Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm
Speaker 1: James Kirby, who was editor at The Australian. Welcome aboard everybody,
Speaker 1: all investors, I expect feeding just a little bit nervous
Speaker 1: this week. It's not every day we have share market
Speaker 1: session to kick off the week where we have the
Speaker 1: worst session in four years, which we had this week
Speaker 1: on Monday, three and a half percent off the market,
Speaker 1: definitely rocky times. We see the NASDAC is already in correction.
Speaker 1: The S and P that's the main US market is
Speaker 1: down about seven and a half percent as we speak
Speaker 1: on Tuesday, and we will see what it does this evening,
Speaker 1: whether it goes into a full blown correction or not.
Speaker 1: Very hard to say. We can see just middle of
Speaker 1: the day Tuesday that the Australian market is stabilizing a little.
Speaker 1: But I can tell you that the slightest answering, I
Speaker 1: should say, in the US features and we will fall
Speaker 1: with them, faithfully, we will fold. Don't you worry. We
Speaker 1: fall lemming like every time we did three and a
Speaker 1: half percent on Monday, and that is barely what happened
Speaker 1: on the US overnight Monday. Perhaps on our market. But
Speaker 1: more broadly, I want to talk about for the diversified investor,
Speaker 1: For the investor who is like most of you, I'm
Speaker 1: sure has shares, probably has property in some fashion, has
Speaker 1: other assets. Then you might have gold, you might have cash,
Speaker 1: you might have alternative assets. How do we handle a
Speaker 1: period of instability which we've seen some of, which we
Speaker 1: may see much more of because the conditions that have
Speaker 1: triggered this selloff are unclear. There is no single trigger,
Speaker 1: and on that basis, it could happen again at any time.
Speaker 1: I was thinking, who could we have as a guest
Speaker 1: on the show to talk about the broader situation. It
Speaker 1: needed someone who was a diversified investor themselves. I thought, Hey,
Speaker 1: Anthony Keane, who has been on the show before. He is,
Speaker 1: of course the personal finance guru and news corporation. He
Speaker 1: operates out of Adelaide. In the end of We're all
Speaker 1: in the same big, happy family, and we finally met
Speaker 1: in person. Irl. Great to have you on board today.
Speaker 1: Tell me we'll talk about all things, not just the
Speaker 1: market downturn, but how that could affect everything, How it
Speaker 1: could affect, for instance, interest rates, how that could in
Speaker 1: turn affect property. I was entertained by the fact that
Speaker 1: you had a piece awfully well timed where you mentioned
Speaker 1: that you had sold all your shares recently. Now that's
Speaker 1: not quite a Warren Buffett like move where you sold
Speaker 1: all your shares just before the downturn. You have lots
Speaker 1: of shares. You just sold all your ordinary shares and
Speaker 1: you've switched entirely to ETFs to exchange traded funds. That's
Speaker 1: a big call, right, tell me? Is that forever? And
Speaker 1: why did you do it?
Speaker 2: Yeah? And I absolutely I have sold every direct share
Speaker 2: that I've built up and owned, but that's been a
Speaker 2: gradual thing over that it started buying maybe twenty five
Speaker 2: years ago. But this is the first time in a
Speaker 2: quarter of a century I do not have one individual share
Speaker 2: to my name. And I'd like to say it was
Speaker 2: timed the share market were out perfectly, but no, it
Speaker 2: was purely a strategic and getting old decision. And unlike you,
Speaker 2: I don't have a self managed super fun but as
Speaker 2: I've got older, my superbalance has grown as everyone's done,
Speaker 2: and that is through a lot of index funds. So
Speaker 2: I invest in a lot of Australian overseas as you said,
Speaker 2: diversified investments through a lot of index funds through super
Speaker 2: but not yet self managed. But that is something I
Speaker 2: am considering for both shares and property in the next
Speaker 2: sort of five to ten years purely. And so the
Speaker 2: reason I've looked to sell out of the direct share
Speaker 2: ownership is purely because if you're holding it this stuff
Speaker 2: in super, the tax benefits that you get from it
Speaker 2: when you do retire from work and switch your money
Speaker 2: to several times about that, I'd like to I've investment
Speaker 2: properties outside of cheaper, but would like to own one
Speaker 2: in the future as well, purely for that capital gains
Speaker 2: tax benefit. It's just you're talking tens of thousands of
Speaker 2: dollars of savings by doing that. So I do love shares,
Speaker 2: I write about shares every day, and I do plan
Speaker 2: to get more in the future. But it's just a
Speaker 2: matter of strategy, age timing. Moving that direct share ownership
Speaker 2: withinside throppernuation. As I get closer to my mid eight
Speaker 2: fifties and sixties, it will work better.
Speaker 1: You don't have to think anymore. You have vtfs. There's
Speaker 1: an element of truth on that, isn't it. You can
Speaker 1: put them. You can say, okay, I've got my sessings. Really,
Speaker 1: I don't really care if come bank ors of fifty
Speaker 1: percent for PHP fours fifty percent anymore? Is am I
Speaker 1: simplifying it?
Speaker 2: I think you're right. I think the one thing that
Speaker 2: will hold me back from going direct shares again in
Speaker 2: the future, through a self managed fund or just through
Speaker 2: a retail or what other the fund that opposite direct
Speaker 2: share investment is do I want do you want the headache?
Speaker 2: Do you just want to trust what the markets are doing?
Speaker 2: Because I've been burnt. I heard you talking, I think
Speaker 2: last week on your podcast about Goodman Group how to
Speaker 2: the star and the market as a real estate investment trust.
Speaker 2: Now I bought them in the GFC and lost ninety
Speaker 2: percent of my money before I sold out and then
Speaker 2: and they've gone gangbusters since. Had I held them, which
Speaker 2: I didn't for various reasons, would have gone great. But
Speaker 2: it's just the damage and that the damage it does
Speaker 2: to your confidence as an investor when you have those
Speaker 2: sorts of losses. I don't know. I'm not sure that
Speaker 2: I want to go through all that again. And it's
Speaker 2: like with the fall we've had in recent days, everyone
Speaker 2: super is going to take a hit, but that's everyone
Speaker 2: super pretty much all those that are invested in share markets.
Speaker 1: So you're comforted by the fact that you won't do
Speaker 1: any worse than everyone else's basicity than the index from
Speaker 1: here on or better.
Speaker 2: That's exactly right. But shares are great and a lot
Speaker 2: of people love that watching it, and I have loved
Speaker 2: it in the past, But is it right for my
Speaker 2: stage of life? And I know you've also spoken about
Speaker 2: as people. Do you get older, it's do you want
Speaker 2: to spend your time watching the moves of individual stocks
Speaker 2: every day? Or do you want to spend your time
Speaker 2: enjoying sort of life and retirement and not having to
Speaker 2: worry about the self managed super fun compliance and all
Speaker 2: that sort of stuff.
Speaker 1: Does your attitude towards property and how much property you have?
Speaker 1: Does it change when you see one of these shock
Speaker 1: share market selloffs?
Speaker 2: You don't see We saw a fifty five percent fall
Speaker 2: in the ASX during the global financial crisis. I've never
Speaker 2: seen anything like that in any of the property markets.
Speaker 2: Makes me relieve that I'm more exposed to real estate.
Speaker 2: But the property market in Australia is sort of a
Speaker 2: real variation in what you get. I'm running a column
Speaker 2: this week. In the past twelve months we've had Perpose
Speaker 2: done plus twenty five percent and Melbourne which is down
Speaker 2: a couple of percent. So that's a massive variation in
Speaker 2: proper as well. But you don't tend to check your
Speaker 2: prices every day. You see it as a long term investment.
Speaker 2: But different people have different preferences as to what they like.
Speaker 2: And I've got a bit of trouble with readers in
Speaker 2: the past writing that I prefer property over shares any day,
Speaker 2: but very happy to own shares and index funds through
Speaker 2: superannuation and have that exposure to the market.
Speaker 1: It's interesting on the share you've gone for the you've
Speaker 1: gone for the indexing and got away from the sort
Speaker 1: of details and the individual variation of shares property. You
Speaker 1: don't really have that choice. I'm just thinking of the
Speaker 1: point you're making that I can stand here and tell
Speaker 1: everyone the property prices are up four percent across Australia
Speaker 1: this year so far. You're laughing at that. If you're
Speaker 1: in Perth, you're saying, hey, we're up twenty percent, and
Speaker 1: if you're in Melbourne you're saying, hang on a second,
Speaker 1: that's not true. In this city, we're down one percent.
Speaker 1: And you live in Adelaide. Adelaide is doing well. If
Speaker 1: Adelette keeps going the way, it's going to have a
Speaker 1: higher average than Melbourne within a matter of weeks. They're
Speaker 1: absolutely light. The average dwelling value is in the high
Speaker 1: seven so maybe seven eighty thereabouts. Its neck and neck
Speaker 1: right now, Do you, as a property investor seek to
Speaker 1: diversey to diversify your risk as you've done with the shares?
Speaker 1: Do you try and basically not have all your eggit
Speaker 1: and basket and have a property that isn't that are
Speaker 1: in different places?
Speaker 2: Yes, most definitely two states. At the moment. I always
Speaker 2: thought that there's no way I would ever be able
Speaker 2: to afford property in Melbourne because of the price is there.
Speaker 2: But having watched that difference, that sort of difference just narrow.
Speaker 2: Looked at Hobart a few years ago, was like soaring
Speaker 2: the prices there, and now that now their medium price
Speaker 2: is one hundred thousand sort of less than any other
Speaker 2: state capital city. So there are cycles in each city
Speaker 2: and diversifying works great as a direct property investor, but
Speaker 2: also great as a property investor from our land tax
Speaker 2: point of view as well, because of the different land
Speaker 2: tax raisings in the different states, so you'll often find
Speaker 2: investors trying to diversify to a different state. So I
Speaker 2: had planned for Perth, but I've missed the boat on
Speaker 2: that one. But Melbourne would potentially be on the radar
Speaker 2: in the next year or two, and you've spoken recently
Speaker 2: about over supply there, so I'll be keeping an eye
Speaker 2: on that, but definitely diversify.
Speaker 1: Okay, very interesting. I want to talk to you about
Speaker 1: a couple of quite topical issues how this market proversivet
Speaker 1: could affect why they're investing. Will be back in a moment.
Speaker 1: Hello and welcome back to the Australians Money Puzzitive podcast.
Speaker 1: I'm James Kirby talking to Anthony Keene today, my Colie
Speaker 1: in News Corporation on the finance section of all the
Speaker 1: papers and digital assets that we have guest on the
Speaker 1: show before. Always happy to have him back, Anthony. I
Speaker 1: was just thinking that one of the things we have
Speaker 1: at the moment is there's a fairly line boble market.
Speaker 1: We've got some softening in the property market, and traditionally,
Speaker 1: if you've got a share market, a serious share market diversity,
Speaker 1: people will move to property. I can give you instances
Speaker 1: back over the years very clear instances where that happened. Now,
Speaker 1: we don't know how bad this will get, but it's
Speaker 1: been a pretty bad week so far on the market.
Speaker 1: That the worst week for four years, And you could
Speaker 1: argue it wouldn't take much more to knock more off
Speaker 1: global markets, particularly the US, because there are always risks
Speaker 1: in the market, but there are distinct risks emerging just now.
Speaker 1: They're geopolitically, particularly US presidency, particularly wars in different parts
Speaker 1: of the world. These are things that can knock a
Speaker 1: market out very easily. It's fragile. I think we could
Speaker 1: say that, and we had a sharp sell off, which
Speaker 1: could extend What I want to draw out from you,
Speaker 1: as someone who invests right across the board in all classes,
Speaker 1: what might happen? What can a share market downturn do
Speaker 1: for broad investments? Apart from the fact that your shares
Speaker 1: have lost value, it takes some energy out of the market, right,
Speaker 1: What might happen with interest rates for all investors if
Speaker 1: we have an extended share market sell off.
Speaker 2: Yeah, that's a really good question, James, because I think
Speaker 2: you're right. If this market sell off continues, and Stephens,
Speaker 2: we saw it during COVID, we saw it before that
Speaker 2: in the GFC when interest rates just drop really sharply,
Speaker 2: that's going to obviously not be good news for the
Speaker 2: people that have been in loving their five percent plus
Speaker 2: returns on cash in the last couple of years, because
Speaker 2: if the Reserve Bank cuts rates quickly, obviously those rates
Speaker 2: will fall. But I think in the past as well,
Speaker 2: it could be great for bonds. Now I've never invested
Speaker 2: directly in bonds. Most people have probably never invested directly
Speaker 2: in bonds, but you might have a portion in your
Speaker 2: super But I remember because as high interest rates, you
Speaker 2: can get great returns from bonds when they're sharp falls
Speaker 2: in central bank interest rates because of that inverse way
Speaker 2: that they work. So might be great for that. Falling
Speaker 2: rates might be beneficial for property if it becomes easier
Speaker 2: to borrow to invest in real estate as well, So
Speaker 2: there's potential there.
Speaker 1: It could be actually easier to finance investments.
Speaker 2: Could be yes, but there's also going to be a
Speaker 2: lot of gloom and a lot of people losing a
Speaker 2: lot of confidence and stuff. And let's hope we don't
Speaker 2: have anywhere near the falls we had in that sort
Speaker 2: of flash crashing COVID. All the huge falls we had
Speaker 2: back at around two thousand and eight, two thousand and nine.
Speaker 1: You with your move to ETFs, if you saw a
Speaker 1: flash crash, a harder crash than we've had. Let's say
Speaker 1: we're down. Let's say that the US market is down
Speaker 1: approximately seven and a half percent is to drop so far,
Speaker 1: but let's say it dropped really sharply and we did
Speaker 1: twenty percent drop or so in the US market. Would
Speaker 1: that disturb your plan about ETFs forever? Would you say, gosh,
Speaker 1: this is there are bargains here. I can't resist it.
Speaker 2: Yeah, it's right, and a lot of them. A lot
Speaker 2: of the brokers and the ches specialists I've been speaking
Speaker 2: to you have literally been waiting for a fall, for
Speaker 2: a breather, whether it's ten or twenty percent. And I've
Speaker 2: had this money sitting on the sidelines. Because market drops
Speaker 2: twenty percent, you're effectively buying at a discount. I've still
Speaker 2: got scars from the GFC. James. I listened to all
Speaker 2: of that and bought it a ten or twenty percent
Speaker 2: discount heavily, very heavily, and then we'll lost another thirty
Speaker 2: five percent on my money and took years and years
Speaker 2: to get That was nice.
Speaker 1: You sound like someone who's been through the war, Anthony,
Speaker 1: that you were you forever. Look, I'm so glad you've
Speaker 1: brought this up because I know a lot of our
Speaker 1: listeners have not really experienced the grueling experience of a
Speaker 1: share market fold. When I say a share market fold,
Speaker 1: what you're talking about was worse. It was much worse
Speaker 1: than the COVID dropped. The GFC was. It rattled confidence
Speaker 1: in the deepest possible way. Banks folks, banks were being
Speaker 1: saved in the UK and the US here and then
Speaker 1: on top of that you had the worst type of market.
Speaker 1: They says, it felt fifty five percent, but it took
Speaker 1: two years to do that. It peaked in late two
Speaker 1: o seven. It was the middle of March two oh
Speaker 1: nine when we hit the bottom, and of course we
Speaker 1: didn't know we'd hit the bottom because it seemed to
Speaker 1: have been going down forever. So it's one thing to
Speaker 1: be an investor goes through the COVID crash, which was
Speaker 1: short and sharp, and the stock markets were flying back
Speaker 1: up within months of the initial downturn. Much harder to
Speaker 1: go through something like the GFC, where there's two solid
Speaker 1: years for people, where the stocks just slowly sink. Child
Speaker 1: child down by fifty percent. That's really difficult. So that'd
Speaker 1: you both, Anthony, and I bet it does shape you.
Speaker 1: Did it push you more towards property investing than it
Speaker 1: might have? Than you might have?
Speaker 2: I think it did. And look there's been I've been
Speaker 2: fortunate being from Adelaide that Adelaide tends not to have
Speaker 2: the heavy downturns in real estate prices that the big
Speaker 2: Eastern capitals do. But that said, before these did, I
Speaker 2: went about eight or nine years before these recent sort
Speaker 2: of run up since around the sort of COVID period
Speaker 2: of zero growth, holding onto a property and getting zero
Speaker 2: growth but still having to pay all the holding costs
Speaker 2: and the fees and things. So but you hold My
Speaker 2: view is if all you've got to do with your
Speaker 2: whole real estate, if you go through two price cycles,
Speaker 2: two price booms, then you're set up for life. Because
Speaker 2: of the magnitude and the size of the money that
Speaker 2: invested in one individual property. Most people would not put
Speaker 2: five one hundred and six seven hundred thousand dollars just
Speaker 2: into one individual share or even a portfolio. A lot
Speaker 2: of people don't do that. Property gives you that leverage.
Speaker 2: So I think you're right they did. I've still owned
Speaker 2: shares for all through the recovery, and Jesus was a
Speaker 2: long recovery as well. We only to the all odds
Speaker 2: in the ASX two hundred only a few years ago.
Speaker 2: It took over ten or twelve years just to get
Speaker 2: back to where they were in November two thousand and seven.
Speaker 2: Whereas steady issue goes, property market just kept plotting higher
Speaker 2: and as I said, flat for a long period while
Speaker 2: I was watching other states go higher. But it's been
Speaker 2: says Tener. Look, I'd be nervous about investing in SA
Speaker 2: or Wa at the moment, even Queensland to a degree
Speaker 2: because of the size of the gains that they've had.
Speaker 2: Nothing keeps going up forever. But you've got that argument.
Speaker 2: You've got various arguments for the under supply of a
Speaker 2: state national aid, the huge population growth. I just think
Speaker 2: the fundamentals are still there. And a roof over your
Speaker 2: head is the best investment you can make, whether it's
Speaker 2: your own home or whether it's an investment property or two.
Speaker 2: I really believe that for a long time because of
Speaker 2: the security that it gives you.
Speaker 1: Okay, terrific, We've take sure break. We're going to have
Speaker 1: some great questions from Alex and Christopher and Margaret and
Speaker 1: if we get to it, orpheus back in a moment. Hello,
Speaker 1: Welcome back to the Australians Money Puzzle podcast. I'm James Kirby.
Speaker 1: I'm talking to Anthony Keene. We have some great questions here.
Speaker 1: Alex says, I'm in my early thirties. I've been contributing
Speaker 1: into super with the goal of starting a SMA super
Speaker 1: fund to buy a house in Sydney. The thirty year
Speaker 1: long price growth for capital cities it's five percent, assuming
Speaker 1: I can even find a house in Sydney. This asset
Speaker 1: with the priests did three million in thirty years time,
Speaker 1: at which point on realize gains and earnings would be
Speaker 1: taxed to thirty percent war Boardly, it seems like the
Speaker 1: two tax hacks of super and negative gearing will be
Speaker 1: phased out in the not too distant future. How is
Speaker 1: this fair? Okay atleast Alex at least has packed an
Speaker 1: awful lot into that question. A couple of things. He says.
Speaker 1: First of all, that negative gearing could go in the
Speaker 1: near future. I don't know about that. Actually, there's absolutely
Speaker 1: no evidence about that, Alex at all. This is never advised.
Speaker 1: This is only information. But you could argue quite strongly
Speaker 1: that the ALP lost the election they might have won
Speaker 1: on the basis that they went near negative gearing and
Speaker 1: had a plan to reform it. Certainly, that and the
Speaker 1: Frank dividend reforms combined was an expensive exercise for them,
Speaker 1: and I don't think there's the political will to go
Speaker 1: near negative gearing for some time. It's not even been discussed,
Speaker 1: not by either party. However, on Super, you make the
Speaker 1: point that he's making the point folks that the new
Speaker 1: supertax which kicks in a three million and then you
Speaker 1: pay fifteen percent new tax over on any earnings over
Speaker 1: three million, that that is going to be it's going
Speaker 1: to hit his property plans in Super over the long
Speaker 1: period of time because it's not indexed, there's no plan
Speaker 1: to index it. I would say to you, Alex, yes,
Speaker 1: it's not fair that that new tax isn't indexed. It
Speaker 1: should be indexed. It also shouldn't be on unrealized gains.
Speaker 1: It should be on realized gains, and if they count
Speaker 1: that it should be deemed. But I would just say
Speaker 1: it's a long you're talking about a long period of
Speaker 1: time and whether a particular supertax was or wasn't indexed
Speaker 1: in thirty years time is unlikely to make a major
Speaker 1: impact on your property returns, he says bravely. But that's
Speaker 1: my view. What do you think, Anthony, I.
Speaker 2: Agree with you on the negative gearing side. I think
Speaker 2: that once bit and twice shy with with the Labor Party,
Speaker 2: but also with these new unfair sort of tax plans.
Speaker 2: I'm a bit of an optimist on that, and I
Speaker 2: figure we are going to have a coalition government at
Speaker 2: some time in the next ten or twenty years, and
Speaker 2: I think that they're going to fight back against some
Speaker 2: of the most unfair parts of that those rules. I
Speaker 2: really think that it's not going to last. So thinking
Speaker 2: of what government's saying today is probably going to be
Speaker 2: completely different sort of ten twenty thirty years from now,
Speaker 2: and I think it eventually everything does revert back to
Speaker 2: fairness as well. It just might take time. And if
Speaker 2: you get your own you're go unlucky enough to get
Speaker 2: caught out at the period where it is unfair. And
Speaker 2: we might see that next year with some several horror
Speaker 2: stories that unfold in the next year or two. Once
Speaker 2: that new tax comes in people being forced to sell stuff.
Speaker 1: Yeah, exactly. I think you might have some farmers that
Speaker 1: go brook or something or have terrible stories, and that
Speaker 1: will be enough to turn the public to actually, first
Speaker 1: of all, have a look at it, see what is
Speaker 1: actually wrong with it. It's hard to feel sorry for
Speaker 1: people who have three millions, super I take that on
Speaker 1: board in two seconds. But also taxes, taxes should have
Speaker 1: a certain shape and they should be broadly equitable, as
Speaker 1: you say, across the board. Okay, do you want to
Speaker 1: read the question from Christopher?
Speaker 2: Yes, So Christopher is wondering what we think will be
Speaker 2: the impact of a Trump presidency on the Australian dollar.
Speaker 2: That's the easier or decent US ATF that focuses on
Speaker 2: US energy stocks because he expects that they're about to
Speaker 2: go gang busters if it's Trump gets in. John may
Speaker 2: to have a thought. Yes, sure, yes, I was. It
Speaker 2: was Yeah, I think he might be on the money
Speaker 2: as far as demand for US energy stock. So I
Speaker 2: heard that Donald Trump and his frenzied crowd chanting at
Speaker 2: one of his rallies or speeches Drill baby drill, Drill
Speaker 2: baby drill. That was what that was calling for. And
Speaker 2: so that does. But as far as the impact on
Speaker 2: the Aussie dollar, some of the stuff that I've read,
Speaker 2: I'm not a currency specialist, but obviously, like you, I
Speaker 2: get a lot of stuff comes across my desk all
Speaker 2: the time, and there seems to be talk that may
Speaker 2: not be very good for the Aussie dollar or global
Speaker 2: exports overall for anybody, because of the talk of heavy
Speaker 2: trap tariffs in that Trump might bring in, particularly the
Speaker 2: wards China. And I do know that the Aussie dollar
Speaker 2: is one I think it's the fifth most traded currency
Speaker 2: in the world, largely because it's a proxy for investing
Speaker 2: in global trade and investing in China in particular. They'll
Speaker 2: buy the Aussie dollar based on the sort of China.
Speaker 2: So if we have this massive trade war with US
Speaker 2: and China and huge tariffs and things, I don't think
Speaker 2: that's going to be good for the Aussie dollar.
Speaker 1: Okay, very good, all right. I hope that's used for
Speaker 1: to you, Christopher, it's I think it's beyond out that
Speaker 1: if Trump won, and this will get placed since the
Speaker 1: market instantly. But if Trump wins, it's beyond doubt it's
Speaker 1: good for EID and plus a few stocks. And it's
Speaker 1: also doubt that it's not good for ESG related investments,
Speaker 1: especially where ESG investments have been packaged up into some
Speaker 1: sort of a thunder and ETF. But that's a flip side, Okay, Margaret,
Speaker 1: Mr GA or e T. I'm a new listener to
Speaker 1: your podcast and I wonder if you can offer me information. Recently,
Speaker 1: my super fund had a data outage that was caused
Speaker 1: by a third party. It took more than a week
Speaker 1: to resolve. Give me time to ponder how safe is
Speaker 1: my super What if there was a malicious attack and
Speaker 1: my super disappeared. I completely understand this question how somebody
Speaker 1: would ask this, And she also says, I understand the
Speaker 1: banks have some kind of insurance known as the Financial
Speaker 1: Claim Scheme which will cover up to fifty k Okay,
Speaker 1: two different things there, Margaret. Yes, old cash in Australia
Speaker 1: held in banks or to be precise, approved positive taking institutions,
Speaker 1: which is more than just banks, is guaranteed by the
Speaker 1: government explicitly to the tune of two hundred and fifty
Speaker 1: thousand per person per bank. Okay, So that's there, But
Speaker 1: that to one side. Nice thing to know now about
Speaker 1: how safe is your super I think we'll just focus
Speaker 1: on how safe is your super in relation to malicious
Speaker 1: attacks shall we say it attacks or scams. The reality
Speaker 1: is that this is wide open and the funds have
Speaker 1: had problems. I had a piece in the paper in
Speaker 1: the section which I used this week, which was actually
Speaker 1: a guest piece by Heather Gray Afka the Austrian Financial
Speaker 1: Complaints Authority, and she makes the point that this is
Speaker 1: very in super in the big super in the industry
Speaker 1: super funds or the other funds. It's a small issue numerically,
Speaker 1: but that small number of people who have been unfortunate enough,
Speaker 1: whether there has been some scams or it issue, whether
Speaker 1: they were malicious or not, it has been a problem
Speaker 1: inside and for the people who were for the handful
Speaker 1: of people who have been exposed to the it's danger
Speaker 1: inside super fund, that's been the problem. So she makes
Speaker 1: the point that it's a small number of people that
Speaker 1: have had any issues in super with it or it scams,
Speaker 1: but those people it's big news for them because she
Speaker 1: mentions figures. She actually puts some figures on at eighty
Speaker 1: thousand dollars I think was the precise nuver she put
Speaker 1: on one of the issues inside Super. I don't think
Speaker 1: anyone knows, Anthony that I don't think anyone can stand
Speaker 1: in front of your super fund and say, listen, this
Speaker 1: fund is immune from it attacks because it's they're always coming,
Speaker 1: they're always breaking through.
Speaker 2: Yes, and I agree, it is really hard to say it.
Speaker 2: We haven't been really tested with a major attack like
Speaker 2: we saw with health insurance details a year or so ago.
Speaker 2: That wouldn't have thought that that would happen, but it did. It.
Speaker 2: Supers always that risks to markets and things, and this
Speaker 2: is just another potential risk. But I think that the
Speaker 2: bigger risk might be just people being scammed from people
Speaker 2: I know. They have been reported scheme of shading people
Speaker 2: out of the money by getting them to transfer to
Speaker 2: an early relay scheme or fan or some other thing
Speaker 2: and then stealing it that way.
Speaker 1: Yes, and that's money coming out of super but while
Speaker 1: the money is safely inside super. Just for what it's worth.
Speaker 1: This piece from Heather Gray Margaret said that AFKAR received
Speaker 1: eleven thousand complaints in relation to scams last year. Only
Speaker 1: twenty twenty out of eleven thousand came from superannuation fund members,
Speaker 1: and she says why these complaints are smaller number the
Speaker 1: average loss claimed in them was eighty eight thousand and
Speaker 1: ranged as high as three hundred and forty four thousand.
Speaker 1: So it's been struck by lightning. Right, It's very unlikely,
Speaker 1: but if it happens, it's trouble for the people involved.
Speaker 1: I think we'll come back to this another time. I
Speaker 1: think this is worth a deeper dive. Thank you very
Speaker 1: much for the questions. That's about as far I think
Speaker 1: as we could go on that one today. All right, Orpheus,
Speaker 1: do you want to try Orpheus's question, Anthony?
Speaker 2: Yes. Orpheus says that a lot of your guests and
Speaker 2: discussions are about how to make money through investing, but
Speaker 2: he asked, what about protecting your final wealth and standard
Speaker 2: of living if a health event or death cuts your
Speaker 2: working life short. He's talking about life insurance or protecting
Speaker 2: your ability to end an income and pay down debt
Speaker 2: if you do become sick or injured and can no
Speaker 2: longer work, or if you pass away. Wants to talk
Speaker 2: about life TPD, trauma and income protection. Insurance cover both
Speaker 2: inside and outside of super and would like to sort
Speaker 2: of this.
Speaker 1: You're a diversified investor, Anthony, do you have all those insurances?
Speaker 2: Yes? And Orpheus is right because he says it's an
Speaker 2: unsexy but essential need to protect wealth. And you're right,
Speaker 2: and there are arguments of having it both within and
Speaker 2: outside of Super.
Speaker 1: Do you your Do you have your insurances? Are they
Speaker 1: inside super or outside?
Speaker 2: Mostly inside Super? And that's purely from apart from some
Speaker 2: trauma cover which you cannot have inside Super, but death
Speaker 2: covered TPD and in protection you can have that withinside Super.
Speaker 2: And it's yes, my children are getting older and finishing
Speaker 2: school now, but I've been in the process in the
Speaker 2: last couple of years of winding down some of that
Speaker 2: cover within Super because you've always got Some people can
Speaker 2: waste a lot of money with huge insurance cover through
Speaker 2: Super because obviously the cover school fees and the like
Speaker 2: if you do pass away. But when those or big
Speaker 2: mortgage is the same sort of thing you gotta cover.
Speaker 2: But people can get get caught being over insured later
Speaker 2: in life. That said, the vast majority of ossies are
Speaker 2: underinsured and don't have enough and think that maybe the
Speaker 2: default one hundred and something thousand dollars of cover they
Speaker 2: might have in their industry super fund or whatever, it's
Speaker 2: going to be enough, and it's not. If anything happens,
Speaker 2: so yet definitely worth looking at, definitely worth speaking to
Speaker 2: a specialist about that.
Speaker 1: Okay, terrific. And I would say, as you see, very true,
Speaker 1: the vast majority of people are under insured. However, I
Speaker 1: would say to our audience, who I instinctively feel would
Speaker 1: be across the basics of this anyway, watch out that
Speaker 1: you're not over insured. As Anthony says, as you get
Speaker 1: older and you have all these insurance settings, particularly if
Speaker 1: you have income protection insurance or even life insurance, and
Speaker 1: if you've got a substantial amount in SUPER, then you
Speaker 1: to ask yourself, why did I get this? Once upon
Speaker 1: a time, fifteen twenty years ago, I got all these
Speaker 1: insurances because I really needed to cover things because I
Speaker 1: was really exposed, right I didn't fully own my house,
Speaker 1: or I didn't have much in Super, et cetera, et cetera.
Speaker 1: Is that still the case? An insurance BROKERA, I'm afraid
Speaker 1: it will never tell you to have less SUPER, to
Speaker 1: have less insurance, not in my experience anyway. They don't
Speaker 1: actually suggest you buy less. And if you say to them,
Speaker 1: maybe I should have less. If the doctor says that
Speaker 1: they shouldn't smoke, and you said could I if I
Speaker 1: had one a year, would it make a difference. They say,
Speaker 1: just don't smoke at all. An insurance broker will say
Speaker 1: the same thing. They will say. If you say, should
Speaker 1: I still have all this insurance? They say, why not?
Speaker 1: Just in case? But that's not an argument. That's not
Speaker 1: a powerful argument, that's not a proper argument. I would
Speaker 1: review your individual circumstance each year and be very careful
Speaker 1: that you don't overensure. It's an oddly seductive thing when
Speaker 1: they say, listen, you're insured for two billion or one million,
Speaker 1: and the figures get high and it sounds great, and
Speaker 1: you say, gosh, yes, I suppose I'm worth that. But
Speaker 1: you pay through the nose for that. As Anthony says,
Speaker 1: keep an eye on it, and keep an eye on
Speaker 1: it as your life changes. If you've got a house
Speaker 1: full of kids, that's one thing. If you don't, it's
Speaker 1: a completely different set of circumstances. I have an advisor
Speaker 1: on this show who says, basically, once you're in your
Speaker 1: early sixties, if you have a substantial amount in super
Speaker 1: you don't need life insurance at all because your super
Speaker 1: fund can cover it, and you can save yourself thousands
Speaker 1: a year which you could invest in your super fund.
Speaker 1: There's a plan that we might think about for another day,
Speaker 1: but we will leave that one hanging out there for
Speaker 1: everyone to kick around until we talk again. Hey, Anthony,
Speaker 1: thank you very much, lovely to have you on the show.
Speaker 2: Thanks for having me. James been great.
Speaker 1: That's Anthony Keenfolks. He's the Person of Finance writer on
Speaker 1: News Corporation, colleague of mine. Do keep the emails coming.
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Speaker 1: person this week. That's what we would really appreciate and
Speaker 1: thank you very much if you do. If you'd like
Speaker 1: to correspond, ask a question, complain, whatever you want. The
Speaker 1: email is there the Money Puzzle at the Australian dot
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