1 00:00:01,200 --> 00:00:04,800 Speaker 1: Hello, James Kirby. Here just a quick note before we begin. 2 00:00:05,280 --> 00:00:08,280 Speaker 1: We're taking a short break over the holiday period and 3 00:00:08,440 --> 00:00:10,840 Speaker 1: we'll be back with the first new episode of the 4 00:00:10,880 --> 00:00:15,680 Speaker 1: Money Puzzle for the new year on Wednesday, January fourtheenth. 5 00:00:16,120 --> 00:00:19,279 Speaker 1: In the meantime, here's Jack Tossl He's one of the 6 00:00:19,520 --> 00:00:23,239 Speaker 1: younger advisors making a name for themselves and he's with 7 00:00:23,320 --> 00:00:27,600 Speaker 1: the Partners Wealth Group. He's a provocative commentator, especially in 8 00:00:27,640 --> 00:00:32,120 Speaker 1: this episode on the question of whether your home is 9 00:00:32,159 --> 00:00:35,479 Speaker 1: actually the worst investment you'll ever make. He brings up 10 00:00:35,479 --> 00:00:38,720 Speaker 1: some pretty powerful points. I'm sure you'll enjoy it on 11 00:00:38,840 --> 00:00:43,239 Speaker 1: behalf of the Money Puzzle team, especially my producer Liah Sammaglu, 12 00:00:43,280 --> 00:00:46,080 Speaker 1: who's been so good this year. I'd like to wish 13 00:00:46,080 --> 00:00:49,640 Speaker 1: you all and merry Christmas and a happy new Year. 14 00:01:00,000 --> 00:01:02,920 Speaker 1: Hello and welcome to The Australian's Money Puzzle podcast. I'm 15 00:01:03,000 --> 00:01:06,800 Speaker 1: James Kerbly. Welcome aboard everybody. Now here's the thought your 16 00:01:06,880 --> 00:01:10,160 Speaker 1: home is the worst investment that you're going to make. 17 00:01:10,680 --> 00:01:15,880 Speaker 1: About that your million dollar house, your mortgage will cost 18 00:01:15,920 --> 00:01:20,920 Speaker 1: you up to three million in the course of your 19 00:01:21,240 --> 00:01:24,800 Speaker 1: lifetime before you pay it off. So you haven't been 20 00:01:24,840 --> 00:01:28,920 Speaker 1: investing really you've been taken for a ride. That's a 21 00:01:28,959 --> 00:01:33,080 Speaker 1: provocative notion and it challenges a lot of what we've 22 00:01:33,120 --> 00:01:36,520 Speaker 1: been told makes good sense, like paying off the mortgage 23 00:01:36,520 --> 00:01:39,039 Speaker 1: as fast as you can. I didn't get the idea 24 00:01:39,080 --> 00:01:43,800 Speaker 1: from nowhere. It comes from Jack Tossl of Partners Wealth Group. 25 00:01:43,840 --> 00:01:46,160 Speaker 1: He's an advisor. He's been on the show before. He's 26 00:01:46,160 --> 00:01:49,200 Speaker 1: got some very distinct ideas. How are you, Jack? 27 00:01:49,840 --> 00:01:50,880 Speaker 2: Thanks you for having me on again. 28 00:01:51,000 --> 00:01:54,000 Speaker 1: Jacks, great to have you on again. It's a very 29 00:01:54,000 --> 00:01:59,600 Speaker 1: fresh thought in property and property investing. But lay it 30 00:01:59,600 --> 00:02:01,360 Speaker 1: out for all, because if I say to you, I 31 00:02:01,400 --> 00:02:04,160 Speaker 1: don't know about that, Jack. I like my house. It's 32 00:02:04,240 --> 00:02:07,840 Speaker 1: very comfortable. Apparently, I've been told that it's a tax 33 00:02:07,880 --> 00:02:11,720 Speaker 1: shelter forever under any government. So what am I doing wrong? 34 00:02:13,120 --> 00:02:16,280 Speaker 3: Look, I just preface this and say that there's absolutely 35 00:02:16,360 --> 00:02:18,959 Speaker 3: nothing wrong with owning your home. There are so many 36 00:02:19,040 --> 00:02:22,640 Speaker 3: benefits to it. It can provide emotional security, there's lifestyle 37 00:02:23,120 --> 00:02:25,799 Speaker 3: benefits to it. What I'm saying is when you look 38 00:02:25,840 --> 00:02:29,240 Speaker 3: at it purely through the lens of an investment, that's 39 00:02:29,280 --> 00:02:31,320 Speaker 3: when the numbers don't stack up so much. And there's 40 00:02:31,320 --> 00:02:33,519 Speaker 3: a number of reasons for that. Number one is that 41 00:02:34,520 --> 00:02:36,800 Speaker 3: nothing is taxed it up or you're paying for it 42 00:02:36,840 --> 00:02:40,400 Speaker 3: with your after tax income. Traditionally speaking, you're a bit 43 00:02:40,440 --> 00:02:44,400 Speaker 3: emotional when you buy your home, so you overpay for it. Arguably, 44 00:02:44,440 --> 00:02:46,160 Speaker 3: you're going to live in an area you want to 45 00:02:46,160 --> 00:02:47,680 Speaker 3: live in, not where you're going to get the best 46 00:02:47,720 --> 00:02:48,480 Speaker 3: investment return. 47 00:02:48,560 --> 00:02:50,120 Speaker 2: And look, you touched on it before. 48 00:02:50,280 --> 00:02:53,639 Speaker 3: Over the duration of a thirty year loan, you're probably 49 00:02:53,680 --> 00:02:57,080 Speaker 3: going to pay two x to three x what the 50 00:02:57,120 --> 00:03:00,040 Speaker 3: actual headline value of it is. 51 00:03:00,200 --> 00:03:02,160 Speaker 1: And you're going to pay that after tax. You're going 52 00:03:02,200 --> 00:03:04,200 Speaker 1: to pay that out of your pocket. Basically, there's no 53 00:03:05,560 --> 00:03:09,960 Speaker 1: there's no advantage, there's no incentives. Okay, So this is 54 00:03:09,960 --> 00:03:12,040 Speaker 1: what I suppose goes without saying that we have an 55 00:03:12,080 --> 00:03:17,200 Speaker 1: exceptionally expensive property market, and so this point is probably is. 56 00:03:17,400 --> 00:03:20,240 Speaker 1: I have no problem with saying that this point you're 57 00:03:20,240 --> 00:03:23,320 Speaker 1: making is more true than it would have been ten 58 00:03:23,400 --> 00:03:26,160 Speaker 1: twenty years ago, because in real terms of our property, 59 00:03:26,440 --> 00:03:30,000 Speaker 1: our homes have become so so expensive on every measure. 60 00:03:30,520 --> 00:03:33,280 Speaker 1: So tell me, if you're looking at the price of 61 00:03:33,320 --> 00:03:36,640 Speaker 1: a house then and someone so let's say someone takes 62 00:03:36,840 --> 00:03:39,080 Speaker 1: what you have to say there and you make that 63 00:03:39,120 --> 00:03:41,280 Speaker 1: point that your home is a very poor investment, probably 64 00:03:41,280 --> 00:03:44,200 Speaker 1: the worst investment you'll make, because you don't normally sign 65 00:03:44,320 --> 00:03:46,160 Speaker 1: up for a million dollar loan in the course of 66 00:03:46,200 --> 00:03:49,000 Speaker 1: your life, and you don't normally actually pay it out 67 00:03:49,040 --> 00:03:52,440 Speaker 1: of post tax. Before we get into how you could 68 00:03:52,440 --> 00:03:55,680 Speaker 1: actually deal with that, just explain a little bit about 69 00:03:55,960 --> 00:03:59,880 Speaker 1: explain what you meant by that, how it's a poor investment, 70 00:04:00,080 --> 00:04:02,360 Speaker 1: and how are there better investments. 71 00:04:02,840 --> 00:04:05,640 Speaker 3: Well, again, generally speaking, when people get those homes, you 72 00:04:05,640 --> 00:04:08,720 Speaker 3: want the flashy swan possible, you overpay for it, you 73 00:04:08,760 --> 00:04:11,840 Speaker 3: get a lot more room that you need, and arguably 74 00:04:12,280 --> 00:04:14,360 Speaker 3: you've got a hell of a lot of leverage there 75 00:04:14,480 --> 00:04:17,640 Speaker 3: in paying it with your after tax dollars, so effectively, 76 00:04:17,760 --> 00:04:21,240 Speaker 3: for really ten to fifteen years, all of your personal 77 00:04:21,279 --> 00:04:24,599 Speaker 3: cash flows, pretty much your excess is going strictly to 78 00:04:24,680 --> 00:04:28,520 Speaker 3: paying that off. There's no investing outside of that, whether 79 00:04:28,560 --> 00:04:31,360 Speaker 3: it's topping up your super looking at shares that traditionally 80 00:04:31,560 --> 00:04:34,160 Speaker 3: is primarily where all of it's going into that one 81 00:04:34,320 --> 00:04:35,320 Speaker 3: singular asset. 82 00:04:36,480 --> 00:04:38,400 Speaker 1: And this is the patch. I'm sure if you saw 83 00:04:38,440 --> 00:04:40,799 Speaker 1: a demographic study, you'd see that people are active investors 84 00:04:40,920 --> 00:04:44,800 Speaker 1: until they're thirty ish they buy their home. They're not 85 00:04:44,880 --> 00:04:49,720 Speaker 1: investors anymore, they peep up in their late forties maybe fifties, 86 00:04:49,800 --> 00:04:51,880 Speaker 1: and they start investing again. I'm only guessing about this 87 00:04:51,960 --> 00:04:53,360 Speaker 1: very imagine it's a pattern, is it? 88 00:04:54,400 --> 00:04:54,640 Speaker 3: Yeah? 89 00:04:54,960 --> 00:04:55,359 Speaker 2: Exactly. 90 00:04:55,360 --> 00:04:58,320 Speaker 3: And that's what we say across the board very commonly, 91 00:04:58,480 --> 00:05:01,360 Speaker 3: is that once you get them more, you put all 92 00:05:01,440 --> 00:05:03,599 Speaker 3: your excess cash flows into that and you don't look 93 00:05:03,600 --> 00:05:06,279 Speaker 3: at any investments really until you pay that off. And 94 00:05:06,320 --> 00:05:09,000 Speaker 3: you think, look, if you get your homeline at twenty 95 00:05:09,000 --> 00:05:11,320 Speaker 3: five or thirty thirty years, you're not looking at getting 96 00:05:11,360 --> 00:05:13,520 Speaker 3: back into the market really until you're fifty, and then 97 00:05:14,000 --> 00:05:15,920 Speaker 3: not knock retirements on the doorsteps. 98 00:05:16,000 --> 00:05:19,760 Speaker 1: That's right, the compounding, compounding opportunities have passed. But okay, 99 00:05:20,080 --> 00:05:23,920 Speaker 1: so then natural next question for you would be, if 100 00:05:23,960 --> 00:05:27,200 Speaker 1: what you see is the case, then paying down the 101 00:05:27,240 --> 00:05:30,520 Speaker 1: mortgage being that sort of all chestnut for in terms 102 00:05:30,560 --> 00:05:33,320 Speaker 1: of present of finance, you must by definition be challenging that. 103 00:05:34,920 --> 00:05:38,480 Speaker 3: Yeah, challenging that. You got to look at the numbers. 104 00:05:38,560 --> 00:05:41,640 Speaker 3: I don't know everyone's situation specifically, but you should be 105 00:05:41,680 --> 00:05:45,680 Speaker 3: looking at the opportunity cost of deploying that capital elsewhere. 106 00:05:45,720 --> 00:05:48,160 Speaker 3: And that's what I'm saying. There's absolutely nothing wrong with 107 00:05:48,320 --> 00:05:51,120 Speaker 3: paying down your home line owning your home as a 108 00:05:51,160 --> 00:05:53,880 Speaker 3: consumption atset, a lifestyle asset, but you do need to 109 00:05:53,920 --> 00:05:55,680 Speaker 3: look at it objectively and go, well, if I put 110 00:05:55,680 --> 00:05:58,320 Speaker 3: my money elsewhere, what returns could I be getting and 111 00:05:58,360 --> 00:06:00,200 Speaker 3: what would the long term impacts of that be. 112 00:06:00,960 --> 00:06:03,359 Speaker 1: So give us an example. I'm presuming you're alluding to 113 00:06:03,400 --> 00:06:05,280 Speaker 1: the fact that, for instance, you can make ten eleven, 114 00:06:05,360 --> 00:06:09,599 Speaker 1: thirteen percent on share markets, and if you did with 115 00:06:09,640 --> 00:06:13,040 Speaker 1: one hundred dollars, then you could be paying down your 116 00:06:13,040 --> 00:06:14,240 Speaker 1: mortgage and still be ahead. 117 00:06:15,240 --> 00:06:16,440 Speaker 2: Well exactly. You know. 118 00:06:16,480 --> 00:06:19,320 Speaker 3: One of the other areas that often gets spoken about 119 00:06:19,440 --> 00:06:21,680 Speaker 3: is rent vesting, and a big part of that is 120 00:06:21,720 --> 00:06:24,719 Speaker 3: because for the same house, it costs you a lot 121 00:06:24,800 --> 00:06:28,000 Speaker 3: less to rent it than what your mortgage expenses would be. Now, 122 00:06:28,040 --> 00:06:30,159 Speaker 3: a lot of people out there say, oh, rent money 123 00:06:30,200 --> 00:06:33,440 Speaker 3: is dead money, but interest money is also dead money. 124 00:06:33,680 --> 00:06:35,720 Speaker 3: So it's what are you doing with that excess capital? 125 00:06:35,760 --> 00:06:37,400 Speaker 3: And if you run the numbers on it, if you 126 00:06:37,520 --> 00:06:40,280 Speaker 3: saving a significant amount of those mortgages, and you're directed 127 00:06:40,320 --> 00:06:42,800 Speaker 3: to say, to investment properties which are fully taxed to 128 00:06:42,880 --> 00:06:45,800 Speaker 3: uctile not anti property. Property is a great investment where 129 00:06:45,800 --> 00:06:49,160 Speaker 3: you can leverage returns for optimizing it for tax reasons 130 00:06:49,160 --> 00:06:51,440 Speaker 3: and getting the best value for where you invest. 131 00:06:51,839 --> 00:06:53,240 Speaker 2: Now, if you straple. 132 00:06:52,800 --> 00:06:56,240 Speaker 3: Out that over ten twenty thirty years, the actual growth 133 00:06:56,800 --> 00:06:58,440 Speaker 3: ends up being far more than if you were to 134 00:06:58,480 --> 00:07:00,480 Speaker 3: just live in your own home and pay them all off. 135 00:07:00,520 --> 00:07:06,240 Speaker 3: And there's a lot of individuals out there with property 136 00:07:06,279 --> 00:07:09,359 Speaker 3: portfolios worth tens of millions dollars, hundreds of millions, and 137 00:07:09,400 --> 00:07:11,440 Speaker 3: the one thing I found in common listening to them 138 00:07:11,480 --> 00:07:14,720 Speaker 3: in podcasts, it's a YouTube channels on the radio. Most 139 00:07:14,760 --> 00:07:17,840 Speaker 3: of them don't actually own their own homes. They all 140 00:07:17,880 --> 00:07:22,000 Speaker 3: rent invest They've got a twenty million plus property portfolio 141 00:07:22,080 --> 00:07:23,400 Speaker 3: and they don't even know their own home. 142 00:07:23,840 --> 00:07:25,760 Speaker 1: Do you worry at all that it turns heavily on 143 00:07:25,800 --> 00:07:29,360 Speaker 1: negative gearing, and negative gearing might someday not be as 144 00:07:29,400 --> 00:07:30,200 Speaker 1: good as it is now. 145 00:07:31,640 --> 00:07:35,040 Speaker 3: Yes, potentially, you know that could have an impact as well. 146 00:07:35,320 --> 00:07:37,080 Speaker 3: I don't think you should just look at it through. 147 00:07:37,680 --> 00:07:42,280 Speaker 3: Negative gearing can be a good aspect to property investment, 148 00:07:42,320 --> 00:07:44,160 Speaker 3: but you shouldn't just look at getting into a property 149 00:07:44,240 --> 00:07:47,240 Speaker 3: purely for negative gearing to make the tax loss, because 150 00:07:47,240 --> 00:07:49,320 Speaker 3: otherwise than you just buy the worst property possible. 151 00:07:49,360 --> 00:07:52,240 Speaker 2: If you could make the biggest loss available. 152 00:07:52,080 --> 00:07:55,240 Speaker 1: You're zoning in on the tax deductibility of the death 153 00:07:55,280 --> 00:07:59,400 Speaker 1: that this is basically the attractive part, that simple delineation 154 00:07:59,480 --> 00:08:01,920 Speaker 1: between you have. If you're paying off your home, the 155 00:08:01,960 --> 00:08:03,920 Speaker 1: mortgage bill comes in, you paid out of your salary 156 00:08:03,920 --> 00:08:06,640 Speaker 1: basically post tax. But if you have an investment property 157 00:08:06,760 --> 00:08:10,920 Speaker 1: you can pay and get you're actually getting the expenses deductible. 158 00:08:11,880 --> 00:08:14,400 Speaker 3: Yeah, you upset what the income is the rent you're paying, 159 00:08:14,960 --> 00:08:17,120 Speaker 3: so naturally it's not going to impact your cash flows 160 00:08:17,280 --> 00:08:17,760 Speaker 3: as hard. 161 00:08:17,800 --> 00:08:20,160 Speaker 1: And if you invest it sounds like you are a 162 00:08:20,680 --> 00:08:22,360 Speaker 1: keen supporter of it re investing. 163 00:08:22,600 --> 00:08:23,800 Speaker 2: I don't know everyone's options. 164 00:08:23,800 --> 00:08:27,120 Speaker 3: Again, I'm not going to recommend properly specifically for the individuals, 165 00:08:27,120 --> 00:08:29,440 Speaker 3: but it can be a great strategy and you should 166 00:08:29,600 --> 00:08:31,720 Speaker 3: look into it and assess whether it's best for you 167 00:08:31,840 --> 00:08:33,000 Speaker 3: or speak to an advice with it. 168 00:08:34,040 --> 00:08:36,240 Speaker 1: More generally, would you give it when we think about 169 00:08:36,240 --> 00:08:38,080 Speaker 1: for ever one hundred dollars that you don't pay down 170 00:08:38,120 --> 00:08:42,360 Speaker 1: the mortgage with and you use elsewhere? Are you thinking 171 00:08:42,440 --> 00:08:45,760 Speaker 1: diversified portfolio? Are you thinking of growth? Are you thinking 172 00:08:45,800 --> 00:08:48,440 Speaker 1: of growth in listed equities? What are you thinking of 173 00:08:48,480 --> 00:08:50,400 Speaker 1: when someone when you're putting that forward to someone as 174 00:08:50,400 --> 00:08:51,480 Speaker 1: a concept. 175 00:08:51,800 --> 00:08:54,040 Speaker 3: There's a number of different options. For example, you think 176 00:08:54,559 --> 00:08:56,920 Speaker 3: you could put it in the superannuation where it's highly 177 00:08:56,920 --> 00:09:00,439 Speaker 3: tax effective, gain tax if when you work in a 178 00:09:00,520 --> 00:09:02,920 Speaker 3: top one right at fifteen percent, compared to you in 179 00:09:03,000 --> 00:09:04,880 Speaker 3: your own personal name where it could be up to 180 00:09:04,920 --> 00:09:08,040 Speaker 3: forty seven percent. And again you look at share markets 181 00:09:08,080 --> 00:09:12,240 Speaker 3: which line ball figure average ten percent of you or 182 00:09:12,320 --> 00:09:15,199 Speaker 3: slightly under that. Conversely as well, you know if you 183 00:09:15,320 --> 00:09:20,000 Speaker 3: directed it to a property in a growth sign where 184 00:09:20,000 --> 00:09:21,800 Speaker 3: it's where you're going to get more bank for BAK 185 00:09:21,920 --> 00:09:24,240 Speaker 3: rather than say just investment strictly where you want to 186 00:09:24,280 --> 00:09:26,640 Speaker 3: live in, which may not have the same growth opportunities. 187 00:09:27,720 --> 00:09:29,720 Speaker 1: Right. And then on the wider picture, you've met the 188 00:09:29,720 --> 00:09:32,760 Speaker 1: point that this sort of thinking, which is paid down 189 00:09:32,800 --> 00:09:35,840 Speaker 1: the mortgage, give everything to the mortgage, get your home, 190 00:09:36,320 --> 00:09:38,560 Speaker 1: focus on that when it's when you've got to paid 191 00:09:38,559 --> 00:09:41,880 Speaker 1: off to other things. You've been pointing out, that's actually 192 00:09:41,920 --> 00:09:46,200 Speaker 1: given us an economy where property, this sort of property 193 00:09:46,200 --> 00:09:49,200 Speaker 1: has become the dominant asset. It's become what the economy 194 00:09:49,280 --> 00:09:52,320 Speaker 1: is substantially about. And that's not a good thing, really, 195 00:09:52,400 --> 00:09:52,640 Speaker 1: is it. 196 00:09:54,000 --> 00:09:58,200 Speaker 3: Yeah, I'm very much against that, mainly for what it 197 00:09:58,240 --> 00:10:00,200 Speaker 3: does the country in the long term. It's very just 198 00:10:00,280 --> 00:10:03,320 Speaker 3: in My partner comes from Palo Alto in the US, 199 00:10:03,360 --> 00:10:05,679 Speaker 3: which is also known as Silicon Valley, very. 200 00:10:05,600 --> 00:10:08,160 Speaker 2: Entrepreneurial part of the world, and. 201 00:10:07,760 --> 00:10:09,640 Speaker 3: Every time I go over there, expect everyone they're in 202 00:10:09,640 --> 00:10:12,760 Speaker 3: a startup, you know, they're involved in business growing. They're 203 00:10:12,800 --> 00:10:16,400 Speaker 3: all entrepreneurs, innovators, and it's really amazing to see. And 204 00:10:16,400 --> 00:10:18,760 Speaker 3: then I look at the Australian landscape and every time 205 00:10:18,800 --> 00:10:21,920 Speaker 3: I spect to someone about getting wealthy or getting rich, 206 00:10:22,000 --> 00:10:25,080 Speaker 3: no one's talking about investing in the business, creating a 207 00:10:25,080 --> 00:10:28,920 Speaker 3: company which employs people, adds high paying wages for the 208 00:10:28,920 --> 00:10:31,080 Speaker 3: individuals out there. It's all how can I put as 209 00:10:31,160 --> 00:10:35,360 Speaker 3: much money possible into property? You know, very tunnel vision 210 00:10:35,440 --> 00:10:37,760 Speaker 3: waves saying that is the only way in this country 211 00:10:38,000 --> 00:10:41,600 Speaker 3: you can get rich. And digging holes and building houses. 212 00:10:41,760 --> 00:10:42,480 Speaker 2: Is that all we do. 213 00:10:42,920 --> 00:10:46,080 Speaker 1: It's pretty helpless for a productivity you'd imagine in releation 214 00:10:46,240 --> 00:10:48,440 Speaker 1: to this economic summit that's coming up. But just on 215 00:10:48,520 --> 00:10:53,439 Speaker 1: that then, in terms of going back to your corenaltion 216 00:10:53,640 --> 00:10:58,160 Speaker 1: that the home is a poor investment because it's now 217 00:10:58,200 --> 00:11:02,520 Speaker 1: tax deductible, it's an inert asset compared to an innovative 218 00:11:02,520 --> 00:11:07,120 Speaker 1: asset so that you might do predictably okay, but you're 219 00:11:07,120 --> 00:11:08,680 Speaker 1: never going to shoot out the lights like someone in 220 00:11:08,720 --> 00:11:11,600 Speaker 1: Palo Alto who gets into the right start up. Are 221 00:11:11,600 --> 00:11:16,559 Speaker 1: you also concerned, as part of what you're saying involved 222 00:11:16,640 --> 00:11:19,240 Speaker 1: that maybe property is not as good going forward as 223 00:11:19,280 --> 00:11:20,840 Speaker 1: it has been. This whole thing that used to double 224 00:11:20,840 --> 00:11:23,400 Speaker 1: every ten years, I think that has faded to some degree. 225 00:11:25,040 --> 00:11:27,280 Speaker 3: If you can generally speaking right, you'll get the law 226 00:11:27,280 --> 00:11:30,000 Speaker 3: of averages. And realistically, I can't tell you what's going 227 00:11:30,040 --> 00:11:31,559 Speaker 3: to happen next year, in the next ten years to 228 00:11:31,600 --> 00:11:33,280 Speaker 3: twenty years, but if you look back at the last 229 00:11:33,280 --> 00:11:38,400 Speaker 3: twenty years, we've had above average returns, far above what 230 00:11:38,440 --> 00:11:39,160 Speaker 3: you'd expect. 231 00:11:38,920 --> 00:11:40,120 Speaker 2: For the last one hundred years. 232 00:11:40,240 --> 00:11:42,440 Speaker 3: You've got to ask the question, really, if it does 233 00:11:42,679 --> 00:11:46,000 Speaker 3: increase at the same rate which it has the last 234 00:11:46,080 --> 00:11:48,840 Speaker 3: ten years, last twenty years, who'll be able to afford it? 235 00:11:48,880 --> 00:11:50,800 Speaker 3: I think I did some numbers right. If Sidney were 236 00:11:50,880 --> 00:11:54,080 Speaker 3: to continue growing at the same growth right which it 237 00:11:54,120 --> 00:11:56,640 Speaker 3: has the last twenty five years, and something like twenty 238 00:11:56,679 --> 00:11:59,520 Speaker 3: forty five twenty fifty, the average price behinme, we'll be 239 00:11:59,559 --> 00:12:03,480 Speaker 3: about four million dollars when we've seen also no real 240 00:12:03,559 --> 00:12:05,680 Speaker 3: material changing incomes as well. 241 00:12:06,240 --> 00:12:09,400 Speaker 1: Okay, just to challenge the re investing idea, which are 242 00:12:10,000 --> 00:12:12,920 Speaker 1: I can see the merit of because it sidesteps that 243 00:12:13,000 --> 00:12:16,000 Speaker 1: issue of you are still in property or in fact 244 00:12:16,080 --> 00:12:17,719 Speaker 1: you have loose cash to do anything you like with 245 00:12:18,000 --> 00:12:22,240 Speaker 1: diversified investing and you are renting. The only thing Jack, 246 00:12:22,320 --> 00:12:24,599 Speaker 1: is that sooner or later you probably do have to 247 00:12:24,640 --> 00:12:28,119 Speaker 1: buy a home. And unless that strategy is very successful, 248 00:12:28,160 --> 00:12:30,600 Speaker 1: is there a risk that the homes fly up faster 249 00:12:30,720 --> 00:12:34,480 Speaker 1: basically than the investments investments that you were preoccupied with. 250 00:12:36,240 --> 00:12:40,200 Speaker 3: Yeah, potentially, you know that is always a risk, are 251 00:12:40,240 --> 00:12:43,120 Speaker 3: they that's attaching? It really depends on what you're doing, 252 00:12:43,160 --> 00:12:44,880 Speaker 3: if your excess capital as well. 253 00:12:45,360 --> 00:12:47,800 Speaker 1: If people are leveraging. You mentioned that the very star 254 00:12:47,920 --> 00:12:50,480 Speaker 1: people leaverage, right, so they take no risks, right, they don't. 255 00:12:50,520 --> 00:12:54,040 Speaker 1: They're very slow to start startup or to invest in 256 00:12:54,160 --> 00:12:57,800 Speaker 1: alternative assets or to try something different. But they'll take 257 00:12:57,800 --> 00:12:59,719 Speaker 1: a million dollar loan. They've never taken a loan in 258 00:12:59,720 --> 00:13:01,240 Speaker 1: their life. If they take a million dollar long to 259 00:13:01,280 --> 00:13:04,080 Speaker 1: buy residential property, as you say, it may not be 260 00:13:04,160 --> 00:13:09,480 Speaker 1: optimal and its future price trajectory is unclear, may not 261 00:13:09,559 --> 00:13:11,880 Speaker 1: be as good as it was in the past, So 262 00:13:12,120 --> 00:13:14,480 Speaker 1: people are willing to do that, but they're not willing 263 00:13:14,520 --> 00:13:17,520 Speaker 1: to do it in any other area. When you say 264 00:13:17,800 --> 00:13:20,559 Speaker 1: that you should think about investing outside the home, does 265 00:13:20,600 --> 00:13:25,160 Speaker 1: it include leverage investing? Does it include gearing up potentially? 266 00:13:25,960 --> 00:13:27,160 Speaker 2: Again, this is a hard one. 267 00:13:27,240 --> 00:13:30,400 Speaker 3: Don't know an individual situation, what their risk apitite is 268 00:13:30,600 --> 00:13:32,960 Speaker 3: like and what their capacity for growth is, so it's 269 00:13:33,120 --> 00:13:34,439 Speaker 3: a bit hard to answer that. 270 00:13:35,840 --> 00:13:38,880 Speaker 1: Yeah, but if someone gears up to buy a home, 271 00:13:39,520 --> 00:13:41,400 Speaker 1: I mean they're gearing up three, four or five times 272 00:13:41,440 --> 00:13:43,920 Speaker 1: the air soundary to buy a home, then it wouldn't 273 00:13:43,920 --> 00:13:46,640 Speaker 1: be unreasonable to do some element of gearing in the 274 00:13:46,679 --> 00:13:47,760 Speaker 1: investing outside the home. 275 00:13:49,280 --> 00:13:53,439 Speaker 3: Yes, No, the thing with the homies is well traditionally speaking, 276 00:13:53,480 --> 00:13:57,120 Speaker 3: it has been good in the way that consistent returns 277 00:13:57,280 --> 00:14:00,400 Speaker 3: and strong value if you did leverage up four other 278 00:14:00,440 --> 00:14:03,880 Speaker 3: areas for example, shares for example, and number one, no 279 00:14:03,960 --> 00:14:07,600 Speaker 3: one's gonna let you take out a million dollar margin 280 00:14:07,679 --> 00:14:12,160 Speaker 3: loan on shares really to do that. Look over the 281 00:14:12,200 --> 00:14:15,880 Speaker 3: long run, yes, the numbers absolutely do stack up. Shares 282 00:14:15,920 --> 00:14:18,880 Speaker 3: over the last one hundred years have performed better than property. 283 00:14:19,080 --> 00:14:21,600 Speaker 3: But the issue with that strategy, right is it shares 284 00:14:21,640 --> 00:14:24,480 Speaker 3: are also a lot more volatile. That's why you get 285 00:14:24,520 --> 00:14:27,480 Speaker 3: the greater returns. So what happens if you have a 286 00:14:27,560 --> 00:14:30,800 Speaker 3: JFC like event or Trump tariffs and you have a 287 00:14:30,840 --> 00:14:34,360 Speaker 3: margin call and you don't have the assets outside to 288 00:14:34,400 --> 00:14:35,320 Speaker 3: be able to pay for that. 289 00:14:35,920 --> 00:14:37,560 Speaker 1: Okay, well dig a break. I think that's a very 290 00:14:37,640 --> 00:14:40,920 Speaker 1: interesting point about the tax folks. It's something that you know, 291 00:14:40,960 --> 00:14:43,520 Speaker 1: maybe we're a little bit preoccupied with the alleged tax 292 00:14:43,560 --> 00:14:48,480 Speaker 1: benefits of home ownership, capital gains, tax exemption, other exemptions 293 00:14:48,520 --> 00:14:50,760 Speaker 1: down the track, but we never think about the opportunity 294 00:14:50,760 --> 00:14:52,680 Speaker 1: cost if you like, of that, which is what I 295 00:14:52,680 --> 00:14:55,360 Speaker 1: think was really interesting that Jack has brought up with 296 00:14:55,400 --> 00:14:57,880 Speaker 1: this notion that your home is a very poor investment. 297 00:14:58,280 --> 00:14:59,800 Speaker 1: In fact, he said it was the worst investment you'd 298 00:14:59,840 --> 00:15:03,080 Speaker 1: make and most likely undercurrent conditions. We'll be back in 299 00:15:03,080 --> 00:15:14,960 Speaker 1: a moment. Hello, Welcome back to the Australians Money Puzzle podcast. 300 00:15:15,000 --> 00:15:17,360 Speaker 1: I'm James Kirby and we're talking to Jack Tussl of 301 00:15:17,480 --> 00:15:20,720 Speaker 1: the Partners Wealth Group, which is a very large financial 302 00:15:20,800 --> 00:15:26,240 Speaker 1: advisory operation which is a nationwide Now, Jack, one of 303 00:15:26,280 --> 00:15:28,560 Speaker 1: the things also, I know that you are something of 304 00:15:28,600 --> 00:15:31,280 Speaker 1: an influencer and I use it in the best possible way, 305 00:15:31,560 --> 00:15:34,880 Speaker 1: because it's got a mixed reputation, this notion of influencer. 306 00:15:35,080 --> 00:15:37,520 Speaker 1: But I actually have no problem with finn influencers as 307 00:15:37,560 --> 00:15:40,200 Speaker 1: long as they're influencing, as long as it's convincing and 308 00:15:40,240 --> 00:15:43,960 Speaker 1: it's well researched and documented, et cetera. But of course 309 00:15:43,960 --> 00:15:47,240 Speaker 1: there's basically no gatekeepers or editors in that field, and 310 00:15:47,320 --> 00:15:50,920 Speaker 1: so you know, some absolute rubbish gets through. You've had 311 00:15:51,040 --> 00:15:53,400 Speaker 1: a look at that area as well, And I just 312 00:15:53,400 --> 00:15:56,200 Speaker 1: want to concentrate on property because I know, even on 313 00:15:56,240 --> 00:15:59,320 Speaker 1: the show people say social media and even on really basics, 314 00:15:59,360 --> 00:16:01,640 Speaker 1: I can selling a property these days you should have 315 00:16:01,680 --> 00:16:05,680 Speaker 1: a social media campaign. Property investors are very tuned into 316 00:16:05,720 --> 00:16:08,480 Speaker 1: social media in terms of trends and data, which is 317 00:16:08,520 --> 00:16:11,720 Speaker 1: all fine. What have you seen in terms of the 318 00:16:11,800 --> 00:16:16,000 Speaker 1: influencers in the property investment market residential property investment market 319 00:16:16,160 --> 00:16:17,840 Speaker 1: sort of what's cut your eye? 320 00:16:19,080 --> 00:16:21,760 Speaker 3: It's interesting. I don't know if this is just my 321 00:16:22,120 --> 00:16:25,760 Speaker 3: algorithm specifically, but recently of the last twelve months, I 322 00:16:25,920 --> 00:16:30,960 Speaker 3: have seen an explosion of the amount of property gurus, 323 00:16:31,000 --> 00:16:35,600 Speaker 3: property investment and analy analysis, the buyers agents out there, 324 00:16:35,640 --> 00:16:38,240 Speaker 3: and interesting, like a lot of them probably don't look 325 00:16:38,280 --> 00:16:39,040 Speaker 3: old enough to shave. 326 00:16:39,120 --> 00:16:40,400 Speaker 2: They're twenty one and twenty. 327 00:16:40,520 --> 00:16:44,840 Speaker 3: Thus I have some queries about, you know, that sphere, 328 00:16:45,160 --> 00:16:48,040 Speaker 3: what the qualifications are behind them, whether they actually do 329 00:16:48,160 --> 00:16:50,240 Speaker 3: have any backing or not. I'm not actually sure how 330 00:16:50,680 --> 00:16:53,520 Speaker 3: ACID regulates proper advisors in the same way they do 331 00:16:53,560 --> 00:16:57,840 Speaker 3: financial advisors like myself, But there has been an explosion 332 00:16:58,000 --> 00:17:00,840 Speaker 3: in social media of those types of indias, and. 333 00:17:00,800 --> 00:17:02,880 Speaker 1: What do you think of the quality of what's the 334 00:17:02,960 --> 00:17:06,680 Speaker 1: quality of information and for one of a better word, 335 00:17:06,720 --> 00:17:09,879 Speaker 1: advice that's going through those that with that big lift 336 00:17:09,880 --> 00:17:10,440 Speaker 1: in activity. 337 00:17:10,960 --> 00:17:13,000 Speaker 2: I'm very skeptical of this. 338 00:17:13,119 --> 00:17:14,879 Speaker 3: It's a bit of a canary in the coal mine 339 00:17:15,040 --> 00:17:18,520 Speaker 3: sort of situation for me, especially talking with other advisors 340 00:17:19,000 --> 00:17:20,960 Speaker 3: as a touch and I've seen a lot of these 341 00:17:20,960 --> 00:17:23,080 Speaker 3: properly gurus so to speak to look very young and 342 00:17:23,080 --> 00:17:26,240 Speaker 3: don't look like they've got any qualifications, often talking about 343 00:17:27,040 --> 00:17:30,040 Speaker 3: all these new builds and the opportunities. I'm a bit skeptical. 344 00:17:30,119 --> 00:17:32,480 Speaker 3: I'd like to know, are you actually getting any kickbacks 345 00:17:32,560 --> 00:17:35,399 Speaker 3: from that? Do you have a vested interest from the 346 00:17:35,440 --> 00:17:38,720 Speaker 3: developers regarding that? And then just some information as well, 347 00:17:38,760 --> 00:17:41,719 Speaker 3: which is just unreally sick. So the other day I 348 00:17:41,760 --> 00:17:44,919 Speaker 3: saw one talking about how could easily get one of 349 00:17:44,920 --> 00:17:47,560 Speaker 3: their clients to purchase a home for six hundred thousand 350 00:17:47,560 --> 00:17:50,359 Speaker 3: dollars and then make a one hundred grand return in 351 00:17:50,400 --> 00:17:53,480 Speaker 3: twelve months. Yes, that's absolutely possible. But the way to 352 00:17:53,840 --> 00:17:59,000 Speaker 3: sprook it is guaranteed. You know, it's a very decent return, right. 353 00:17:59,520 --> 00:18:04,159 Speaker 1: It's a exceptional return. Yeah, and this is put forward 354 00:18:04,200 --> 00:18:07,680 Speaker 1: as probable exactly. 355 00:18:07,760 --> 00:18:09,960 Speaker 2: Well, the way I saw it was put forward is 356 00:18:10,000 --> 00:18:11,400 Speaker 2: more than probable. 357 00:18:11,080 --> 00:18:14,000 Speaker 3: Is expected to be honest, and if you didn't get that, 358 00:18:14,080 --> 00:18:18,119 Speaker 3: well that's the unexpected return. So that's I find it 359 00:18:18,200 --> 00:18:22,080 Speaker 3: quite an army to be honest again working in that space. 360 00:18:22,640 --> 00:18:24,800 Speaker 1: Yes, because you've gone and done all the exams and 361 00:18:24,800 --> 00:18:26,840 Speaker 1: you've gone through everything to become an advisor. 362 00:18:27,840 --> 00:18:30,600 Speaker 3: Yeah, exactly. I don't know if the property industries are 363 00:18:30,600 --> 00:18:33,760 Speaker 3: always gone through that. That's soul searching and looking for 364 00:18:33,840 --> 00:18:37,240 Speaker 3: professionalism that the financial advice industries had to go through. 365 00:18:37,800 --> 00:18:41,080 Speaker 1: Yes, went through in fairly brutal fashion, didn't it. And literally, 366 00:18:41,160 --> 00:18:44,800 Speaker 1: quite literally every second advisor left the scene. There was 367 00:18:44,880 --> 00:18:47,000 Speaker 1: thirty ten years ago and now there's fifteen. 368 00:18:47,080 --> 00:18:50,640 Speaker 3: Yeah, about forty to fifty percent decline in advisor numbers 369 00:18:50,640 --> 00:18:51,840 Speaker 3: since the Royal commission. 370 00:18:52,720 --> 00:18:56,680 Speaker 1: So to our listeners who would listen, you know, one 371 00:18:56,720 --> 00:18:58,960 Speaker 1: podcast is as good as the other basically when it's 372 00:18:58,960 --> 00:19:00,879 Speaker 1: put in front of you, onto you give it a try. 373 00:19:01,920 --> 00:19:04,040 Speaker 1: We don't know what the selection mechanism that puts a 374 00:19:04,040 --> 00:19:06,520 Speaker 1: podcast in front of you or a YouTube video in 375 00:19:06,520 --> 00:19:08,560 Speaker 1: front of you. As you say, there are algorithms, But 376 00:19:08,840 --> 00:19:11,239 Speaker 1: what do you think our listeners should What should they 377 00:19:11,280 --> 00:19:13,639 Speaker 1: watch out for? This is an area that we just 378 00:19:13,680 --> 00:19:15,879 Speaker 1: don't look at enough, We don't get advice enough on 379 00:19:16,600 --> 00:19:19,159 Speaker 1: because properly it's strange in some ways, it's sort of 380 00:19:19,200 --> 00:19:23,800 Speaker 1: falls slightly outside the jurisdiction, if you like, traditional jurisdiction 381 00:19:24,200 --> 00:19:26,600 Speaker 1: of financial advice. And mortgage brokeles, for instance, are in 382 00:19:26,600 --> 00:19:28,800 Speaker 1: a world of their own to some degree from a 383 00:19:28,840 --> 00:19:31,480 Speaker 1: regulatory point of view. So what should people look out for? 384 00:19:31,600 --> 00:19:34,480 Speaker 1: What should they watch out for from social media? Education 385 00:19:34,600 --> 00:19:35,240 Speaker 1: and advice? 386 00:19:37,440 --> 00:19:40,080 Speaker 3: Well, this is the hardest thing, and I've raised this 387 00:19:40,119 --> 00:19:43,680 Speaker 3: a number of times. The issue with social media is 388 00:19:43,720 --> 00:19:45,960 Speaker 3: generally speaking, those who are the best of it and 389 00:19:46,080 --> 00:19:49,280 Speaker 3: highly engaging and putting content in front of you which 390 00:19:49,320 --> 00:19:52,560 Speaker 3: you want to watch. Traditionally speaking, aren't the ones who 391 00:19:52,640 --> 00:19:55,159 Speaker 3: have the best level of knowledge. The education you can 392 00:19:55,200 --> 00:19:57,840 Speaker 3: actually get it out there, and that's a significant issue 393 00:19:58,320 --> 00:20:01,000 Speaker 3: with the industries are doing within Partly I'm helping a 394 00:20:01,040 --> 00:20:01,760 Speaker 3: bridge as well. 395 00:20:02,320 --> 00:20:06,320 Speaker 1: Yes, and I take your point that the ability to 396 00:20:06,400 --> 00:20:12,040 Speaker 1: catch surprise provolk have a dazzling knee effective video is 397 00:20:12,119 --> 00:20:16,400 Speaker 1: not actually the same as offering good advice. 398 00:20:16,640 --> 00:20:18,840 Speaker 3: But the way the algorithms work is it's all about 399 00:20:18,920 --> 00:20:21,919 Speaker 3: keeping attention. So have you say something engaging and people 400 00:20:21,960 --> 00:20:24,080 Speaker 3: watching it, it's going to push to more and more people. 401 00:20:24,320 --> 00:20:27,560 Speaker 3: The algorithm could not care less whether what you're saying 402 00:20:27,800 --> 00:20:30,359 Speaker 3: is right or wrong or downright dangerous. 403 00:20:31,280 --> 00:20:35,880 Speaker 1: Right, it's alarming, It is alarming. Often it's the investments 404 00:20:35,960 --> 00:20:37,880 Speaker 1: with at least knowledge and experience that. 405 00:20:37,920 --> 00:20:39,119 Speaker 2: I was just going to touch on it. 406 00:20:39,200 --> 00:20:42,960 Speaker 3: I think, looking at from a financial advisors perspective, the 407 00:20:43,000 --> 00:20:46,240 Speaker 3: average financial advisors adds fifty two in a male. Now, 408 00:20:46,359 --> 00:20:50,159 Speaker 3: I don't imagine many of those guys are posting the 409 00:20:50,240 --> 00:20:55,880 Speaker 3: TikTok Instagram reels or even writing engaging content on LinkedIn. 410 00:20:56,480 --> 00:20:59,120 Speaker 1: Yes, but you are, so you're aware of the world. 411 00:20:59,119 --> 00:21:01,280 Speaker 1: That's a different milieu you're in, and you're aware of that, 412 00:21:01,359 --> 00:21:04,240 Speaker 1: and then you see then you see the gaps. Basically 413 00:21:04,280 --> 00:21:07,880 Speaker 1: in terms of qualifications that perhaps others don't see. Okay, 414 00:21:08,000 --> 00:21:22,560 Speaker 1: we'll be back at the moment. Hello, Welcome back to 415 00:21:22,600 --> 00:21:25,359 Speaker 1: The Australian's Money Puzzle podcast. I'm James Kirby and I'm 416 00:21:25,359 --> 00:21:27,639 Speaker 1: talking to Jack Tussl from the Partner's Wealth Group and 417 00:21:27,640 --> 00:21:30,760 Speaker 1: we've been covering some very interesting material. Jack's point that 418 00:21:30,840 --> 00:21:33,399 Speaker 1: you're you know, the investment that you're home is probably 419 00:21:33,440 --> 00:21:35,919 Speaker 1: one of the worst investments you will make is really interesting. 420 00:21:36,600 --> 00:21:39,320 Speaker 1: It sounds unconvincing at first glance what he's saying is 421 00:21:39,800 --> 00:21:43,719 Speaker 1: compared to other investments from a tax perspective. Then you 422 00:21:43,760 --> 00:21:46,480 Speaker 1: start to see the weakness this year, the distinct weakness 423 00:21:46,800 --> 00:21:51,600 Speaker 1: in home ownership against successful investing that is tax deductible, 424 00:21:52,000 --> 00:21:56,880 Speaker 1: something we should look more at. Also, the social media influencers. 425 00:21:57,480 --> 00:21:59,840 Speaker 1: I was asked to speak at an ACT conference on 426 00:22:00,200 --> 00:22:03,439 Speaker 1: where there was a segment on fin influencers recently, and 427 00:22:03,520 --> 00:22:06,439 Speaker 1: I think the regulators are at sea really about what 428 00:22:06,480 --> 00:22:09,240 Speaker 1: to do about that. Because you can have someone who's 429 00:22:09,280 --> 00:22:13,160 Speaker 1: highly qualified on social media, like you, Jack, and then 430 00:22:13,160 --> 00:22:17,720 Speaker 1: you can have someone who has zilsh qualifications and the 431 00:22:17,960 --> 00:22:21,520 Speaker 1: algorithm will trade both of you the same. So it's 432 00:22:21,560 --> 00:22:23,840 Speaker 1: a very tricky area to regulate. That's not to say 433 00:22:23,880 --> 00:22:26,400 Speaker 1: that it shouldn't be regulated, because it's going to cause 434 00:22:26,480 --> 00:22:30,840 Speaker 1: problems very soon, if not already. Okay, if you questions, David, 435 00:22:31,040 --> 00:22:33,760 Speaker 1: your recent episode on the Retirement sweet Spot was great, 436 00:22:33,760 --> 00:22:36,639 Speaker 1: but did have one misleading statement. Your guest said, you 437 00:22:36,720 --> 00:22:38,480 Speaker 1: need about a million of your own money to gain 438 00:22:38,520 --> 00:22:41,800 Speaker 1: an equivalent income to the pension. This is wrong since 439 00:22:41,840 --> 00:22:43,880 Speaker 1: the starting bands would leave you with about a million 440 00:22:43,920 --> 00:22:46,080 Speaker 1: in the bank when you die, but the pension doesn't 441 00:22:46,160 --> 00:22:50,840 Speaker 1: leave you anything. Yeah. Absolutely, David, you're correct. The point 442 00:22:50,880 --> 00:22:53,879 Speaker 1: I suppose that Hugh Robertson was making is that you 443 00:22:53,920 --> 00:22:57,000 Speaker 1: can have someone who has a government pension getting say 444 00:22:57,000 --> 00:23:01,200 Speaker 1: a couple getting forty something thousand a year in income. 445 00:23:01,480 --> 00:23:03,959 Speaker 1: Another couple who doesn't have a government pension has to 446 00:23:04,000 --> 00:23:07,440 Speaker 1: have a million dollars to bank roll an income of 447 00:23:07,680 --> 00:23:10,720 Speaker 1: forty something thousand a year, and if they both live 448 00:23:10,800 --> 00:23:13,920 Speaker 1: for forty more years, they both have that same dynamic. 449 00:23:14,040 --> 00:23:18,119 Speaker 1: That's the issue. Nathan a question. I understand the logic 450 00:23:18,240 --> 00:23:22,000 Speaker 1: of not including the value of the home in pension calculations. 451 00:23:22,040 --> 00:23:23,720 Speaker 1: No one wants to see Betty kicked out of her 452 00:23:23,760 --> 00:23:27,639 Speaker 1: family at ninety, But when Betty passes away with a 453 00:23:27,680 --> 00:23:30,040 Speaker 1: five million dollar home, should the taxpayer not get some 454 00:23:30,080 --> 00:23:32,040 Speaker 1: of that pension back from the sale of her house. 455 00:23:32,320 --> 00:23:35,760 Speaker 1: I wonder Jack, going back to the original thoughts at 456 00:23:35,800 --> 00:23:37,960 Speaker 1: the start of the show about how the home is 457 00:23:37,960 --> 00:23:41,159 Speaker 1: such a poor investment. There's a lot of things in 458 00:23:41,200 --> 00:23:43,600 Speaker 1: the tax system that help it along, isn't there. Yeah, 459 00:23:43,640 --> 00:23:46,320 Speaker 1: the home isn't included in pension asset test. The home 460 00:23:46,400 --> 00:23:48,200 Speaker 1: isn't included in capital gains. Do you think if we 461 00:23:48,280 --> 00:23:50,680 Speaker 1: flattened out those taxes what you're saying would become much 462 00:23:50,720 --> 00:23:51,639 Speaker 1: more obvious. 463 00:23:52,400 --> 00:23:54,639 Speaker 3: Yeah, And it's interesting you look at that, the ability 464 00:23:54,680 --> 00:23:57,560 Speaker 3: to have a five million dollar house and still I 465 00:23:57,560 --> 00:23:59,840 Speaker 3: would get a full government pension. The millennials say, at 466 00:23:59,840 --> 00:24:04,240 Speaker 3: there be seen in at the minute it would, Yes. 467 00:24:04,160 --> 00:24:05,880 Speaker 1: They would, And you can make that a ten million 468 00:24:05,920 --> 00:24:07,800 Speaker 1: dollar house if you want. It is really quite a 469 00:24:07,880 --> 00:24:10,280 Speaker 1: remarkable that it's come to that. I don't think when 470 00:24:10,320 --> 00:24:13,639 Speaker 1: they excluded the value of the family home they weren't 471 00:24:13,640 --> 00:24:17,760 Speaker 1: thinking of fourteen million dollar houses on Sydney Harbor being excluded. No. 472 00:24:18,240 --> 00:24:20,760 Speaker 3: I think the smartest thing to do would be, sadly, 473 00:24:20,880 --> 00:24:23,720 Speaker 3: just capture two million dollars or three million, which is 474 00:24:23,720 --> 00:24:26,520 Speaker 3: going to be probably eighty percent of the population really, 475 00:24:26,520 --> 00:24:28,560 Speaker 3: and then you're going to pay tax on the level above. 476 00:24:28,600 --> 00:24:31,360 Speaker 2: That would be a more equable thing. 477 00:24:31,600 --> 00:24:35,120 Speaker 3: You just got to ask the question, right, given how 478 00:24:35,480 --> 00:24:40,800 Speaker 3: much debt is expanding, right, can younger generation, say millennials, example, 479 00:24:40,800 --> 00:24:44,399 Speaker 3: we were paying forty seven percent tax on income about 480 00:24:44,440 --> 00:24:46,800 Speaker 3: one hundred and ninety thousand dollars. How long can they 481 00:24:46,960 --> 00:24:49,560 Speaker 3: subsidize someone who's living in a five million dollar property 482 00:24:49,600 --> 00:24:51,000 Speaker 3: to get paid a full government pension. 483 00:24:51,000 --> 00:24:53,240 Speaker 2: And do we see that as equitable in the long run. 484 00:24:53,560 --> 00:24:55,560 Speaker 1: Yeah, yeah, I think that's something that would come up 485 00:24:55,560 --> 00:24:57,840 Speaker 1: in the economics so much. Actually next week, which we 486 00:24:57,880 --> 00:25:00,280 Speaker 1: will have special on this're starting on the name tenth 487 00:25:00,400 --> 00:25:03,600 Speaker 1: the Economic Summits, which has quickly been repackaged in some 488 00:25:04,040 --> 00:25:06,840 Speaker 1: parts as the Tax Summit or even the Wealth Tax 489 00:25:06,840 --> 00:25:11,399 Speaker 1: Summit perhaps. Okay, final question from Peter. It's very specific. 490 00:25:11,560 --> 00:25:14,520 Speaker 1: We'd have a go this has never advised information only. 491 00:25:14,640 --> 00:25:16,919 Speaker 1: He says. He gets a question regarding the cost space 492 00:25:17,200 --> 00:25:20,800 Speaker 1: of his ETF distributions. He gets his cash distributions during 493 00:25:20,800 --> 00:25:24,040 Speaker 1: the year from his Vanguard ETF. At the end of 494 00:25:24,040 --> 00:25:25,960 Speaker 1: the tax year, I get the tax profile with the 495 00:25:26,000 --> 00:25:30,160 Speaker 1: breakdown of the components of the distribution. One particular line 496 00:25:30,160 --> 00:25:33,440 Speaker 1: has him puzzled. A mighty cost base net amount dash 497 00:25:33,520 --> 00:25:37,120 Speaker 1: shortfall increase in the cost space, which for twenty twenty 498 00:25:37,119 --> 00:25:40,280 Speaker 1: five tax year Peter says, was two hundred and fifty dollars, 499 00:25:40,359 --> 00:25:43,040 Speaker 1: and he wants to know does this mean he should 500 00:25:43,080 --> 00:25:45,439 Speaker 1: go through in a portion the amount across each of 501 00:25:45,480 --> 00:25:48,440 Speaker 1: his shares and ETFs and increase the cost space for 502 00:25:48,520 --> 00:25:52,400 Speaker 1: each parcels so at the time I sell, I will 503 00:25:52,440 --> 00:25:56,159 Speaker 1: decrease my capital gain feeling it kind of gets automated 504 00:25:56,240 --> 00:25:58,119 Speaker 1: and he doesn't have to do all that. Have you 505 00:25:58,280 --> 00:26:01,680 Speaker 1: any observation on that one I blame? 506 00:26:01,960 --> 00:26:05,920 Speaker 3: Isn't that because he's technically paid more income tax now 507 00:26:05,960 --> 00:26:08,840 Speaker 3: than what he should. So affectively, what it's doing is 508 00:26:08,960 --> 00:26:11,480 Speaker 3: increasing the cost basis so that when it does get 509 00:26:11,520 --> 00:26:15,320 Speaker 3: solved and he doesn't pay as much tax, which offsets 510 00:26:15,320 --> 00:26:16,119 Speaker 3: that initial and. 511 00:26:16,200 --> 00:26:19,440 Speaker 2: That in terms of applying, that's a sort of accountant job. 512 00:26:19,520 --> 00:26:20,720 Speaker 2: I think I would just yes. 513 00:26:21,280 --> 00:26:23,440 Speaker 1: Okay, and I tend to let the accountants do all that. 514 00:26:23,480 --> 00:26:25,240 Speaker 1: I mean sometimes I do sit back and I say, 515 00:26:25,400 --> 00:26:27,760 Speaker 1: when you get your annual returns, you say okay. So 516 00:26:27,840 --> 00:26:29,960 Speaker 1: let's say you bought some more shares in something you 517 00:26:30,000 --> 00:26:34,359 Speaker 1: had already, Like, how exactly is that treated? If I 518 00:26:34,400 --> 00:26:36,200 Speaker 1: went in and drilled down, I could, I suppose, spend 519 00:26:36,280 --> 00:26:38,640 Speaker 1: days and days finding out whether the accountant did that right. 520 00:26:38,840 --> 00:26:40,960 Speaker 1: At a certain point you have to trust the accountant 521 00:26:41,040 --> 00:26:43,080 Speaker 1: and the order did is right. But you could drill 522 00:26:43,119 --> 00:26:45,239 Speaker 1: down forever, I suppose, if you had the time. And 523 00:26:45,240 --> 00:26:46,960 Speaker 1: that don't mean to be flippant. I just mean that 524 00:26:47,720 --> 00:26:51,720 Speaker 1: it's probably extremely difficult to track each individual item sometimes 525 00:26:51,760 --> 00:26:54,320 Speaker 1: that when they are routine, these sort of covered by 526 00:26:54,320 --> 00:26:57,560 Speaker 1: accountants and orders. But you could always ask your accountant 527 00:26:58,119 --> 00:27:00,440 Speaker 1: or orders or how did they deal with that last 528 00:27:00,520 --> 00:27:04,160 Speaker 1: year for instance? That might be useful. All right, terrific, Jack, 529 00:27:04,240 --> 00:27:06,560 Speaker 1: Tossil Partners, Wealth Group, thanks for coming on the show. 530 00:27:06,680 --> 00:27:08,959 Speaker 3: Thanks for having me again. Jan It's been absolute pleasure. 531 00:27:09,200 --> 00:27:11,560 Speaker 1: Great to have you, Jack, and great to hear your 532 00:27:11,720 --> 00:27:14,560 Speaker 1: very distinct views on the market. They're very distinct views, 533 00:27:14,560 --> 00:27:18,720 Speaker 1: they're clear views, and they're often provocative. Okay, folks, let's 534 00:27:18,720 --> 00:27:21,600 Speaker 1: have some more correspondence the Money Puzzle at the Australian 535 00:27:21,720 --> 00:27:23,760 Speaker 1: dot com dot Au. Talk to you soon.