:02,920
Speaker 2: Thank you, James,