1 00:00:10,480 --> 00:00:13,600 Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm 2 00:00:13,680 --> 00:00:17,720 Speaker 1: James Kirby. Welcome aboard everybody. It is the first week 3 00:00:17,920 --> 00:00:21,560 Speaker 1: of the new financial year, brimming with opportunities for you, 4 00:00:21,640 --> 00:00:24,959 Speaker 1: and I want to explore opportunities and risks in the 5 00:00:25,000 --> 00:00:28,880 Speaker 1: new financial year with my special guest today, the author 6 00:00:29,640 --> 00:00:33,640 Speaker 1: Noel Whitaker. Who better to join us for a panoramic 7 00:00:33,680 --> 00:00:38,160 Speaker 1: look at what's in store for investors over the next 8 00:00:38,360 --> 00:00:42,560 Speaker 1: twelve months. It's an ambitious agenda. I will concede immediately, 9 00:00:42,920 --> 00:00:47,800 Speaker 1: so I think we should split it into Property Super 10 00:00:48,720 --> 00:00:50,360 Speaker 1: then we'll do shares and we'll have a look at 11 00:00:50,360 --> 00:00:52,720 Speaker 1: some questions as well. How are you, Noel? 12 00:00:53,120 --> 00:00:55,360 Speaker 2: Very good, James, so nice to be back with you again. 13 00:00:56,400 --> 00:00:58,560 Speaker 1: Delighted to have you on. I know that you are 14 00:00:58,680 --> 00:01:03,880 Speaker 1: skeptical about the very notion of a property market. Why 15 00:01:03,960 --> 00:01:05,800 Speaker 1: is that you don't even like this notion that we 16 00:01:05,800 --> 00:01:08,400 Speaker 1: could talk about the property market terminology. 17 00:01:09,040 --> 00:01:11,399 Speaker 2: There is no such thing as a property market that 18 00:01:11,400 --> 00:01:14,720 Speaker 2: we've been pointed by per houses or Black Town units 19 00:01:14,800 --> 00:01:18,839 Speaker 2: or Cairne's apartments. I mean, I can talk about property 20 00:01:18,880 --> 00:01:22,600 Speaker 2: in a very general way, but people need to understand 21 00:01:22,680 --> 00:01:26,679 Speaker 2: that there are many property markets or maybe doing different things. 22 00:01:27,120 --> 00:01:30,959 Speaker 1: I think that's actually come Just this morning, the Rehite 23 00:01:30,959 --> 00:01:33,440 Speaker 1: Group have issued a report which is really interesting with 24 00:01:33,640 --> 00:01:37,480 Speaker 1: six years of data, and they are saying that the 25 00:01:37,520 --> 00:01:43,160 Speaker 1: Australian property landscape has fundamentally changed and that basically the 26 00:01:43,280 --> 00:01:47,520 Speaker 1: Queensland coastal regions, Gold Coast, particularly on Sunshine Coast are 27 00:01:47,800 --> 00:01:50,880 Speaker 1: the new hotspots in the market. That their price gains 28 00:01:50,920 --> 00:01:54,320 Speaker 1: have outpaced the city of Melbourne for instance, four years now, 29 00:01:55,000 --> 00:01:58,400 Speaker 1: and that this new order, if you like, where it 30 00:01:58,720 --> 00:02:03,080 Speaker 1: always was Sydney first, Melbourne second, Brisbane third, and prices 31 00:02:03,160 --> 00:02:05,280 Speaker 1: kind of went into predictable fashion. That they think that's 32 00:02:05,280 --> 00:02:08,880 Speaker 1: fundamentally changed. I mean that's relevant, isn't it if you 33 00:02:08,919 --> 00:02:09,720 Speaker 1: were an investor. 34 00:02:11,120 --> 00:02:14,840 Speaker 2: Yes. And I also think investing in property is difficult 35 00:02:15,360 --> 00:02:18,120 Speaker 2: as we know in Victoria they have passed very harsh 36 00:02:18,160 --> 00:02:22,600 Speaker 2: laws against landlords, which is one of the reasons. The 37 00:02:22,760 --> 00:02:27,120 Speaker 2: key to property is to add value, which you can't 38 00:02:27,160 --> 00:02:31,720 Speaker 2: do to an apartment, which means houses. Now the medium 39 00:02:31,760 --> 00:02:35,840 Speaker 2: home in Brisbane's about over one million dollars. Now to me, 40 00:02:35,880 --> 00:02:37,920 Speaker 2: it'll be a big leap of faith to buy a 41 00:02:38,000 --> 00:02:41,400 Speaker 2: one million dollar investment property when you can be buying 42 00:02:41,400 --> 00:02:45,560 Speaker 2: a million dollars of shares. It's a no brainer. Yeah. 43 00:02:45,600 --> 00:02:48,160 Speaker 1: But in terms of this year and the you know, 44 00:02:48,200 --> 00:02:51,120 Speaker 1: the parameters of this new financial year, we've had pretty 45 00:02:51,240 --> 00:02:57,480 Speaker 1: ordinary property prices performance around the country this year, spectacular, spectacular, 46 00:02:57,639 --> 00:03:03,160 Speaker 1: very strong year for shares. Property is about to experience 47 00:03:04,160 --> 00:03:09,080 Speaker 1: the impact of interest rates dropping, so I think, I mean, 48 00:03:09,120 --> 00:03:11,040 Speaker 1: wouldn't it be a reasonable thing to say that the 49 00:03:11,080 --> 00:03:14,280 Speaker 1: outlook for property is promising whatever it might be. 50 00:03:15,480 --> 00:03:19,359 Speaker 2: Well, as you say, interest rates are dropping, and the 51 00:03:19,360 --> 00:03:23,560 Speaker 2: more they drop, there are more buyers. Every state government 52 00:03:23,680 --> 00:03:28,079 Speaker 2: in the federal government is doing instead for first home buyers. 53 00:03:28,440 --> 00:03:31,880 Speaker 2: So you're creating an increasing demand for property, but no 54 00:03:32,000 --> 00:03:36,000 Speaker 2: more supply. I mean, they talk about supply, so I 55 00:03:36,040 --> 00:03:37,840 Speaker 2: think it's going to be an even type of market 56 00:03:37,960 --> 00:03:39,080 Speaker 2: for first home buyers. 57 00:03:40,160 --> 00:03:42,800 Speaker 1: What about foreign investors? I take your point about the incentives. 58 00:03:42,800 --> 00:03:45,240 Speaker 1: I mean, Brisbane's leading the pack, aren't they. The state 59 00:03:45,280 --> 00:03:49,400 Speaker 1: budget has a scheme for a two percent deposit and 60 00:03:49,440 --> 00:03:51,440 Speaker 1: you can buy a million dollar home. I know it's 61 00:03:51,440 --> 00:03:56,160 Speaker 1: shared equity, but it stands for two percent twenty thousand dollars. 62 00:03:56,800 --> 00:03:59,320 Speaker 1: You can get a million dollar home under a government 63 00:03:59,320 --> 00:04:01,600 Speaker 1: scheme in Brisbin and now in the state budget. What 64 00:04:01,640 --> 00:04:02,160 Speaker 1: do you think of it. 65 00:04:02,280 --> 00:04:05,280 Speaker 2: I think that's a copy of the federal government scheme. James. 66 00:04:05,320 --> 00:04:07,920 Speaker 2: It seems fairly much the same to me. All I 67 00:04:08,000 --> 00:04:10,200 Speaker 2: know is that the bar is getting higher and higher, 68 00:04:10,840 --> 00:04:13,720 Speaker 2: but also much say, as an investor for a long time, 69 00:04:14,560 --> 00:04:18,520 Speaker 2: I don't like property as an investment. It's got big 70 00:04:18,680 --> 00:04:21,560 Speaker 2: entry costs. It's the friends of ours just bought a 71 00:04:21,600 --> 00:04:26,040 Speaker 2: four million dollar apartment two hundred and fifty thousand dollars 72 00:04:26,080 --> 00:04:30,160 Speaker 2: in stamp duty, and you've got big exit fees, and 73 00:04:30,200 --> 00:04:33,560 Speaker 2: you've got on the land taxes going up. So with 74 00:04:33,720 --> 00:04:38,680 Speaker 2: land tax and rates and insurance and vacancies, you know, 75 00:04:39,080 --> 00:04:41,320 Speaker 2: plus the fact that all governments are making it hard 76 00:04:41,360 --> 00:04:43,760 Speaker 2: to be a landlord, I think you're much better off 77 00:04:43,800 --> 00:04:46,840 Speaker 2: in shares. Shares are so simple. There's nothing to do. 78 00:04:47,839 --> 00:04:49,640 Speaker 1: There's nothing to do when it goes right. But there's 79 00:04:49,640 --> 00:04:51,760 Speaker 1: nothing to do when it goes wrong either except dowd 80 00:04:51,760 --> 00:04:53,599 Speaker 1: there and watch it. If you have a property, you 81 00:04:53,640 --> 00:04:56,919 Speaker 1: can at least improve it, just as you're making that 82 00:04:57,000 --> 00:04:58,080 Speaker 1: point at the start. 83 00:04:58,240 --> 00:05:01,799 Speaker 2: But that's what they call the curse of liquidity. Because 84 00:05:01,839 --> 00:05:04,960 Speaker 2: shares are liquid, it means that we can buy and 85 00:05:05,040 --> 00:05:07,760 Speaker 2: sell any time. We like a an liquidity place with 86 00:05:07,839 --> 00:05:12,280 Speaker 2: your mind. If your shares going well, that's great. If 87 00:05:12,320 --> 00:05:15,039 Speaker 2: it's not, that I sell or keep. That's why I 88 00:05:15,040 --> 00:05:17,719 Speaker 2: think for most people the index fund is just such 89 00:05:17,760 --> 00:05:20,880 Speaker 2: a lovely investment. It's average nine percent for one hundred 90 00:05:20,920 --> 00:05:23,440 Speaker 2: and twenty years and there are no decisions to make. 91 00:05:23,560 --> 00:05:26,880 Speaker 2: You just hang in there. Whereas if you go for 92 00:05:27,000 --> 00:05:30,080 Speaker 2: speculative share then there's the bit do I buy or 93 00:05:30,080 --> 00:05:30,760 Speaker 2: do I sell? 94 00:05:31,640 --> 00:05:35,800 Speaker 1: Yes, And in terms of just the immediate, as I said, 95 00:05:35,800 --> 00:05:38,000 Speaker 1: in terms of the year ahead, in terms of property, 96 00:05:39,080 --> 00:05:44,200 Speaker 1: the consensus is that rests will fall, the property prices 97 00:05:44,240 --> 00:05:46,640 Speaker 1: will improve. They're currently doing about two percent a year, 98 00:05:46,680 --> 00:05:48,640 Speaker 1: two or three, they're going to move to five percent 99 00:05:48,680 --> 00:05:51,080 Speaker 1: a year. That's the kind of consensus. How do you 100 00:05:51,120 --> 00:05:53,400 Speaker 1: sit with that? Are you would you think that's a 101 00:05:53,400 --> 00:05:54,120 Speaker 1: sound or. 102 00:05:55,720 --> 00:05:59,280 Speaker 2: Well, again, it depends on the type of property in 103 00:05:59,320 --> 00:06:02,320 Speaker 2: the low Mark and I'd say yes. You talked about 104 00:06:02,360 --> 00:06:05,679 Speaker 2: the Sunshine Coast and the Gold Coast. They are two 105 00:06:05,680 --> 00:06:09,240 Speaker 2: different markets. The Gold Coast now is just a concrete 106 00:06:09,360 --> 00:06:13,479 Speaker 2: jungle with a tower going up on every corner with 107 00:06:13,560 --> 00:06:16,640 Speaker 2: no more roads. That's why people are going to the 108 00:06:16,680 --> 00:06:20,040 Speaker 2: north coast because you've got trees and no traffic lights. 109 00:06:20,880 --> 00:06:21,800 Speaker 2: It's a different area. 110 00:06:22,839 --> 00:06:27,920 Speaker 1: So all property is highly particular, highly localized. 111 00:06:27,880 --> 00:06:28,320 Speaker 2: Very much. 112 00:06:28,320 --> 00:06:29,840 Speaker 1: So Yeah, I mean. 113 00:06:31,320 --> 00:06:33,240 Speaker 2: You're either on the beach or off the beach if 114 00:06:33,279 --> 00:06:37,359 Speaker 2: you're buying beachfront property. Big key factors are close to 115 00:06:37,440 --> 00:06:44,120 Speaker 2: infrastructure like transport and shops, major key. And I've also 116 00:06:44,160 --> 00:06:47,159 Speaker 2: said if you're buying property, the key factory is location 117 00:06:47,720 --> 00:06:48,960 Speaker 2: because you can't change that. 118 00:06:51,520 --> 00:06:53,840 Speaker 1: And do you think these other factors and property are 119 00:06:53,960 --> 00:06:59,960 Speaker 1: marginal housing incentives, tax lures, or inducements. 120 00:07:00,400 --> 00:07:03,839 Speaker 2: Well, they talk about negative gearing, but given the thirty 121 00:07:03,880 --> 00:07:06,839 Speaker 2: percent van now goes to one hundred and thirty five 122 00:07:06,880 --> 00:07:10,520 Speaker 2: grand a year, if you lose ten thousand dollars, you 123 00:07:10,600 --> 00:07:13,880 Speaker 2: pay seven thousand dollars at that. I mean, negative gearing 124 00:07:13,960 --> 00:07:17,440 Speaker 2: is not the magic pudding they think it is. You're 125 00:07:17,480 --> 00:07:18,840 Speaker 2: still paying seventy percent. 126 00:07:20,160 --> 00:07:23,520 Speaker 1: Yes, you're still paying out. You're still paying out week 127 00:07:23,600 --> 00:07:25,520 Speaker 1: after week or a month after month as you try 128 00:07:25,560 --> 00:07:26,840 Speaker 1: to get these capital gains. 129 00:07:27,280 --> 00:07:30,000 Speaker 2: Sure, and if you've got two million dollars in property 130 00:07:30,600 --> 00:07:32,760 Speaker 2: and I've got two million dollars in shares, and we 131 00:07:32,840 --> 00:07:36,280 Speaker 2: both want one hundred thousand dollars you can't sell the 132 00:07:36,280 --> 00:07:38,960 Speaker 2: back bedroom. I can just ring the broker and I've 133 00:07:38,960 --> 00:07:41,400 Speaker 2: got the money next day. And that's the big difference. 134 00:07:41,760 --> 00:07:44,840 Speaker 1: Ye hyeah, you can you can't. You can't sell a 135 00:07:44,880 --> 00:07:47,480 Speaker 1: part of a property. It's very true. Okay, what we're 136 00:07:47,480 --> 00:07:49,760 Speaker 1: going to do is we're going to talk in a 137 00:07:49,800 --> 00:07:52,760 Speaker 1: moment about the share market. That's obviously that what everyone's 138 00:07:52,800 --> 00:07:55,320 Speaker 1: interested in this year. We've just had an amazing year 139 00:07:55,800 --> 00:07:58,200 Speaker 1: ten percent plus on the local market, even better in 140 00:07:58,240 --> 00:08:01,520 Speaker 1: the US despite all the distractions. Let's have a look 141 00:08:01,520 --> 00:08:03,280 Speaker 1: at the yearhead in one moment. We'll be back in 142 00:08:03,320 --> 00:08:14,280 Speaker 1: a minute. Hello, Welcome back to the Australians Money Puzzle 143 00:08:14,360 --> 00:08:18,160 Speaker 1: podcast James Kirby with Noel Whittaker. Now we are going 144 00:08:18,200 --> 00:08:21,880 Speaker 1: to talk about the share market for a few minutes 145 00:08:21,920 --> 00:08:23,760 Speaker 1: and have a look at the year ahead. So let's 146 00:08:23,800 --> 00:08:26,800 Speaker 1: just put it on the table. What happened in the 147 00:08:27,040 --> 00:08:30,840 Speaker 1: year to June? Noel, a ten percent plus on the 148 00:08:30,880 --> 00:08:35,520 Speaker 1: share market eleven or twelve percent plus in the US. 149 00:08:35,760 --> 00:08:39,679 Speaker 1: On top of that, dividendial still holding up at four 150 00:08:40,480 --> 00:08:44,720 Speaker 1: over four percent in our market. How did you respond 151 00:08:44,720 --> 00:08:46,800 Speaker 1: to that performance this year? I mean, was it better 152 00:08:46,840 --> 00:08:48,480 Speaker 1: than you might have expected? 153 00:08:49,480 --> 00:08:53,400 Speaker 2: Well, when Donald Trump got in, I'm being asked to myself, 154 00:08:53,679 --> 00:08:56,160 Speaker 2: and I say, it's a long game. Hang in there. 155 00:08:57,240 --> 00:09:01,080 Speaker 2: No one can pick the short term movements of the market, 156 00:09:01,880 --> 00:09:04,760 Speaker 2: but we do know long term it's got an upturned bias. 157 00:09:05,600 --> 00:09:09,920 Speaker 2: And as interest rates fur shares are realty more attractive. 158 00:09:10,679 --> 00:09:13,480 Speaker 2: So it's interest rates four. If I can get an 159 00:09:13,480 --> 00:09:17,440 Speaker 2: effective yield of six percent franc it's much better than 160 00:09:17,720 --> 00:09:22,400 Speaker 2: three percent on the term deposit. Yeah, but it's interesting 161 00:09:22,440 --> 00:09:25,080 Speaker 2: that every time I make a speech, I ask two 162 00:09:25,200 --> 00:09:30,800 Speaker 2: questions tax would you rather pay income tax or GST 163 00:09:31,040 --> 00:09:35,840 Speaker 2: or capital gains tax? And nobody knows. Now the no 164 00:09:36,000 --> 00:09:39,160 Speaker 2: brain is capital gains tax because you don't pay it 165 00:09:39,240 --> 00:09:42,199 Speaker 2: till you sell the asset and death doesn't trigger it, 166 00:09:42,440 --> 00:09:45,240 Speaker 2: and you get fifty percent discount when you do that. 167 00:09:45,320 --> 00:09:49,160 Speaker 2: I say, who understands franking? No one gets it. They 168 00:09:49,160 --> 00:09:54,040 Speaker 2: don't understand it's money for nothing. So once people understand 169 00:09:54,160 --> 00:09:58,880 Speaker 2: the unique benefits of shares and franking, credits still go 170 00:09:59,000 --> 00:10:03,280 Speaker 2: for them. See I had an investment property. It cost 171 00:10:03,360 --> 00:10:06,240 Speaker 2: me two hundred and thirty thousand dollars twenty years ago. 172 00:10:07,559 --> 00:10:12,400 Speaker 2: An apartment I've just solved for seven forty I'm only 173 00:10:12,520 --> 00:10:15,360 Speaker 2: stell in because it's old. If that would have been 174 00:10:15,400 --> 00:10:17,559 Speaker 2: in the index, it would have been worth one point 175 00:10:17,600 --> 00:10:20,800 Speaker 2: four million dollars and there would be no sale needed. 176 00:10:21,480 --> 00:10:25,680 Speaker 2: That's the big difference with Shees. She could hang on in. Yeah. 177 00:10:26,040 --> 00:10:29,440 Speaker 2: But also, as I'm all say too, don't forget the 178 00:10:29,440 --> 00:10:33,880 Speaker 2: supervaluation is going to twelve percent this month in July. 179 00:10:34,880 --> 00:10:38,439 Speaker 2: That's more money which we're going into the share market 180 00:10:38,280 --> 00:10:41,360 Speaker 2: and what I'm moving my portfoilion and that more and 181 00:10:41,400 --> 00:10:45,440 Speaker 2: more overseas investment. It's a bigger market, and I'm only 182 00:10:45,559 --> 00:10:49,440 Speaker 2: using good managed funds. I would never try to pick 183 00:10:49,480 --> 00:10:53,040 Speaker 2: oversea shares on my own, and your accountant says to me, 184 00:10:53,160 --> 00:10:56,040 Speaker 2: don't do it. It's a tax nightmare. So stay away 185 00:10:56,040 --> 00:10:59,960 Speaker 2: from direct share investment, but you can use good managed funds. 186 00:11:00,920 --> 00:11:02,719 Speaker 1: So when you look at the share market, we did 187 00:11:02,760 --> 00:11:05,800 Speaker 1: ten percent. What's a long term average? What would people 188 00:11:05,800 --> 00:11:09,000 Speaker 1: reasonably expect on the share market on the AX the. 189 00:11:08,960 --> 00:11:12,280 Speaker 2: Long term average for the all lords accumulation. That's interesting. 190 00:11:12,360 --> 00:11:16,199 Speaker 2: Dividends a sorry growth and dividends is about nine percent. 191 00:11:17,160 --> 00:11:20,760 Speaker 2: But don't forget there are normally four negative years and 192 00:11:20,960 --> 00:11:25,880 Speaker 2: six positive years, and the biggest rises always come after 193 00:11:25,920 --> 00:11:29,520 Speaker 2: the biggest falls because people say, how about I jump 194 00:11:29,559 --> 00:11:31,760 Speaker 2: out now and get back when the time is right. 195 00:11:32,280 --> 00:11:35,199 Speaker 2: When the time is right, it's too late. This is 196 00:11:35,240 --> 00:11:38,679 Speaker 2: the whole point. So also, if you look at a 197 00:11:39,320 --> 00:11:43,959 Speaker 2: one month, sorry, a one year chart, almost every year, 198 00:11:44,080 --> 00:11:47,360 Speaker 2: there'll be up months and down months. See, you've got 199 00:11:47,360 --> 00:11:50,120 Speaker 2: a long term upward trend, but you've got a short 200 00:11:50,240 --> 00:11:52,800 Speaker 2: term up and down trend. And that's what scares people. 201 00:11:53,600 --> 00:11:55,400 Speaker 1: Yeah, so that's why you're a lot of surprised. I 202 00:11:55,480 --> 00:11:57,880 Speaker 1: think that we finished with a ten percent for the year. 203 00:11:58,960 --> 00:12:01,520 Speaker 2: It just happens. I'm and it's to me, it's no 204 00:12:01,600 --> 00:12:04,040 Speaker 2: point forecasting. All I know is if you hang on 205 00:12:04,120 --> 00:12:06,439 Speaker 2: there for long term, it's going to be great again. 206 00:12:06,480 --> 00:12:09,040 Speaker 1: And again, tell me your views on the ETFs and 207 00:12:09,120 --> 00:12:12,120 Speaker 1: also on frank dividends and do they overlap to some extent. 208 00:12:13,040 --> 00:12:19,320 Speaker 2: Okay, most people don't understand the difference between ETFs and LICs. Now, 209 00:12:19,320 --> 00:12:23,840 Speaker 2: an ETF is an exchange traded fund, which means it's 210 00:12:23,840 --> 00:12:27,520 Speaker 2: listed on the stock market and it always trades at 211 00:12:27,640 --> 00:12:31,800 Speaker 2: net asset value, which to meets a great it's a 212 00:12:31,840 --> 00:12:37,040 Speaker 2: great advantage. Now ETFs it's a broad church. I mean, 213 00:12:37,040 --> 00:12:39,960 Speaker 2: there's bitcoin and there's gold, and there's shares. It's there's 214 00:12:40,000 --> 00:12:43,760 Speaker 2: all kinds of them, but the essences they are liquid 215 00:12:44,559 --> 00:12:48,480 Speaker 2: and they trade at net value a listed investment company. 216 00:12:49,280 --> 00:12:52,959 Speaker 2: They trade at what the market pays. So if I've 217 00:12:53,000 --> 00:12:55,240 Speaker 2: got one hundred million, if you've got one hundred million 218 00:12:55,240 --> 00:12:59,440 Speaker 2: dollar portfolio, the ETF, it will be one hundred million, 219 00:13:00,160 --> 00:13:03,360 Speaker 2: but that could be worth as an ally six ninety 220 00:13:03,360 --> 00:13:06,040 Speaker 2: five million dollars because it could be. That's why I 221 00:13:06,160 --> 00:13:08,760 Speaker 2: much prefer et allies alwise. 222 00:13:08,840 --> 00:13:12,160 Speaker 1: Yes, just to frame it for people listening about the 223 00:13:12,280 --> 00:13:15,160 Speaker 1: in terms of looking at this year ahead, you mentioned 224 00:13:15,160 --> 00:13:18,600 Speaker 1: that SGC everyone should be alert, of course to the 225 00:13:18,679 --> 00:13:21,920 Speaker 1: fact that take a look at your take home pay, folks, 226 00:13:22,000 --> 00:13:26,160 Speaker 1: and you will find that it's actually it would have reduced, 227 00:13:26,200 --> 00:13:32,120 Speaker 1: I'm sure, because your compulsory mandatory payment into the superannuation 228 00:13:32,280 --> 00:13:35,800 Speaker 1: system has now lifted to twelve percent from July one, 229 00:13:36,000 --> 00:13:38,360 Speaker 1: twenty twenty five, and that hopefully is the top of 230 00:13:38,360 --> 00:13:40,240 Speaker 1: the ladder. Hopefully that's about as far as it goes. 231 00:13:40,240 --> 00:13:43,360 Speaker 1: It's going to stop there, we think. But no, just 232 00:13:43,559 --> 00:13:45,440 Speaker 1: so you're one of the things you were saying was 233 00:13:45,480 --> 00:13:48,400 Speaker 1: because of this more money pours into the market, is 234 00:13:48,440 --> 00:13:50,040 Speaker 1: that it literally has to find a. 235 00:13:50,080 --> 00:13:53,760 Speaker 2: Home more demand and I have funds now have to 236 00:13:53,760 --> 00:13:56,800 Speaker 2: go up shore because there's not enough Australian shares. But 237 00:13:56,880 --> 00:13:59,920 Speaker 2: also just one point there, the boss would normally pay 238 00:14:00,080 --> 00:14:06,079 Speaker 2: the superanui himself themselves. You don't. They don't normally reduce 239 00:14:06,160 --> 00:14:08,360 Speaker 2: your salary for the for the super. 240 00:14:08,920 --> 00:14:12,880 Speaker 1: But your take home package, if it's inclusive of Super, 241 00:14:13,160 --> 00:14:16,680 Speaker 1: the amount going into super actually goes up from eleven 242 00:14:16,679 --> 00:14:19,200 Speaker 1: and a half twelve, so your take on cash would 243 00:14:19,240 --> 00:14:21,120 Speaker 1: go down in many instances, wouldn't do. 244 00:14:21,280 --> 00:14:24,080 Speaker 2: That's if you've got to take package probably. 245 00:14:23,960 --> 00:14:25,560 Speaker 1: Okay, yes, yes, yeah, all right. 246 00:14:25,640 --> 00:14:29,520 Speaker 2: But for the average working person, the boss will play sleeper. 247 00:14:29,560 --> 00:14:31,600 Speaker 2: It's just another on cost on the. 248 00:14:31,560 --> 00:14:36,480 Speaker 1: Boss, right right, okay. And if you're in that, if 249 00:14:36,200 --> 00:14:39,880 Speaker 1: you're better off. If you are, if you have that arrangement, 250 00:14:39,880 --> 00:14:41,680 Speaker 1: you are better off. But for people are interested in 251 00:14:41,800 --> 00:14:44,640 Speaker 1: terms of the share market, then you were talking about 252 00:14:44,640 --> 00:14:49,000 Speaker 1: a couple of things you think are very enduringly attractive, 253 00:14:49,240 --> 00:14:52,120 Speaker 1: and you mentioned two things. One was frank dividends and 254 00:14:52,200 --> 00:14:56,840 Speaker 1: the second was actually you're increasing disposition if you'd like 255 00:14:56,880 --> 00:15:00,280 Speaker 1: to invest overseas, explain it. For most people who are 256 00:15:00,280 --> 00:15:03,120 Speaker 1: interested in the share market and looking at the new year, 257 00:15:04,240 --> 00:15:06,160 Speaker 1: how that might play out this year for them or 258 00:15:06,200 --> 00:15:07,280 Speaker 1: should play out for them. 259 00:15:08,040 --> 00:15:10,560 Speaker 2: Well, our share market is only about three percent of 260 00:15:10,640 --> 00:15:14,240 Speaker 2: world markets. If you stick to Australia, you're missing out 261 00:15:14,240 --> 00:15:17,720 Speaker 2: of ninety seven percent. So I'd rather invest with good 262 00:15:17,760 --> 00:15:21,280 Speaker 2: fund managers and they've been doing very good returns in 263 00:15:21,480 --> 00:15:24,240 Speaker 2: the Ambassa's market. But you don't get franking. That's the 264 00:15:24,280 --> 00:15:24,920 Speaker 2: big difference. 265 00:15:26,040 --> 00:15:27,360 Speaker 1: And your dividends aren't as good. 266 00:15:27,360 --> 00:15:32,200 Speaker 2: No, but the growth is better, yes, And that's going 267 00:15:32,240 --> 00:15:34,680 Speaker 2: to be interesting when when the new super reels come 268 00:15:34,720 --> 00:15:39,360 Speaker 2: in from next year, because maybe you're better off not 269 00:15:39,520 --> 00:15:45,520 Speaker 2: having such huge growth, depends on your portfolio. What I'm 270 00:15:45,560 --> 00:15:49,480 Speaker 2: really hoping is we finish this year on a strong note. 271 00:15:50,200 --> 00:15:52,600 Speaker 2: So what I wouldn't like is to finish this year 272 00:15:52,680 --> 00:15:55,760 Speaker 2: on a very low note, which means there's a much 273 00:15:55,840 --> 00:15:58,840 Speaker 2: bigger chance of a big unreal life capital gain in 274 00:15:58,880 --> 00:16:00,000 Speaker 2: the twelve months going forward. 275 00:16:00,000 --> 00:16:04,040 Speaker 1: Would Yeah, Actually, what we do we talk about super 276 00:16:04,080 --> 00:16:07,520 Speaker 1: in the in the next segment, but just on share market. Okay, 277 00:16:07,840 --> 00:16:11,080 Speaker 1: So you make that point that you like many investors 278 00:16:11,080 --> 00:16:17,040 Speaker 1: in Australia have gradually and incrementally put more money offshore 279 00:16:17,120 --> 00:16:19,760 Speaker 1: than you used to outside the ax and how do 280 00:16:19,800 --> 00:16:22,040 Speaker 1: you approach that? You said you really like ETFs, which 281 00:16:22,040 --> 00:16:24,760 Speaker 1: you said you also like fund managers, So which how 282 00:16:24,800 --> 00:16:27,280 Speaker 1: do you access? How do you start? You're skeptical about 283 00:16:27,320 --> 00:16:30,320 Speaker 1: going in and buying a share like Apple or Brukshire 284 00:16:30,320 --> 00:16:32,200 Speaker 1: Hathaway or whatever. You think funds are the way. 285 00:16:32,240 --> 00:16:36,400 Speaker 2: In my Accountain told me, don't you did buy any 286 00:16:36,480 --> 00:16:38,960 Speaker 2: direct shares I sites, he said, do not do it. 287 00:16:40,440 --> 00:16:42,920 Speaker 2: I won't name them, but there's some very good IBOSS 288 00:16:42,960 --> 00:16:47,120 Speaker 2: fan managers here. I don't particularly like an Ibos's index 289 00:16:47,200 --> 00:16:50,360 Speaker 2: fan because there's too many fans. I'm very happy with 290 00:16:50,400 --> 00:16:52,560 Speaker 2: a local index fan, but I did not like an 291 00:16:52,560 --> 00:16:53,720 Speaker 2: ices index fan. 292 00:16:54,480 --> 00:16:57,920 Speaker 1: Right. How about buying an index fund that's an Australian 293 00:16:58,040 --> 00:17:00,320 Speaker 1: based fund that's investing internationally. 294 00:17:01,760 --> 00:17:05,840 Speaker 2: Well, I'm happy. Well, no, I don't like any I 295 00:17:05,880 --> 00:17:09,560 Speaker 2: don't like an indexed obceas portfoilio. I'm very happy with 296 00:17:09,680 --> 00:17:12,919 Speaker 2: the OSSI portfoil Yoh. Yes, but I really don't. I 297 00:17:13,000 --> 00:17:16,440 Speaker 2: want my overseas manager to be picking the tests and 298 00:17:16,520 --> 00:17:18,000 Speaker 2: the palentes and the VIDs. 299 00:17:18,119 --> 00:17:26,760 Speaker 1: Right, yeah, So index for a home base active for overseas, yes, okay, interesting? Yes? 300 00:17:27,119 --> 00:17:29,879 Speaker 1: And on the frank dividends front. You mentioned how you 301 00:17:29,920 --> 00:17:32,320 Speaker 1: say from many people ETFs side of the way, then 302 00:17:32,320 --> 00:17:35,600 Speaker 1: you also say that franking is perhaps underestimated by the 303 00:17:35,640 --> 00:17:39,240 Speaker 1: wider population. Are there ETFs that zone in on franking? 304 00:17:40,400 --> 00:17:44,359 Speaker 2: Look, I invest in an ETF which invests in the 305 00:17:44,440 --> 00:17:48,879 Speaker 2: top two hundred Ossie shares. But as I said before, 306 00:17:48,960 --> 00:17:51,080 Speaker 2: you could have a gold ETF, you can have a 307 00:17:51,080 --> 00:17:53,720 Speaker 2: bitcoin e T if you can have any sort of ETF. 308 00:17:54,600 --> 00:17:58,960 Speaker 2: What I like about the ETF is liquidity and trains 309 00:17:58,960 --> 00:18:03,240 Speaker 2: a net asset and at net asset value. That's what 310 00:18:03,320 --> 00:18:05,199 Speaker 2: I like about them. And they're simple. 311 00:18:05,280 --> 00:18:09,040 Speaker 1: Yet, and what do you think in terms of returns 312 00:18:09,080 --> 00:18:12,240 Speaker 1: for the year? Had people think that the AESX is 313 00:18:12,280 --> 00:18:14,320 Speaker 1: already at the level that it was supposed to reach 314 00:18:14,359 --> 00:18:17,119 Speaker 1: at the end of the calendar year. But here we 315 00:18:17,160 --> 00:18:19,800 Speaker 1: are at the start of July and the AESX has 316 00:18:19,840 --> 00:18:23,120 Speaker 1: basically done its dash. According to many researchers, they think 317 00:18:23,119 --> 00:18:24,679 Speaker 1: that it's this is as high as it gets for 318 00:18:24,760 --> 00:18:26,080 Speaker 1: the year. What's your view on that. 319 00:18:27,760 --> 00:18:31,920 Speaker 2: After fifty years in this business, I've given up on forecasts. 320 00:18:33,160 --> 00:18:38,520 Speaker 2: All forecasts do is give great newspaper headlines. And my 321 00:18:38,680 --> 00:18:43,680 Speaker 2: friend Don Stammer had a thing called Factor REX and 322 00:18:43,760 --> 00:18:46,919 Speaker 2: don in fact Rex was it was like the black swan, 323 00:18:47,320 --> 00:18:51,399 Speaker 2: the thing we never expected like COVID was that factor Rex. 324 00:18:52,200 --> 00:18:56,320 Speaker 2: The market plunged with COVID. Remember when Donald Trump did 325 00:18:56,320 --> 00:18:58,679 Speaker 2: his tariff thing a few months ago, we had the 326 00:18:58,720 --> 00:19:02,919 Speaker 2: biggest fall in the biggest rise in about sixty years. 327 00:19:04,520 --> 00:19:07,080 Speaker 2: And that's why I say with shares you must take 328 00:19:07,119 --> 00:19:07,960 Speaker 2: a long term view. 329 00:19:09,560 --> 00:19:14,040 Speaker 1: And when these incidents occur, then these X factor incidents 330 00:19:14,200 --> 00:19:17,320 Speaker 1: or these black Swan incidents, which is which, as you see, 331 00:19:17,400 --> 00:19:20,000 Speaker 1: is what really matters, and you can't forecast them. So 332 00:19:20,040 --> 00:19:22,040 Speaker 1: everyone has a forecast for the market, but what they 333 00:19:22,080 --> 00:19:24,560 Speaker 1: don't have they couldn't have, and if they did, there 334 00:19:24,560 --> 00:19:28,320 Speaker 1: would be zillionaires. Is the item of the event we 335 00:19:28,359 --> 00:19:33,000 Speaker 1: can't see coming. Yeah, yeah, so this year's was the tariffs. 336 00:19:33,920 --> 00:19:38,520 Speaker 2: But also what happens is the papers have shock headlines 337 00:19:39,720 --> 00:19:42,639 Speaker 2: and this confirms the you of many people's shares. It 338 00:19:42,720 --> 00:19:46,040 Speaker 2: too risky for me, and they can't afford to invest 339 00:19:46,080 --> 00:19:48,959 Speaker 2: in property and they have and they just sit with 340 00:19:49,119 --> 00:19:53,520 Speaker 2: cash in the bank and so don't get the returns 341 00:19:53,560 --> 00:19:55,800 Speaker 2: they could get if they knew to hang in there. 342 00:19:57,000 --> 00:20:01,200 Speaker 1: Yeah, this is obviously a concern, isn't it for older Australians. 343 00:20:01,240 --> 00:20:04,000 Speaker 1: They're holding on to too much cash. All the reports 344 00:20:04,000 --> 00:20:06,399 Speaker 1: show us that, the ATO show us that, but the 345 00:20:06,480 --> 00:20:08,240 Speaker 1: returns would have been a little bit better known for 346 00:20:08,359 --> 00:20:09,640 Speaker 1: cash recent times. 347 00:20:10,240 --> 00:20:13,360 Speaker 2: Yes, but it's going down. And don't forget that cash 348 00:20:13,520 --> 00:20:19,760 Speaker 2: is attacked by inflation and there's no franking. I always 349 00:20:19,800 --> 00:20:24,919 Speaker 2: say to people keep if you're retired, keep three years 350 00:20:25,040 --> 00:20:29,720 Speaker 2: money in cash or in reliable income streams so you're 351 00:20:29,760 --> 00:20:33,320 Speaker 2: never forced to dump good assets when the market's having 352 00:20:33,359 --> 00:20:37,800 Speaker 2: one of its normal downturns. And I stress normal downturns. 353 00:20:39,040 --> 00:20:41,280 Speaker 2: Once you get around your head that downturns are normal, 354 00:20:41,400 --> 00:20:41,959 Speaker 2: it's okay. 355 00:20:42,440 --> 00:20:44,639 Speaker 1: That would apply for everybody, wouldn't it that they should 356 00:20:44,680 --> 00:20:48,520 Speaker 1: never sell? Yeah, you don't ever want to sell at 357 00:20:48,520 --> 00:20:50,440 Speaker 1: the time. You don't want to sell. You don't ever 358 00:20:50,480 --> 00:20:52,080 Speaker 1: want to sell into a distress market. 359 00:20:52,200 --> 00:20:54,040 Speaker 2: And absolutely so, how do. 360 00:20:54,040 --> 00:20:56,320 Speaker 1: People do that if they are when people are in 361 00:20:56,359 --> 00:20:59,399 Speaker 1: accumulation phase, is it should they have some cash buffer 362 00:20:59,480 --> 00:21:01,320 Speaker 1: or how would you approach that? 363 00:21:01,760 --> 00:21:04,960 Speaker 2: Well, if you're an accumulation funds, you're probably a salary 364 00:21:04,960 --> 00:21:08,720 Speaker 2: and wagers earner. I'm talking about mainly with people with 365 00:21:08,760 --> 00:21:12,040 Speaker 2: no other income than their portfolio, and then you simply 366 00:21:12,480 --> 00:21:14,159 Speaker 2: you can have it all in SUPER and have it 367 00:21:14,200 --> 00:21:16,199 Speaker 2: in buckets inside that you can have x in the 368 00:21:16,280 --> 00:21:19,600 Speaker 2: cash component. But the trouble there is a lot of 369 00:21:19,640 --> 00:21:23,639 Speaker 2: supervanuation funds don't pay very well in the cash components, 370 00:21:24,960 --> 00:21:27,840 Speaker 2: and a couple can have eight hundred thousand dollars outside 371 00:21:27,880 --> 00:21:31,880 Speaker 2: SUPER and paino attacks. So I'd be keeping my two 372 00:21:32,040 --> 00:21:37,000 Speaker 2: or three years cash buffer outside the system. 373 00:21:36,520 --> 00:21:38,159 Speaker 1: Yes, right, outside Super entirely. 374 00:21:38,760 --> 00:21:41,800 Speaker 2: Well, it's easier, you'll get better returns. I mean most 375 00:21:41,800 --> 00:21:43,679 Speaker 2: of these funds have allows the cash balance, as I 376 00:21:43,680 --> 00:21:44,159 Speaker 2: can tell you. 377 00:21:45,280 --> 00:21:47,520 Speaker 1: Right, So as a structure, you'd have your SUPER, but 378 00:21:47,560 --> 00:21:49,680 Speaker 1: you'd also have a cash buffer and that would be 379 00:21:49,680 --> 00:21:50,600 Speaker 1: outside SUPER. 380 00:21:50,920 --> 00:21:52,640 Speaker 2: Sure, I think, yeah. 381 00:21:52,760 --> 00:21:55,000 Speaker 1: And this is something you recommend regularly, is it? 382 00:21:55,680 --> 00:21:55,920 Speaker 2: Yes? 383 00:21:56,400 --> 00:21:58,040 Speaker 1: Okay? Very interesting And. 384 00:21:58,160 --> 00:22:02,240 Speaker 2: Also don't forget if you're an older retired couple and 385 00:22:02,359 --> 00:22:05,719 Speaker 2: one person dies, the last thing he wants all the 386 00:22:05,720 --> 00:22:07,880 Speaker 2: money in Super because it might take you twelve months 387 00:22:07,960 --> 00:22:11,360 Speaker 2: to get it. And that's why cashplaff is very important, 388 00:22:11,359 --> 00:22:12,360 Speaker 2: particularly if you're. 389 00:22:12,160 --> 00:22:16,679 Speaker 1: Ouder Okay, And I think it's an interesting point for anyone. No, 390 00:22:16,920 --> 00:22:20,040 Speaker 1: at any point, as you say, imagine if you had 391 00:22:20,040 --> 00:22:23,760 Speaker 1: a cash puffer in earlier this year when the market 392 00:22:23,800 --> 00:22:26,399 Speaker 1: took a turn with the tariffs, you'd actually have been 393 00:22:26,440 --> 00:22:28,920 Speaker 1: able to take up opportunities. It's something that we don't 394 00:22:28,920 --> 00:22:30,359 Speaker 1: talk about very often on the show. 395 00:22:31,359 --> 00:22:35,159 Speaker 2: Sure, but again you must keep that cash. Remember, the 396 00:22:35,200 --> 00:22:38,840 Speaker 2: wisest man knows not when the Big four might be 397 00:22:38,880 --> 00:22:40,440 Speaker 2: a precursor to another four. 398 00:22:41,280 --> 00:22:43,520 Speaker 1: Yes, well, I. 399 00:22:43,440 --> 00:22:45,919 Speaker 2: Think you're better off just to hang in there. And 400 00:22:46,000 --> 00:22:49,760 Speaker 2: how the steady coset irrespective if there's rough seas. 401 00:22:49,560 --> 00:22:54,280 Speaker 1: Yes, okay, very interesting. I want to move into Super 402 00:22:54,320 --> 00:22:56,479 Speaker 1: for that. We have a segment coming, folks. We are 403 00:22:56,480 --> 00:22:58,879 Speaker 1: going to do some really interesting questions which I've kept. 404 00:22:59,440 --> 00:23:02,919 Speaker 1: I've spent kept for No because they're particularly tricky. And 405 00:23:02,960 --> 00:23:05,800 Speaker 1: I say to myself, these are the sort of questions 406 00:23:05,840 --> 00:23:08,040 Speaker 1: that if no Foot can't answer them, no one can. 407 00:23:08,320 --> 00:23:12,040 Speaker 1: I've got them. Are you ready for those? All right, Look, 408 00:23:12,040 --> 00:23:13,680 Speaker 1: we take a break. We'll just have a quick look 409 00:23:13,680 --> 00:23:21,200 Speaker 1: at Super and then we'll do the questions. Hello, welcome 410 00:23:21,240 --> 00:23:23,920 Speaker 1: back to the Australians Money Puzzle Podcast. No, just before 411 00:23:23,960 --> 00:23:25,960 Speaker 1: we do go to questions on Super, I think we 412 00:23:25,960 --> 00:23:29,080 Speaker 1: should bring people up to speed on two very important things. 413 00:23:29,359 --> 00:23:32,959 Speaker 1: One is that the SGC is now moving to twelve percent. 414 00:23:33,040 --> 00:23:35,440 Speaker 1: And as we say, there's two dimensions to that. First 415 00:23:35,440 --> 00:23:41,480 Speaker 1: of all, be aware of how much your super mandatory 416 00:23:41,520 --> 00:23:44,160 Speaker 1: super is to you. Now twelve percent is quite a lot. 417 00:23:44,200 --> 00:23:46,800 Speaker 1: How much of your salary is going into super That's 418 00:23:46,840 --> 00:23:49,520 Speaker 1: one thing. And also to weigh that up in terms 419 00:23:49,560 --> 00:23:51,640 Speaker 1: of what else you do, how else you save, how 420 00:23:51,640 --> 00:23:54,240 Speaker 1: else you invest? And as Node says, the flip side 421 00:23:54,280 --> 00:23:57,760 Speaker 1: of that, he said, it's twelve percent of every Australian worker. 422 00:23:59,000 --> 00:24:01,200 Speaker 1: If their money is going into a super fund, it's 423 00:24:01,200 --> 00:24:04,199 Speaker 1: a big super They in turn must invest and in 424 00:24:04,240 --> 00:24:07,800 Speaker 1: a way as part of the momentum of the markets. No, 425 00:24:08,040 --> 00:24:10,560 Speaker 1: what about the we won't go too far on this, 426 00:24:10,640 --> 00:24:15,360 Speaker 1: but Division two ninety six the new super tax fifteen 427 00:24:15,400 --> 00:24:20,200 Speaker 1: percent on earnings on amounts above three million, on indexed 428 00:24:20,320 --> 00:24:26,400 Speaker 1: and based on realized and on realized gains, very controversial. 429 00:24:27,040 --> 00:24:29,520 Speaker 1: Do you think it'll pass in the form that it's 430 00:24:29,600 --> 00:24:31,639 Speaker 1: designed and what do you think the impact will be? 431 00:24:32,600 --> 00:24:35,520 Speaker 2: I think they've got the numbers to do it in Parliament. 432 00:24:35,600 --> 00:24:39,760 Speaker 2: First thing, I think it's wrong. But be very careful 433 00:24:39,760 --> 00:24:44,959 Speaker 2: about moving your affairs around because the more I research this, 434 00:24:45,560 --> 00:24:48,440 Speaker 2: you'd probably better staying in sleep with and moving out 435 00:24:48,480 --> 00:24:52,360 Speaker 2: of it. This is the whole thing. Now, if your 436 00:24:52,440 --> 00:24:56,440 Speaker 2: balance is under three million dollars at June next year, 437 00:24:57,200 --> 00:25:00,040 Speaker 2: you are not affect that. You can forget about it. 438 00:25:00,119 --> 00:25:02,400 Speaker 2: But the first era of people are making is I've 439 00:25:02,400 --> 00:25:06,080 Speaker 2: got a four million dollar fund. I've got I've got 440 00:25:06,119 --> 00:25:08,600 Speaker 2: a five million dollar fund. I'm fine, No, you're not. 441 00:25:08,760 --> 00:25:13,400 Speaker 2: It's per member, not per fund. So if a five 442 00:25:13,440 --> 00:25:16,199 Speaker 2: million dollar fund has got one member with four and 443 00:25:16,280 --> 00:25:20,840 Speaker 2: one with one, the four member four billion member is affected. 444 00:25:21,280 --> 00:25:23,720 Speaker 1: Yeah, it's a per capita individual. 445 00:25:24,200 --> 00:25:26,920 Speaker 2: Yes. And the second thing is I keep getting asked 446 00:25:26,920 --> 00:25:29,520 Speaker 2: what are my how will it affect my siege by 447 00:25:29,560 --> 00:25:33,480 Speaker 2: cost base. What people don't get is their balance sheet 448 00:25:33,520 --> 00:25:36,639 Speaker 2: will be prepared as normal. This is not going to 449 00:25:36,680 --> 00:25:40,480 Speaker 2: affect their profit loss or balance sheet one iota. This 450 00:25:40,640 --> 00:25:43,600 Speaker 2: is just a separate tax as a method of calculating 451 00:25:43,800 --> 00:25:48,080 Speaker 2: a super tax. But what they probably don't get is 452 00:25:48,119 --> 00:25:51,800 Speaker 2: if you've got a four million dollar balance and your 453 00:25:51,840 --> 00:25:54,960 Speaker 2: total capital gain hypothetic. We will say one hundred thousand 454 00:25:55,000 --> 00:25:59,560 Speaker 2: dollars on the twelve months, you're only paying fifteen percent 455 00:25:59,560 --> 00:26:03,640 Speaker 2: of a core because only the difference. So if you've 456 00:26:03,680 --> 00:26:07,760 Speaker 2: got four million dollars in Seper, then it's one quarter 457 00:26:07,960 --> 00:26:11,360 Speaker 2: of one quarter of your phone is affected. So the 458 00:26:11,400 --> 00:26:14,440 Speaker 2: tax is fifteen percent of one quarter of the gain, 459 00:26:14,800 --> 00:26:18,359 Speaker 2: which probably isn't that much. And I spoke to a 460 00:26:18,400 --> 00:26:21,760 Speaker 2: doctor who's got sixteen million dollars in Super, mainly in property. 461 00:26:22,080 --> 00:26:24,040 Speaker 2: We worked out for him it's going to be about 462 00:26:24,119 --> 00:26:28,720 Speaker 2: ninety eight thousand dollars. It's quite small in relation to 463 00:26:28,760 --> 00:26:32,200 Speaker 2: his portfolio, and the cost of moving property would be 464 00:26:32,480 --> 00:26:33,639 Speaker 2: milliontant stamp duty. 465 00:26:34,359 --> 00:26:39,520 Speaker 1: Right, So you're saying that, whatever it is, and whatever 466 00:26:39,560 --> 00:26:43,560 Speaker 1: it's false, that moving it outside Super would be more expensive. 467 00:26:44,040 --> 00:26:49,879 Speaker 2: Possibly because see it's hard to get money out. If 468 00:26:49,920 --> 00:26:53,639 Speaker 2: you're wealthy enough to have over three million in Super 469 00:26:53,640 --> 00:26:56,919 Speaker 2: each you've probably got a fair bit of money outside Seeper, 470 00:26:57,720 --> 00:27:00,480 Speaker 2: and it's very hard to get under the thirty percent racket. 471 00:27:01,320 --> 00:27:04,720 Speaker 2: So for most my strong advice is, as I've done, 472 00:27:04,760 --> 00:27:08,080 Speaker 2: talk to your account and run the numbers, and I've 473 00:27:08,080 --> 00:27:12,680 Speaker 2: decided you're better to stay in even though we hate it. 474 00:27:13,359 --> 00:27:16,200 Speaker 2: But also one more thing, one more thing, the transfer 475 00:27:16,280 --> 00:27:20,399 Speaker 2: balance cap was increasing to two million dollars. People don't 476 00:27:20,520 --> 00:27:24,359 Speaker 2: understand the transfer balance cap. It's the amount you can 477 00:27:24,400 --> 00:27:30,000 Speaker 2: transfer to Super Now I did my transfer years ago 478 00:27:30,119 --> 00:27:34,560 Speaker 2: at one point six million, my transfer cap is over. 479 00:27:36,040 --> 00:27:39,120 Speaker 2: But if I were to put one million dollars, I'd 480 00:27:39,119 --> 00:27:42,600 Speaker 2: still have six hundred thousand left to do. So many 481 00:27:42,680 --> 00:27:45,879 Speaker 2: people have only used part of the transfer balance cap. 482 00:27:46,080 --> 00:27:48,239 Speaker 2: Then they can use part of the remaining if they 483 00:27:48,240 --> 00:27:50,840 Speaker 2: wish to to transfer more to Super. And the other 484 00:27:50,880 --> 00:27:54,040 Speaker 2: misconception is it does not limit what your pension can 485 00:27:54,080 --> 00:27:57,680 Speaker 2: grow to. I know two people have had a very 486 00:27:57,680 --> 00:28:01,720 Speaker 2: good year. Their pension balances down four million, but that's 487 00:28:01,760 --> 00:28:05,679 Speaker 2: the growth. So if your money in pension mode is 488 00:28:05,720 --> 00:28:09,600 Speaker 2: earning more than your withdrawals, then it's growing, which is fine. 489 00:28:10,240 --> 00:28:14,080 Speaker 1: Interesting, okay, all right, as you say it's a very 490 00:28:14,119 --> 00:28:17,159 Speaker 1: hot area. I'man just interested in the broad sweep of 491 00:28:17,160 --> 00:28:20,160 Speaker 1: what you're saying that in most cases, most of the time, 492 00:28:20,160 --> 00:28:23,280 Speaker 1: it's worth reconsidering the tax that even if it arrives, 493 00:28:23,280 --> 00:28:25,879 Speaker 1: the difficulty will be moving it will be moving it 494 00:28:25,920 --> 00:28:28,400 Speaker 1: outside could be more expensive. And the second short there, 495 00:28:28,520 --> 00:28:30,400 Speaker 1: as you say two million, it goes to two million. 496 00:28:30,440 --> 00:28:32,680 Speaker 1: That is, folks, two million tax free the amount you 497 00:28:32,720 --> 00:28:34,760 Speaker 1: can happen super tax free. 498 00:28:34,640 --> 00:28:37,439 Speaker 2: Now not the amount you could happen super. Yeah, you 499 00:28:37,480 --> 00:28:40,720 Speaker 2: can transfer to super after Jene thirtieth, Yes, you haven't 500 00:28:40,800 --> 00:28:42,320 Speaker 2: done anything before. 501 00:28:42,040 --> 00:28:45,560 Speaker 1: Then, transfer balance cap. That's right. Strictly technically the taxfer 502 00:28:45,680 --> 00:28:48,160 Speaker 1: balance cap, which is our guidance on how much is 503 00:28:48,200 --> 00:28:50,400 Speaker 1: tax free and super each year, which is moving from 504 00:28:50,400 --> 00:28:51,760 Speaker 1: one point nine to two. Isn't that right? 505 00:28:51,960 --> 00:28:54,760 Speaker 2: July want how much you can move to super? It 506 00:28:54,800 --> 00:28:58,760 Speaker 2: can then grow as long as your earnings exceed your withdrawals. 507 00:28:58,800 --> 00:28:59,240 Speaker 2: It'll grow. 508 00:28:59,560 --> 00:29:03,560 Speaker 1: That's fine, Yes, and it can as you say, there's 509 00:29:03,560 --> 00:29:05,240 Speaker 1: no limit on that. It can grow as much as 510 00:29:05,240 --> 00:29:05,760 Speaker 1: it wants. 511 00:29:06,160 --> 00:29:08,920 Speaker 2: Sure. Yeah, but you're still going to take your mandatory 512 00:29:09,000 --> 00:29:11,160 Speaker 2: withdrawals and they get bigger as you get out. 513 00:29:11,720 --> 00:29:13,960 Speaker 1: Yeah, that's right. They start at four percent or so 514 00:29:14,000 --> 00:29:17,880 Speaker 1: and they go okay, now, questions, all right, where will 515 00:29:17,920 --> 00:29:22,280 Speaker 1: we start? I think that we'll start with Mix says, notwithstanding, 516 00:29:22,320 --> 00:29:25,360 Speaker 1: that's super bigan a lot smaller than today. It's now 517 00:29:25,440 --> 00:29:28,160 Speaker 1: twelve percent as we said, and it starts goes from 518 00:29:28,160 --> 00:29:31,120 Speaker 1: eleven point five to twelve percent. This did I want 519 00:29:31,120 --> 00:29:37,440 Speaker 1: it started? Mick says. Pension outflows will usually be four percent. 520 00:29:37,640 --> 00:29:39,680 Speaker 1: That is the amount that must be spent. Do you 521 00:29:39,760 --> 00:29:43,200 Speaker 1: expect someone like me in my thirties will see superannuation 522 00:29:43,440 --> 00:29:47,680 Speaker 1: invested more conservatively, given that the big super funds will 523 00:29:47,760 --> 00:29:51,840 Speaker 1: have to consider shorter investment horizons to have their liquidity 524 00:29:51,920 --> 00:29:55,080 Speaker 1: mixed accurate in the next decade, And what could that 525 00:29:55,120 --> 00:29:59,080 Speaker 1: do to my returns? Really good question, Mick. So, what 526 00:29:59,120 --> 00:30:02,520 Speaker 1: Mick is saying is he's thirty or so. He knows 527 00:30:02,560 --> 00:30:05,400 Speaker 1: that super is changing. He knows that the context in 528 00:30:05,440 --> 00:30:08,720 Speaker 1: which are SUPER operates. It used to be that nearly 529 00:30:08,720 --> 00:30:12,000 Speaker 1: everybody was in accumulation. It's going to the point where 530 00:30:12,320 --> 00:30:15,160 Speaker 1: nearly everybody would be in retirement. Basically, what I'm saying 531 00:30:15,200 --> 00:30:18,360 Speaker 1: here is that the emphasis change. The funds must pay 532 00:30:18,400 --> 00:30:21,000 Speaker 1: more than they used to, They must pay more pensions 533 00:30:21,040 --> 00:30:23,440 Speaker 1: than they used to. Well, that change the nature of 534 00:30:23,480 --> 00:30:26,120 Speaker 1: them and SUPER returns ultimately for people like Mick. 535 00:30:26,200 --> 00:30:28,840 Speaker 2: Do you think no, Well, bear in mind, there's a 536 00:30:28,880 --> 00:30:33,880 Speaker 2: baby boomer bulge in thirty years. The baby boomers are 537 00:30:33,920 --> 00:30:40,000 Speaker 2: all dead and we have a live birth rate and 538 00:30:40,080 --> 00:30:42,120 Speaker 2: Marcaels will be wrong. So I've got no fear of 539 00:30:42,160 --> 00:30:44,160 Speaker 2: that at all, No fear at all. 540 00:30:44,240 --> 00:30:47,400 Speaker 1: Right, what about pressure on the funds to pay pensions 541 00:30:47,400 --> 00:30:48,440 Speaker 1: that weren't there before? 542 00:30:49,240 --> 00:30:51,840 Speaker 2: Yes, but that will be gone by the time he's 543 00:30:51,840 --> 00:30:54,640 Speaker 2: sixty five, there will be gone right, the bulge will 544 00:30:54,680 --> 00:30:55,000 Speaker 2: be over. 545 00:30:55,520 --> 00:30:57,120 Speaker 1: I see, and I've got a sign. 546 00:30:57,360 --> 00:31:00,640 Speaker 2: If you take control the things you can control, you 547 00:31:00,680 --> 00:31:03,640 Speaker 2: won't need to worry about the things you can't. His 548 00:31:03,920 --> 00:31:07,040 Speaker 2: major issue now should be investing while he's trying to 549 00:31:07,080 --> 00:31:10,720 Speaker 2: get the benefit of compounding. Don't worry about things. Why 550 00:31:10,720 --> 00:31:11,520 Speaker 2: a miscontroled. 551 00:31:11,600 --> 00:31:14,520 Speaker 1: Yes, yes, that's there's an observation for you make and 552 00:31:14,560 --> 00:31:18,080 Speaker 1: remember this is not advice, information only all right from 553 00:31:18,280 --> 00:31:23,120 Speaker 1: David A constant listener. I bought an exchange traded funds 554 00:31:23,120 --> 00:31:29,160 Speaker 1: in US small cap shares. I think David is implying 555 00:31:29,200 --> 00:31:31,960 Speaker 1: that he bought them having listened to the show directly. 556 00:31:32,520 --> 00:31:36,560 Speaker 1: Volatility no problem, but the distributions are at pittance and 557 00:31:36,880 --> 00:31:41,880 Speaker 1: on franked. Yes, okay, bringing us back to what we were 558 00:31:41,800 --> 00:31:45,200 Speaker 1: talking about at the start of the show, moving cash 559 00:31:45,320 --> 00:31:49,560 Speaker 1: out of Australia looking for investments. An easy way, a practical, 560 00:31:49,680 --> 00:31:53,880 Speaker 1: pragmatic way into offshore markets is to buy funds. Some 561 00:31:53,880 --> 00:31:56,840 Speaker 1: people will buy ETFs, some people will buy active funds. 562 00:31:56,960 --> 00:31:59,760 Speaker 1: One thing they have in common know is us dividends 563 00:31:59,800 --> 00:32:02,360 Speaker 1: are are really small, right, They're like one point something percent. 564 00:32:02,440 --> 00:32:05,560 Speaker 1: Hours are four percent, and you don't get to franking, 565 00:32:06,240 --> 00:32:12,120 Speaker 1: so David was surprised when he got his small cap returns. 566 00:32:12,320 --> 00:32:14,120 Speaker 1: I think with the US you have to you have 567 00:32:14,240 --> 00:32:16,480 Speaker 1: to take that on board, don't you. You The game 568 00:32:16,600 --> 00:32:18,960 Speaker 1: is all about growth of the price of your shares 569 00:32:19,080 --> 00:32:20,680 Speaker 1: or your fund, not the dividends. 570 00:32:21,080 --> 00:32:23,880 Speaker 2: Hey, James, I think forty years ago you and I 571 00:32:23,960 --> 00:32:27,320 Speaker 2: bought Berkshire Hathaway never paid a dividend. I think we'd 572 00:32:27,400 --> 00:32:28,160 Speaker 2: be very happy. 573 00:32:28,760 --> 00:32:35,360 Speaker 1: Yes, yes, yeah, very happy because American companies reinvest the profits. 574 00:32:36,000 --> 00:32:37,560 Speaker 1: Why don't we? Why don't we. 575 00:32:38,320 --> 00:32:41,400 Speaker 2: Because as sherhowlders want their Frank dividends and they got 576 00:32:41,440 --> 00:32:42,320 Speaker 2: to have them. 577 00:32:42,680 --> 00:32:45,760 Speaker 1: So the Frank dividends actually a negative then for the 578 00:32:45,800 --> 00:32:47,000 Speaker 1: economy in some ways. 579 00:32:47,520 --> 00:32:50,040 Speaker 2: I don't think they are. But I'm saying that investors 580 00:32:50,040 --> 00:32:54,360 Speaker 2: in Australia like Frank dividends and expect companies to pay dividends. 581 00:32:54,640 --> 00:32:58,880 Speaker 2: We are more dividend driveling company than most people. This 582 00:32:58,920 --> 00:33:02,840 Speaker 2: is why I'm concerned about this unrealized capital gains business 583 00:33:03,160 --> 00:33:06,800 Speaker 2: because overseas shares will tend to grow quicker than Australian 584 00:33:06,840 --> 00:33:09,720 Speaker 2: shares because we've got more in the yield, we've got 585 00:33:09,720 --> 00:33:12,520 Speaker 2: more distributions. 586 00:33:12,160 --> 00:33:14,360 Speaker 1: So you think that's a structural thing that's going to 587 00:33:14,520 --> 00:33:16,320 Speaker 1: just that's the way it is now from now on. 588 00:33:16,400 --> 00:33:18,960 Speaker 2: The way it is. Yeah. Right, if you invest the 589 00:33:19,000 --> 00:33:21,160 Speaker 2: other thing overseas, you've got a risk in the currency. 590 00:33:21,840 --> 00:33:23,000 Speaker 2: That's another issue. 591 00:33:24,080 --> 00:33:25,400 Speaker 1: And how do you account for that? 592 00:33:26,800 --> 00:33:28,880 Speaker 2: Well, it's just life. I mean you're either buy something 593 00:33:28,920 --> 00:33:30,320 Speaker 2: hedged or just copied. 594 00:33:31,000 --> 00:33:32,040 Speaker 1: Yes, and what do you do? 595 00:33:33,200 --> 00:33:36,920 Speaker 2: Well, every investment has good points and bad points. I 596 00:33:36,960 --> 00:33:41,480 Speaker 2: only invest to manage funds from Australia and most of 597 00:33:41,520 --> 00:33:42,800 Speaker 2: them are hedged, but some aren't. 598 00:33:43,240 --> 00:33:47,160 Speaker 1: Okay, So no strict rule on that. Okay. Now finally 599 00:33:47,240 --> 00:33:49,760 Speaker 1: question from Ben. This was off the back of course, 600 00:33:49,800 --> 00:33:51,880 Speaker 1: we did two shows No lo on crypto. We did it. 601 00:33:52,640 --> 00:33:53,360 Speaker 2: Don't stop me on that. 602 00:33:53,440 --> 00:33:55,640 Speaker 1: Yes, here we go, Yes, yes, I wonderful side you 603 00:33:55,680 --> 00:33:58,680 Speaker 1: would have been on. We had a cryptoskeptic who put 604 00:33:58,720 --> 00:34:05,360 Speaker 1: forward the skeptics case, and then we did a crypto supporter, which, 605 00:34:05,560 --> 00:34:07,920 Speaker 1: believe it or not, was AMP, which of course reacent 606 00:34:07,960 --> 00:34:11,480 Speaker 1: if we're twenty seven million into crypto. So we had 607 00:34:11,560 --> 00:34:15,800 Speaker 1: the two sides of the bitcoin and we were debating 608 00:34:15,800 --> 00:34:18,399 Speaker 1: it basically in the show with two consecutive shows. Now 609 00:34:18,560 --> 00:34:21,919 Speaker 1: from those shows, Ben asks isn't a stable coin from 610 00:34:22,040 --> 00:34:27,120 Speaker 1: Walmart just like a souped up gift card. Why would 611 00:34:27,120 --> 00:34:29,800 Speaker 1: you give Walmart real money for a stable coin just 612 00:34:29,920 --> 00:34:32,880 Speaker 1: so they can give you real money back without interest. 613 00:34:33,120 --> 00:34:35,719 Speaker 1: I think you're really onto something, Ben. I think the 614 00:34:35,840 --> 00:34:42,839 Speaker 1: arrival of very big players into crypto JP Morgan, Walmart, Amazon, 615 00:34:44,160 --> 00:34:47,680 Speaker 1: I think they are seeing the payment system change before 616 00:34:47,719 --> 00:34:51,480 Speaker 1: their eyes and there it's a grab for territory and power, 617 00:34:51,760 --> 00:34:53,759 Speaker 1: and they are getting involved because they say, this is 618 00:34:53,800 --> 00:34:55,520 Speaker 1: a new payment system and if we can get a 619 00:34:55,560 --> 00:34:58,160 Speaker 1: slice of it early, we will increase our power in it. 620 00:34:58,920 --> 00:35:01,600 Speaker 1: I think that's actually self explanatory. The harder it is 621 00:35:01,640 --> 00:35:05,120 Speaker 1: people actually investing in it, because they are putting forward 622 00:35:05,160 --> 00:35:07,680 Speaker 1: an investment case. And we had Shane Oliver aren't chief 623 00:35:07,680 --> 00:35:11,600 Speaker 1: economist of AMP, and he was explaining why AMP put 624 00:35:11,600 --> 00:35:15,600 Speaker 1: twenty seven million, twenty seven million into crypto even though 625 00:35:15,600 --> 00:35:18,239 Speaker 1: there's no intrinsic value. And I thought to take away 626 00:35:18,280 --> 00:35:24,320 Speaker 1: from Shane's explanation was that investment can operate without intrinsic value. 627 00:35:25,040 --> 00:35:28,680 Speaker 2: What do you think, No, Well, think about the tulips 628 00:35:28,719 --> 00:35:34,000 Speaker 2: in Holland. Yeah. I mean, look, if you want to 629 00:35:34,040 --> 00:35:35,759 Speaker 2: back a horse, you can pick the race and the 630 00:35:35,840 --> 00:35:39,440 Speaker 2: jockey and the track. If you want to buy property, 631 00:35:39,480 --> 00:35:42,520 Speaker 2: you can pick location. Everything else. You want to buy shares, 632 00:35:42,600 --> 00:35:45,279 Speaker 2: you can pick all sorts of factors. You only buy 633 00:35:45,360 --> 00:35:49,879 Speaker 2: crypto because you think it's going up. I just don't 634 00:35:49,960 --> 00:35:54,319 Speaker 2: like to invest that way, you know. I mean, I 635 00:35:54,520 --> 00:35:58,240 Speaker 2: just like things. I know, I understand cash, property in shares. 636 00:35:58,520 --> 00:36:01,200 Speaker 2: I don't like dambing and things know nothing about. Look, 637 00:36:01,440 --> 00:36:03,560 Speaker 2: it's a gamble to me if you want to gamble, gamble. 638 00:36:04,160 --> 00:36:07,200 Speaker 1: Do you think if if you saw more action in 639 00:36:07,200 --> 00:36:11,319 Speaker 1: this area of the RBA AMP, maybe major super fund 640 00:36:11,360 --> 00:36:13,920 Speaker 1: coming next, that is an industry fund comes in next, 641 00:36:13,960 --> 00:36:14,840 Speaker 1: would you change review? 642 00:36:15,440 --> 00:36:15,520 Speaker 2: No? 643 00:36:17,160 --> 00:36:17,399 Speaker 1: Right? 644 00:36:19,880 --> 00:36:22,560 Speaker 2: You know. The main thing about bitcoin, it's supposed to 645 00:36:22,600 --> 00:36:26,680 Speaker 2: be anonymous. This is the point. It suits people who 646 00:36:26,719 --> 00:36:29,880 Speaker 2: don't want to be chased by the ato. You know. 647 00:36:30,200 --> 00:36:34,879 Speaker 2: But let's see, ok, let's see. 648 00:36:34,880 --> 00:36:38,759 Speaker 1: Let's see, let's see. Indeed. All right, very good, No God, 649 00:36:38,760 --> 00:36:40,319 Speaker 1: thank you very much for coming on the show today. 650 00:36:40,360 --> 00:36:42,279 Speaker 1: Great to have you on board again. Lovely to talk 651 00:36:42,280 --> 00:36:42,520 Speaker 1: to you. 652 00:36:42,680 --> 00:36:46,560 Speaker 2: We'll talk again always, pleasure lovely. 653 00:36:46,600 --> 00:36:49,760 Speaker 1: Thank you, Noel, and thank you everyone for that. Responses 654 00:36:50,000 --> 00:36:53,439 Speaker 1: on a crypto shows interesting. I must say we got 655 00:36:53,440 --> 00:36:58,120 Speaker 1: a lot much more. We got much more complaints about 656 00:36:58,239 --> 00:37:04,919 Speaker 1: Jackie's approach and her skepticism than we did about AMP being, 657 00:37:05,080 --> 00:37:08,279 Speaker 1: you know, a century old financial institution putting twenty seven 658 00:37:08,320 --> 00:37:12,319 Speaker 1: million into crypto, even though it has yet to be 659 00:37:12,400 --> 00:37:15,080 Speaker 1: determined in many ways. If ever, it'll be determined whether 660 00:37:15,120 --> 00:37:17,200 Speaker 1: it has intrinsic value or not. That's the debate that 661 00:37:17,280 --> 00:37:19,760 Speaker 1: sits there. I thought it was very interesting today looking 662 00:37:19,840 --> 00:37:22,480 Speaker 1: forward to the new financial year, and I like where 663 00:37:22,560 --> 00:37:26,600 Speaker 1: NOL was coming from. Really, it's not the time you 664 00:37:26,840 --> 00:37:29,319 Speaker 1: join the market, it's your time in the market, and 665 00:37:29,360 --> 00:37:31,840 Speaker 1: I think that's appropriate for all the acid classes. We 666 00:37:31,840 --> 00:37:34,880 Speaker 1: had to look at, Okay, the money puzzle at the 667 00:37:34,920 --> 00:37:38,279 Speaker 1: Australian dot com dot au. If you need to tell 668 00:37:38,360 --> 00:37:41,000 Speaker 1: us something, to send in something, talk to you soon.