Speaker 1: Hello, and welcome to the Australian's Money Puzzle podcast. I'm
Speaker 1: James Kirby, Welsh editor at The Australian. Now welcome aboard
Speaker 1: of your body. My guest today is a special guest,
Speaker 1: a special guest with a capital G. He is quite
Speaker 1: simply the doyene really of personal and finance investment in
Speaker 1: Australia's author of many financial books, including Making Money Made Simple,
Speaker 1: which is I would reckon on just about every shelf
Speaker 1: of every home that anyone whoever really wanted to get
Speaker 1: a grab on how it all works. I see it's
Speaker 1: in twenty He's had twenty five editions of that book,
Speaker 1: which has got to be a record. It's of course
Speaker 1: no Whittaker, and I'm delighted to have him on the show.
Speaker 1: He's just produced his latest book, which is called Will's
Speaker 1: The Death and Taxes Made Simple. I know, how are you, hi, James.
Speaker 2: Great to be with you. I've been a great fan
Speaker 2: of your podcast for a long time, so it's great
Speaker 2: to talk.
Speaker 1: Oh, thank you very much, Thank you very much. Well
Speaker 1: there you are. Mutual admiration Society of two straight away.
Speaker 1: But they tell me about the Yeah, Making Money Made Simple.
Speaker 1: I presume that's your biggest seller of all the books,
Speaker 1: is it. I'm only guessing yes.
Speaker 2: I would think so when so many people call it
Speaker 2: making money made easy and there's no connection between simple
Speaker 2: and easy. It's simple, but simple need not be easy.
Speaker 1: We have a joke basically inside the Australian now that
Speaker 1: we can see so easily how stories perform and all that,
Speaker 1: and you can measure, you know, how many people read it,
Speaker 1: how long did they read it for et cetera. If
Speaker 1: we have a joke that, like in personal finance, if
Speaker 1: you if you want a story to go really well,
Speaker 1: all you have to do is put a headline on
Speaker 1: it which says like how to make a million easy,
Speaker 1: and it will always be read because there's always this demand,
Speaker 1: isn't there. There's always this uh, misapprehension. I suppose that
Speaker 1: you can make money easily or without taking a risk
Speaker 1: or without thinking about it, and I think that's something
Speaker 1: that you've always worked on and challenged really but at
Speaker 1: the same time as you say it can be done well.
Speaker 2: Look, I've never been one for sensational headlines market right
Speaker 2: the headline market's about to crash.
Speaker 1: Yes, and it would do well. No, it would it
Speaker 1: would do well.
Speaker 2: Yes, we do very well. But the whole thing about
Speaker 2: making money is it happens slowly and compoundies is the secret.
Speaker 2: Compounding slow to start and gets faster and faster as
Speaker 2: time passes. I tell the story of the lily in
Speaker 2: the pond that doubles every day and fills the pond
Speaker 2: in ten days. How long to goo from quarter full
Speaker 2: to full? The answer is two days, quarter to half
Speaker 2: on the ninth, and half fall to fall on the tenth. Now,
Speaker 2: if that ten days is your investment time frame, and
Speaker 2: you because you start late or cash early, if you've
Speaker 2: only got eight days, you miss out on three quarters
Speaker 2: of what you would have had. Basically, investment, it's all
Speaker 2: about time in.
Speaker 1: And I suppose the corollary of that is to start
Speaker 1: as soon as you possibly can always.
Speaker 2: I spoke to Blake last week. He's now worth about
Speaker 2: four hundred million. He said, I was in school at
Speaker 2: fifteen and you came and gave a talk to the kids,
Speaker 2: and you talked about compound interest, and that was life
Speaker 2: changing for me.
Speaker 1: Yes, it's something I think that's even more relevant now
Speaker 1: with property prices, where perhaps earlier generations it was a choice,
Speaker 1: would you like to be wealthy. Would you like to
Speaker 1: make money? This current generation, it's like, if you want
Speaker 1: to buy a house, you have to make money, you
Speaker 1: must make that deposit. It's become more compulsory, or at
Speaker 1: least mandatory. I think for this generation than your generation
Speaker 1: or my generation.
Speaker 2: I think, well, well, I think back about nineteen seventy five.
Speaker 2: We were building houses and the house was thirty thousand
Speaker 2: dollars in Brisbane, a low set brick network two years income,
Speaker 2: and people borrowed money at fourteen percent. The same house
Speaker 2: is ten times dearer at eight hundred thousand dollars. So
Speaker 2: they've just got so much more expensive in real terms.
Speaker 2: That's the problem.
Speaker 1: It's the problem. I I'm want to talk about your
Speaker 1: book in a second and the issues. I said, I'll
Speaker 1: ask you one quick thing if I could. Had a
Speaker 1: guest on Tuesday, Duncan Perkins, an accountant who was very good,
Speaker 1: and we mentioned on the show that you were coming
Speaker 1: on today, and he said, Noel is very skeptical about
Speaker 1: investment property and that he certainly was of the impression
Speaker 1: that you believe that in terms of making money, there's
Speaker 1: a lot of easier ways and more reliable ways than
Speaker 1: investment property. Our shows on Tuesday tend to concentrate on
Speaker 1: investment property. Is that your sort of disposition.
Speaker 2: It's been my experience times.
Speaker 1: Right.
Speaker 2: I'm sold a property for seven hundred thousand, which cost
Speaker 2: me two hundred and twenty thousand in two thousand, that's
Speaker 2: twenty four years. My money in shares would be worth
Speaker 2: in the index, which will be worth one point five
Speaker 2: million dollars. Now I solwed this because I got sick
Speaker 2: of it. I had to sell it. Now I'm going
Speaker 2: to pay one hundred thousand capital gains tax that would
Speaker 2: have been in shares. There's never a need to sell.
Speaker 2: So if you've got property, you need to turn it
Speaker 2: over and make it better and improve it. And that's
Speaker 2: got massive costs, plus the land tax and the rates
Speaker 2: and the insurance. You buy an index fund which requires
Speaker 2: no decisions and your set and forget. It's done nine
Speaker 2: percent total for one hundred and twenty years. It's hands
Speaker 2: down the best.
Speaker 1: Right, Okay, But I suppose you you would allow that
Speaker 1: every property is individual and there will always be individual
Speaker 1: properties always.
Speaker 2: But the thing is, there's no such animal as the
Speaker 2: property market. There might be point Piper and cans and
Speaker 2: madeer and perth, you know, and some are going well
Speaker 2: and some aren't. About shares, you can start with bug
Speaker 2: roll anyway, that's the great thing bout shit it is.
Speaker 1: It is absolutely okay, terrific. Now, let's talk about your
Speaker 1: new book, which I can tell you like everyone else,
Speaker 1: I'm only human. And it's many people have asked to
Speaker 1: come on the show and talk about wills and estate planning,
Speaker 1: and I have resisted it because I think someone has
Speaker 1: to be very good and very articulous to actually make
Speaker 1: it interesting. And you've just done this book on this
Speaker 1: whole area, and you have a couple of things you
Speaker 1: really a couple of points I know that you really
Speaker 1: wanted to make. One was about to review reviewing your
Speaker 1: will regularly. If you don't review your will regularly, it
Speaker 1: doesn't become non and void.
Speaker 2: Now, it doesn't become null and void, but it might
Speaker 2: be out of date. I mean, since you might do well.
Speaker 2: Most people might be will at age forty eight. The
Speaker 2: reason is that's when their parents are writy and they're
Speaker 2: thinking about the inherence. You know. But you may have
Speaker 2: extra kids, There may be relationship breakdowns. One of your
Speaker 2: kids might have got divorced, there's also you may have
Speaker 2: changed houses. It's important that your estate reflects the circumstances
Speaker 2: of the time. That's why we say at least every
Speaker 2: three or four years review you will, but don't forget
Speaker 2: to you. It's four specialties a state planning is law
Speaker 2: and tax and superannuation and all the financial planning stuff
Speaker 2: such as age care. So it's a multi dissamer area.
Speaker 1: Yes, every four years is your recommendation.
Speaker 2: Well, not so much. That's so much every time there's
Speaker 2: a change of circumstance.
Speaker 1: Yeah, yeah, or life major life events. Major life events,
Speaker 1: I mean very obvious ones, being a divorce for instance.
Speaker 2: Okay, all the parents' death, you know, or parents to
Speaker 2: age care. Also, these days, people are living longer and
Speaker 2: all the relationships are becoming more common. There's two couples
Speaker 2: and one partner dies in each and they re partner
Speaker 2: and that's a whole new ball game. Again. They want
Speaker 2: to keep their money for each side. They don't want
Speaker 2: it intermingled.
Speaker 1: You're right, Okay, So let's say that happens. Then what
Speaker 1: would be the pathway for that in the case where
Speaker 1: the couple remarried, where the two individuals who were left widowed,
Speaker 1: if you like, remarried, and they came to you or
Speaker 1: someone like you, what would your advice? What would your
Speaker 1: advice be?
Speaker 2: Well, first of all, people don't understand, but you can
Speaker 2: have a house as joint tenants or as tenants in common.
Speaker 2: On death, joint tenancy automatically goes to the survivor, and
Speaker 2: that's the way most young couples hold the house. But
Speaker 2: if you're a second relationship, as normally tenants in common,
Speaker 2: so you could individually leave your share to your inside.
Speaker 2: There's also a trick. Let's say that a couple marry
Speaker 2: and they resource her and little bit out of balance,
Speaker 2: and say that she gets sick and needs to go
Speaker 2: to a nursing home. He pays the half a million
Speaker 2: dollars for the bond on her death that goes to
Speaker 2: her estate automatically. So who's a state is missed out
Speaker 2: on half a million dollars. Now, the way around that
Speaker 2: is he makes a line to her of half a
Speaker 2: million dollars. Problem solved. It's easier to solve a problem
Speaker 2: in advance.
Speaker 1: It is, of course, yes, a clearness I wanted just
Speaker 1: on that whole area. And it's a difficult area, of course,
Speaker 1: it is. And age care and aging of Australia with
Speaker 1: a huge issue, and finally some breakthrough in recent times
Speaker 1: about each care which cut to the chase. Basically, people
Speaker 1: who are self funder retirees may end up paying about
Speaker 1: nine thousand dollars more works then they might have been
Speaker 1: under the old regime.
Speaker 2: And age care is the most complex topic I.
Speaker 1: Know, yes, and it's a it's difficult. I mean it's
Speaker 1: difficult for everybody, the including the sons and daughters of
Speaker 1: the person, who are only human and in making decisions
Speaker 1: financially for their parents. Only someone with no emotions that
Speaker 1: all could could separate the fact that their inheritance is
Speaker 1: shrinking basically on the basis of some of the decisions
Speaker 1: they might make in relation to age care. That's that's
Speaker 1: something that everybody has to face. One of the things
Speaker 1: you bring up during powers of attorney which sounds could
Speaker 1: you first of all explain what that is? And I
Speaker 1: just want to explain also I want to bring up
Speaker 1: the point then as to it sounds great, but what
Speaker 1: if the person says.
Speaker 2: No.
Speaker 1: If the person says yeah, when it comes to that
Speaker 1: stage that I have lost my capacity, I'll sign it.
Speaker 1: But of course it's to late them. I bet it
Speaker 1: happens all the time, but could you expland what the
Speaker 1: joint powers of attorney is and the issues around that.
Speaker 2: There there will be a time in most people's lives
Speaker 2: when they don't have capacity, and therefore the enduring power
Speaker 2: of attorney exists as long as they are alive. Many
Speaker 2: people think it survives thee deceased, and it doesn't. Many
Speaker 2: widows have rushed down to the bank with the document
Speaker 2: to be told it doesn't work anymore. But I stress
Speaker 2: in the book you need to rehearse it now in
Speaker 2: case reasons. I heard about woman was a widow, two
Speaker 2: kids had the endearing powers of attorney. They go to
Speaker 2: the bank to withdraw five hundred thousand for the bond.
Speaker 2: Bank says a power of attorney is not valid because
Speaker 2: the kids signed before the widow and the document is
Speaker 2: giving power. So those who accept the pair can't sign
Speaker 2: before the giver said, simply solved will get the attorneys
Speaker 2: to resign. Banks, says I I one quite accept that,
Speaker 2: and that they go to the court because banks can
Speaker 2: be very difficult, extremely difficult.
Speaker 1: Just just backtrack for a second. So during powers of attorney,
Speaker 1: it's a situation where For instance, I have a very
Speaker 1: old parent and that very old parent, or I or
Speaker 1: anyone like me has a very old parent, and we
Speaker 1: know that parent is fine, but we also know that
Speaker 1: in whatever the three or four years time they're going
Speaker 1: to the statistics would suggest that they're going to find
Speaker 1: it too hard to pay their bills, to manage things,
Speaker 1: and signed documents. So as a preemptive measure as a
Speaker 1: defense for them, to help them and to help the
Speaker 1: family have all this done properly, the present suggests, Hey
Speaker 1: dad or hey mom, there's a thing called enduring power
Speaker 1: of attorney, and if you sign it, it means that
Speaker 1: I'll be able to manage your affairs for you on
Speaker 1: your behalf should you lose capacity. Now, that's the enduring
Speaker 1: property what But how often do you think they work
Speaker 1: and how often do you think the older person resists?
Speaker 2: Well, I think the older person is usually amenable to it.
Speaker 2: The trouble is when you try to use it, if
Speaker 2: the bank doesn't accept it, or worse still, if you
Speaker 2: can't find it. I heard about a guard headed the will,
Speaker 2: the power of attorney and the advance Health Directive and
Speaker 2: put them all in the safe and the kids needed
Speaker 2: the court order to get them. So those documents need
Speaker 2: to be available.
Speaker 1: Okay, so what's the perfect way to do it.
Speaker 2: Well, you need the documents and your family should know
Speaker 2: about them. One of the things to be covered in
Speaker 2: the book is a lot of people now prepay their
Speaker 2: funerals because you can pay fifteen thousand, five hundred dollars
Speaker 2: a big exempt from Santlowick. It's a good age pension strategy.
Speaker 2: But it's too late when you're all in church to
Speaker 2: find out that you've prepaid a different funeral director. But
Speaker 2: very important the kids know if it's a prepaid funeral,
Speaker 2: who's got it? I hear time and time again. Ah.
Speaker 2: We went through mum's stuff and all the things we
Speaker 2: found you couldn't believe it. One person said all the
Speaker 2: books were full of banknotes.
Speaker 1: Yes, at least with banknotes you don't have to seek
Speaker 1: anyone that say advice about how to access them. Okay,
Speaker 1: here we'll take a short break. I'll will be back
Speaker 1: in a moment. Hello and welcome back to The Australian's
Speaker 1: Money Caused podcast. James Kirby here talking to Noel Whittaker,
Speaker 1: the author and finance commentator. The original of the species folks.
Speaker 1: Long before many of us, including myself, were on the scene,
Speaker 1: Noel really was guiding light and how to do this
Speaker 1: and how to talk to the general public about specific
Speaker 1: financial issues. And you must remember today we've got podcasts
Speaker 1: and a lot of coverage in newspapers, et cetera. But
Speaker 1: there was a time when there was very little. You
Speaker 1: had to be quite wealthy to get advice. You need
Speaker 1: to be quite wealthy to even use a stock broker,
Speaker 1: and people like Noel really broke the mold in this area.
Speaker 1: No one of the things that you mentioned about in
Speaker 1: terms of and it's hard to there's only so much
Speaker 1: we can cover today. But in the past, wills were everything, right,
Speaker 1: the will was the big thing. Yes, Now enormous amounts
Speaker 1: of money are now in super and we're compulsory super.
Speaker 1: There's a whole generation coming through where you know, outside
Speaker 1: of the family home, most of the money might be
Speaker 1: in super. There mightn't be anything really but talking about
Speaker 1: outside of super. If they put all their money in
Speaker 1: super and then after they pass on, it's all about
Speaker 1: how the super is passed on. Can you give some
Speaker 1: information about how that should be done properly?
Speaker 2: Well, the first big issue James is you will does
Speaker 2: not determine who gets you super. The trustee of your
Speaker 2: fund is the person who decides who gets the super.
Speaker 2: They can do a binding death benefit nomination that tells
Speaker 2: the trustee what they got to do. But I think
Speaker 2: the big dang is the death tax. Now most people
Speaker 2: don't understand the death tax. Now, your super has a
Speaker 2: taxable component that's contributions and earnings, and the only exempt
Speaker 2: component is stuff you've made from your own after text
Speaker 2: dollars out. That's fine enough lift to a dependent and
Speaker 2: your partners all was dependent. But if that'st lift to
Speaker 2: a non dependent as a seventeen percent tax on death.
Speaker 1: So just for the listeners, just to clarify on this
Speaker 1: one people, nowadays, the amount we're paying in compulsory super,
Speaker 1: for most people, it's so much that it's all they
Speaker 1: put in, right, They don't volunteer anything else. And so
Speaker 1: what you're saying is, let's say for the average Australian
Speaker 1: in twenty years time, their super will be made up
Speaker 1: probably I don't know, eighty or ninety percent will be
Speaker 1: compulsory super that was put in by law, and that
Speaker 1: money that should they seek in the future to pass
Speaker 1: that on to what we call an adult dependent there's
Speaker 1: a tax on that. It's seventeen percent. Is that what
Speaker 1: it works out?
Speaker 2: I know thereabouts it's non dependent MEDICALLYBIA two plus fifteen percent.
Speaker 2: Like I just say one thing there, They balance will
Speaker 2: be probably thirty percent contributions and seventy percent earnings, because
Speaker 2: as the balance grows, the contributions form a smaller component.
Speaker 2: But that's all.
Speaker 1: Taxable, yes, so okay, oh fair enough. So it's the contributions.
Speaker 1: It's that pillar, if you like, the core of the
Speaker 1: contributions that we're talking about here, and the earnings and
Speaker 1: the earnings on them, which is the vast most of
Speaker 1: the money. I spose is it?
Speaker 2: Sure? Say be what a half million of super there's
Speaker 2: eighty five thousand dollars potential death tax on that. Now
Speaker 2: there's ways around it.
Speaker 1: There is ways around us, and they're completely they are
Speaker 1: almost daft. I think they're such a sort of a
Speaker 1: circular thing. But basically what you do is you take
Speaker 1: the super out and your recontributors. Is that right?
Speaker 2: Yes? But that yes true? So once you eat sixty
Speaker 2: you can take your sleeper out of tax free and
Speaker 2: you contribute to a seventy five, so you could take
Speaker 2: if you're balance half a million dollars, you could take
Speaker 2: out three hundred thousand now and put it back. But
Speaker 2: don't forget, the earnings are still taxable on that, and
Speaker 2: you can't specify which part you withdraw. So I've got
Speaker 2: a say eighty percent taxable and twenty percent non taxable,
Speaker 2: then the withdrawals will be in those proportions. The best
Speaker 2: solution is to have your attorney instructed to withdraw the
Speaker 2: money when your death is knee tax free and put
Speaker 2: that in your bank account.
Speaker 1: Yes, do many people do that.
Speaker 2: A woman rode to me this week, sorry how her
Speaker 2: daughter around dad died and the instructions were to go
Speaker 2: straight to mum. Mum died three days later. Now Australian
Speaker 2: super were not prepared to pay the benefit to a
Speaker 2: dead person, so the whole state copped the seventeen percent
Speaker 2: because mum died so fast that there was no time.
Speaker 2: Don't forget, if you're dealing with big funds, it could
Speaker 2: take six months to get the money out, is that right.
Speaker 1: I know they're notorious for their delays and their and
Speaker 1: how slow, and probably it's probably one of the selling
Speaker 1: advantages under underestimated advantages of self managed super funds. But
Speaker 1: absolutely you don't have to deal with all that. But
Speaker 1: just on that, I just one last thing on that.
Speaker 1: I know in principle it sounds terrific, but how often
Speaker 1: can a family member, in good faith persuade someone who's
Speaker 1: literally close to deb to gift all their money. I mean,
Speaker 1: it would be a diplomatic no.
Speaker 2: It's going to the member's bank account. So I've got
Speaker 2: a million dollars in seper say the attorney takes out
Speaker 2: my million tax free and puts a million dollars in
Speaker 2: my bank account, and then the will takes over.
Speaker 1: Yes, yes, okay, I guess it. But still do you
Speaker 1: think it's common that people actually go through that process?
Speaker 2: Well, they don't get around to doing it, that's the
Speaker 2: whole problem. And then, of course, when the guy's close
Speaker 2: to death, they're soel traumatized about is amcamming if they
Speaker 2: still don't do it.
Speaker 1: Of course, that's right. It's very hard to talk about
Speaker 1: things like that at that time. Of course. Okay, one
Speaker 1: last thing, one last thing before we go to questions,
Speaker 1: and we're trying to squeeze in a lot here. But
Speaker 1: about executors, I know you the various points you want
Speaker 1: to make, But I want to say one thing to
Speaker 1: our listeners. If someone asks them, would they be the
Speaker 1: executor on their will? I have heard absolute horror stories
Speaker 1: of people who very casually said of course, and ended
Speaker 1: up being the executor on two or three different wills
Speaker 1: and found themselves in the middle of ferociously feuding families.
Speaker 1: Is there any advice you give two people about the
Speaker 1: whole business of being an executor?
Speaker 2: Well, I think the executive stands in the place of
Speaker 2: the deceased, and I think if you're making a will,
Speaker 2: you've got to make sure the executor is a person
Speaker 2: who can do that. Now, that's pretty okay if you've
Speaker 2: only got a house and super but if you've got
Speaker 2: to say, maybe rental properties and commercial property and stuff,
Speaker 2: there's big decisions to make. In the book, we talk
Speaker 2: about the case for kids and two want to keep
Speaker 2: the family home and too don't. One saying month's promised
Speaker 2: we could mortgage the house for my business. The other
Speaker 2: says no, And then the executive's got to adjudicate. You know,
Speaker 2: I'd be very loath to accept anything as an executor.
Speaker 1: You'd be you'd be very low to accept the task
Speaker 1: in itself with being an executor. Either, do you think
Speaker 1: the person should be a lawyer?
Speaker 2: Well, well, there's lawyers will do it for free. But
Speaker 2: in my own case, I found that old well i'd
Speaker 2: made fifteen years ago. Was I reviewing the current will
Speaker 2: and the people I'd chosen as executives, I would never
Speaker 2: pick now, Well, one turn out to be a dreadful
Speaker 2: stock picker, one is now too old, and one's deceased.
Speaker 2: That's why in keeping the will up to dates important.
Speaker 2: But I also like to say we stress, don't rush.
Speaker 2: I hear time and time again. Dad died. We rushed
Speaker 2: and told the bank. They froze the accounts and we
Speaker 2: couldn't pay for the funeral. You don't need to rush
Speaker 2: and tell the bank.
Speaker 1: Is there a legal requirement about how long you can
Speaker 1: not there?
Speaker 2: But the other big one is most couples exist on
Speaker 2: the husband's superannuation pension. Now he dies, they rush and
Speaker 2: tell the fund freezes the pension. It can take a
Speaker 2: year to revive it. That's a major problem. And also
Speaker 2: a big issue is most people on the age pension
Speaker 2: leave their assets to each other. Now the couple's cut
Speaker 2: off points about a million when the single cutoff points
Speaker 2: about six hundred and eighty thousand dollars. So if you've
Speaker 2: got eight hundred thousand of assets and you're getting your
Speaker 2: part pension and all the benefits, then the husband dies
Speaker 2: and the widow gets all the money, she's over the
Speaker 2: limit and she loses the pension, all these things that
Speaker 2: are so important that and they're all talking about big dollars.
Speaker 2: I mean, these mistakes cost a lot of money.
Speaker 1: Yes, but what could the person one last before we
Speaker 1: go to the big what could the person do? I mean,
Speaker 1: in a way, there's a justification to that. They've just
Speaker 1: picked up a whole pile of money. They don't need
Speaker 1: attention as much as they used to.
Speaker 2: Well, yes, but as much simpler. I always believe the
Speaker 2: same saying that you give with a warm hand. When
Speaker 2: Bill and Mary are doing their will, they could decide
Speaker 2: which kids to leave the money too, and I could
Speaker 2: leave three hundred thousand dollars to the kids and Mom
Speaker 2: would still have six hundred thousand, still get the pension.
Speaker 1: Okay, yeah, just the basic clever, cool, calm assessment of
Speaker 1: the numbers. Very good. Okay, Hey, we'll go to questions. Well,
Speaker 1: take a show break and we'll come back and try
Speaker 1: and get no to do two or three questions from
Speaker 1: our listeners back in a moment. Hello, welcome back to
Speaker 1: The Australian's Money Puzzle. I'm James Kirby talking to No
Speaker 1: fight occur, Okay, no, we'll try. Well, just tye two
Speaker 1: or three of these. David says, I'm moving my super
Speaker 1: from a wrap account to an industry fund. I want
Speaker 1: to ensure that when my accumulation faced super changes to
Speaker 1: accompa's pension within the same provider, it doesn't trigger a
Speaker 1: CGT event. However, reading all the documents, I can't see
Speaker 1: a clear answer to the question. People are always worried
Speaker 1: about that moving money and losing the CGT. You're having
Speaker 1: to pay tax in some fashion.
Speaker 2: It's the main point, James, is their insurance with his
Speaker 2: present fund. If there is will the new fund accept
Speaker 2: the insurance because you can't transfer it.
Speaker 1: Oh, you can transfer your money, but you can't transfer
Speaker 1: your insurance.
Speaker 2: And one of the lawyers was telling me that they're
Speaker 2: acting for a person. He had five super funds. Wife Amalga,
Speaker 2: bade them to save fees because he had cancer, was
Speaker 2: dying and she closed the one fund that had a
Speaker 2: four hundred thousand insurance in it, so they lost to
Speaker 2: four hundred thousand death benefits by moving funds. So the
Speaker 2: first thing is that by moving funds, is insurance an issue?
Speaker 1: Because if you move the fund and the CGT is
Speaker 1: the CGT is clean. I presume that's not an issue
Speaker 1: in this case.
Speaker 2: And say that I can't say there's any issue with keptain.
Speaker 1: Yeah, I wouldn't have thought so, by the way, David,
Speaker 1: and if all the David's out there, this is never advised.
Speaker 1: This is information only. But here's the point that Noel
Speaker 1: is making. If you're choosing between insured super funds, be
Speaker 1: very careful on the insurance because the insurance doesn't transfer
Speaker 1: with you, and when you go to the new fund,
Speaker 1: they're going to make you take all the medical tests
Speaker 1: again and fill out all the forms again. And the
Speaker 1: chances are you're probably not as healthy as you were
Speaker 1: when you signed it the first time, and so your
Speaker 1: insurance would go. What would that be the issue?
Speaker 2: Known spot on? Yeah?
Speaker 1: Yeah, okay, all right, so keep that in mind, David.
Speaker 1: All right, Tina, try and edit Tina a little, Tina,
Speaker 1: my husband and I have a self managed superfund Unlike
Speaker 1: the recommendation of one of your recent guests, we certainly
Speaker 1: didn't have a million in super fund. We set it up. Ah,
Speaker 1: quick question, No, how much do you think someone should
Speaker 1: have to set up a self managed superfund?
Speaker 2: Well, they normally say at least three or four hundred
Speaker 2: thousand dollars. But the mind issue is why do you
Speaker 2: want to self managed fund? I've got one. They're great,
Speaker 2: they're great for business premises perfect, they're very good. If
Speaker 2: you've got I've got money in property syndicates that you'd
Speaker 2: need to self manage fund for that. That's the main thing.
Speaker 2: I think the was that what often happens is that
Speaker 2: the market crashes, your superannuation goes down, no matter who
Speaker 2: it's with, Oh I'll do better meself, and they set
Speaker 2: up a self managed superannuation fund. Of course, more and
Speaker 2: more too. It's normally the bloke runs the fund and
Speaker 2: then he gets dementia and the wife doesn't want it.
Speaker 2: I think they're great in the right circumstances. As we're
Speaker 2: saying before, if you're taking out money fast, it's going
Speaker 2: to be much quicker in the self managed fund.
Speaker 1: So no, what about investment property? I don't mean business
Speaker 1: proper because you mentioned the advantages of a business property.
Speaker 1: Of course, if you put your business in an SMS,
Speaker 1: if it's the great thing. But what about residential investment
Speaker 1: property inside self managed super funds? What do you think
Speaker 1: of that?
Speaker 2: Well, as you know, I don't like residential real estate.
Speaker 1: In the first place, Yes, so you're right, I likely
Speaker 1: to like it in the super fund.
Speaker 2: Yes. But the whole thing is this, you make your
Speaker 2: property by gearing. I'd rather borrow one hundred percent of
Speaker 2: the purchase part of the property fully gear in my
Speaker 2: own name, which you don't get that concession in a superfund.
Speaker 2: It's a much lower rate of tax. Then if I've
Speaker 2: got to sell the property, sell it when I'm old
Speaker 2: and I don't earn any money, you know, I'll be
Speaker 2: in a much lower tax bracket. I'd rather keep your
Speaker 2: real estate out of your sleeper. It's much simpler.
Speaker 1: And the point you're making is that you pay high
Speaker 1: tax as an individual, and the negative gearing is considerable
Speaker 1: because the tax is high. In the super fund, the tax, say,
Speaker 1: is lo so the negative gearing isn't as good. I
Speaker 1: suppose that's it all right, sure.
Speaker 2: But also there's some conment out there the property spreakers.
Speaker 2: It will contact you and say we will start yourself
Speaker 2: many super fan exciousis saper and we will build you
Speaker 2: a property. And that's a recipe for disaster.
Speaker 1: Believe me, I don't disagree with you for one moment. Sure, folks,
Speaker 1: you will never hear them on this show. They'll tell
Speaker 1: you that much. We will not have them on. And
Speaker 1: if I sniff anyone trying that, I will protect our
Speaker 1: listeners on that one. Okay, I think we will leave
Speaker 1: it at that for today, Noel, it's great to talk
Speaker 1: to you. The name of the of the latest book
Speaker 1: from Noel is why don't you tell us what it is? Again?
Speaker 1: Once more?
Speaker 2: Will's Death and Texas made simple.
Speaker 1: Well, well, we'll have you on again. It's been great
Speaker 1: to have you on today. So thank you very much.
Speaker 2: It's a pleasure.
Speaker 1: Thank you and thank you for listening. Everybody, keep those
Speaker 1: email is coming. I have some capacity you now to
Speaker 1: pick up some questions, so let's have them. The money
Speaker 1: puzzle at the Australian dot Com dot Au producer today
Speaker 1: was Leah sam Ogloo, who has done a great job
Speaker 1: both today and over the period when I was away,
Speaker 1: and I want to thank her for that on air. Okay,
Speaker 1: talk to you soon.