1 00:00:09,680 --> 00:00:12,720 Speaker 1: Hello and welcome to The Australian's Money Puzzle podcast. I'm 2 00:00:12,800 --> 00:00:16,599 Speaker 1: James Kurbly. Welcome aboard everybody. Now here's the thought your 3 00:00:16,640 --> 00:00:19,960 Speaker 1: home is the worst investment that you're going to make. 4 00:00:20,440 --> 00:00:25,680 Speaker 1: About that your million dollar house, your mortgage will cost 5 00:00:25,720 --> 00:00:30,680 Speaker 1: you up to three million in the course of your 6 00:00:31,000 --> 00:00:36,080 Speaker 1: lifetime before you pay it off. So you haven't been investing. Really, 7 00:00:36,120 --> 00:00:40,240 Speaker 1: you've been taken for a ride. That's a provocative notion 8 00:00:40,520 --> 00:00:43,440 Speaker 1: and it challenges a lot of what we've been told 9 00:00:43,560 --> 00:00:46,680 Speaker 1: makes good sense, like paying off the mortgage as fast 10 00:00:46,720 --> 00:00:49,800 Speaker 1: as you can. I didn't get the idea from nowhere. 11 00:00:50,360 --> 00:00:53,800 Speaker 1: It comes from Jack Tossil of Partners Wealth Group. He's 12 00:00:53,800 --> 00:00:56,120 Speaker 1: an advisor. He's been on the show before. He's got 13 00:00:56,120 --> 00:00:57,960 Speaker 1: some very distinct ideas. 14 00:00:58,280 --> 00:01:02,680 Speaker 2: How are you Jack? Thanks you have me on again, James. 15 00:01:01,720 --> 00:01:04,200 Speaker 1: Great to have you on again. It's a very fresh 16 00:01:04,959 --> 00:01:09,600 Speaker 1: thought in property and property investing. But lay it out 17 00:01:09,640 --> 00:01:11,160 Speaker 1: first of all, because if I say to you, I 18 00:01:11,200 --> 00:01:13,920 Speaker 1: don't know about that, Jack. I like my house. It's 19 00:01:14,000 --> 00:01:17,640 Speaker 1: very comfortable. Apparently I've been told that it's a tax 20 00:01:17,680 --> 00:01:21,560 Speaker 1: shelter forever under any government. So what am I doing wrong? 21 00:01:22,920 --> 00:01:26,119 Speaker 2: Look, I'll just preface this and say that there's absolutely 22 00:01:26,120 --> 00:01:28,800 Speaker 2: nothing wrong with owning your home. There are so many 23 00:01:28,800 --> 00:01:32,400 Speaker 2: benefits to it. It can provide emotional security, there's lifestyle 24 00:01:32,880 --> 00:01:35,560 Speaker 2: benefits to it. What I'm saying is when you look 25 00:01:35,600 --> 00:01:39,000 Speaker 2: at it purely through the lens of an investment, that's 26 00:01:39,040 --> 00:01:41,080 Speaker 2: when the numbers don't stack up so much. And there's 27 00:01:41,120 --> 00:01:43,440 Speaker 2: a number of reasons for that. Number One is it 28 00:01:44,319 --> 00:01:46,600 Speaker 2: nothing is taxed it up, or you're paying for it 29 00:01:46,640 --> 00:01:50,160 Speaker 2: with your after tax income. Now, traditionally speaking, your bit 30 00:01:50,200 --> 00:01:54,200 Speaker 2: emotional when you buy your home, so you overpay for it. Arguably, 31 00:01:54,200 --> 00:01:55,920 Speaker 2: you're going to live in an area you want to 32 00:01:55,960 --> 00:01:57,480 Speaker 2: live in, not where you're going to get the best 33 00:01:57,480 --> 00:02:00,280 Speaker 2: investment return. And look, you touched on it before. Over 34 00:02:00,320 --> 00:02:03,680 Speaker 2: the duration of a thirty loan, you're probably going to 35 00:02:03,720 --> 00:02:09,160 Speaker 2: pay two x three x what the actual headline value 36 00:02:09,200 --> 00:02:09,959 Speaker 2: of these. 37 00:02:09,960 --> 00:02:11,960 Speaker 1: And you're going to pay that after tax. You're going 38 00:02:11,960 --> 00:02:15,040 Speaker 1: to pay that out of your pocket. Basically, there's no exactly, 39 00:02:15,360 --> 00:02:19,720 Speaker 1: there's no advantage, there's no incentives. Okay, So this is 40 00:02:19,760 --> 00:02:21,800 Speaker 1: what I suppose goes without saying that we have an 41 00:02:21,840 --> 00:02:26,520 Speaker 1: exceptionally expensive property market, and so this point is probably 42 00:02:26,800 --> 00:02:29,760 Speaker 1: is I have no problem with saying that this point 43 00:02:29,800 --> 00:02:32,160 Speaker 1: you're making is more true than it would have been 44 00:02:32,919 --> 00:02:35,960 Speaker 1: ten twenty years ago, because in real terms of our property, 45 00:02:36,240 --> 00:02:39,800 Speaker 1: our homes have become so so expensive on every measure. 46 00:02:40,280 --> 00:02:43,080 Speaker 1: So tell me if you're looking at the price of 47 00:02:43,080 --> 00:02:46,440 Speaker 1: a house then and someone so let's say someone takes 48 00:02:46,600 --> 00:02:48,840 Speaker 1: what you have to say there, and you make that 49 00:02:48,880 --> 00:02:51,000 Speaker 1: point that your home is a very poor investment, probably 50 00:02:51,040 --> 00:02:54,000 Speaker 1: the worst investment you'll make, because you don't normally sign 51 00:02:54,120 --> 00:02:55,960 Speaker 1: up for a million dollar loan in the course of 52 00:02:56,000 --> 00:02:58,799 Speaker 1: your life, and you don't normally actually pay it out 53 00:02:58,800 --> 00:03:02,200 Speaker 1: of post tax. Before we get into how you could 54 00:03:02,240 --> 00:03:05,239 Speaker 1: actually deal with that, just explain a little bit of 55 00:03:05,760 --> 00:03:09,679 Speaker 1: explain what you meant by that, how it's a poor investment, 56 00:03:09,800 --> 00:03:12,079 Speaker 1: and how are there better investments. 57 00:03:12,639 --> 00:03:15,400 Speaker 2: Well, again, generally speaking, when people get those times you 58 00:03:15,440 --> 00:03:18,520 Speaker 2: want the flashy swine possible, you overpay for it, you 59 00:03:18,520 --> 00:03:21,600 Speaker 2: get a lot more room that you need, and arguably 60 00:03:22,040 --> 00:03:24,240 Speaker 2: you've got a hell of a lot of leverage there 61 00:03:24,280 --> 00:03:27,440 Speaker 2: in paining it with your after taped doors so effectively, 62 00:03:27,520 --> 00:03:31,000 Speaker 2: for really ten to fifteen years, all of your personal 63 00:03:31,040 --> 00:03:34,360 Speaker 2: cash flows, pretty much your excess is going strictly to 64 00:03:34,440 --> 00:03:38,280 Speaker 2: paying that off. There's no investing outside of that, whether 65 00:03:38,320 --> 00:03:41,160 Speaker 2: it's topping up your super, looking at shares that traditionally 66 00:03:41,200 --> 00:03:43,920 Speaker 2: used primarily where all of it's going into that one 67 00:03:44,080 --> 00:03:45,080 Speaker 2: singular asset. 68 00:03:46,240 --> 00:03:48,160 Speaker 1: And this is the patch. I'm sure if you saw 69 00:03:48,200 --> 00:03:50,600 Speaker 1: a demographic study, you'd see that people are active investors 70 00:03:50,680 --> 00:03:54,560 Speaker 1: until their thirty ish, they buy their home, they're not 71 00:03:54,640 --> 00:03:59,520 Speaker 1: investors anymore. They peep up in their late forties maybe fifties, 72 00:03:59,520 --> 00:04:01,640 Speaker 1: and they start investing again. I'm only guessing about this, 73 00:04:01,680 --> 00:04:03,120 Speaker 1: but imagine it's a pattern, is it? 74 00:04:04,160 --> 00:04:07,320 Speaker 2: Yeah? Exactly, And that's what we say across the board 75 00:04:07,480 --> 00:04:10,520 Speaker 2: very commonly, is that once you get a mortgage, you 76 00:04:10,640 --> 00:04:12,840 Speaker 2: put all your excess cash flows into that and you 77 00:04:12,880 --> 00:04:15,960 Speaker 2: don't look at any investments really until you pay that off. 78 00:04:15,960 --> 00:04:18,480 Speaker 2: And you think, look, if you get your homeline at 79 00:04:18,520 --> 00:04:20,800 Speaker 2: twenty five or thirty thirty years, you're not looking at 80 00:04:20,800 --> 00:04:23,159 Speaker 2: getting back into the market really until you're fifty and 81 00:04:23,160 --> 00:04:25,680 Speaker 2: then not knock retirements on the doorsteps. 82 00:04:25,760 --> 00:04:29,520 Speaker 1: That's right, the compounding compounding opportunities have passed. But okay, 83 00:04:29,839 --> 00:04:33,720 Speaker 1: so then natural next question for you would be, if 84 00:04:33,760 --> 00:04:36,960 Speaker 1: what you see is the case, then paying down the 85 00:04:37,040 --> 00:04:40,320 Speaker 1: mortgage being that sort of old chestnut for in terms 86 00:04:40,320 --> 00:04:43,160 Speaker 1: of present of finance, you must by definition be challenging that. 87 00:04:44,680 --> 00:04:48,240 Speaker 2: Yeah, challenging that. You got to look at the numbers. 88 00:04:48,320 --> 00:04:51,400 Speaker 2: I don't know everyone's situation specifically, but you should be 89 00:04:51,440 --> 00:04:55,480 Speaker 2: looking at the opportunity cost of deploying that capital elsewhere. 90 00:04:55,480 --> 00:04:57,920 Speaker 2: And that's what I'm saying. There's absolutely nothing wrong with 91 00:04:58,080 --> 00:05:01,880 Speaker 2: paying down your homeline home as a consumption asset, a 92 00:05:01,880 --> 00:05:04,000 Speaker 2: lifestyle asset, but you do need to look at it 93 00:05:04,040 --> 00:05:06,440 Speaker 2: objectively and go, well, if I put my money elsewhere, 94 00:05:06,600 --> 00:05:08,560 Speaker 2: what returns could I be getting and what would the 95 00:05:08,600 --> 00:05:09,919 Speaker 2: long term impacts would that be? 96 00:05:10,760 --> 00:05:13,120 Speaker 1: So give us an example. I'm presum you're alluding to 97 00:05:13,160 --> 00:05:14,680 Speaker 1: the fact that, for instance, you can make ten to 98 00:05:14,680 --> 00:05:19,240 Speaker 1: eleven thirteen percent on share markets, and if you did 99 00:05:19,279 --> 00:05:22,720 Speaker 1: with one hundred dollars, then you could be paying down 100 00:05:22,720 --> 00:05:23,160 Speaker 1: your mortgage. 101 00:05:23,160 --> 00:05:26,480 Speaker 2: It's still be ahead, well exactly. You know. One of 102 00:05:26,520 --> 00:05:29,560 Speaker 2: the other areas that often gets spoken about is rent 103 00:05:29,640 --> 00:05:32,919 Speaker 2: vest and a big part of that is because for 104 00:05:33,000 --> 00:05:34,880 Speaker 2: the same house, it costs you a lot less to 105 00:05:34,960 --> 00:05:37,800 Speaker 2: rent it than what your mortgage expenses would be. Now, 106 00:05:37,800 --> 00:05:39,919 Speaker 2: a lot of people out there say, oh, rent money 107 00:05:39,960 --> 00:05:43,200 Speaker 2: is dead money. But interest money is also dead money. 108 00:05:43,480 --> 00:05:45,520 Speaker 2: So it's what are you doing with that excess capital? 109 00:05:45,520 --> 00:05:47,200 Speaker 2: And if you run the numbers on it, if you 110 00:05:47,279 --> 00:05:50,040 Speaker 2: saving the significant amount of those mortgages, and you directed 111 00:05:50,080 --> 00:05:53,000 Speaker 2: to say to investment properties which are fully taxed, auctible, 112 00:05:53,279 --> 00:05:55,760 Speaker 2: not anti property properties, a great investment where you can 113 00:05:55,800 --> 00:05:59,400 Speaker 2: leverage returns for optimizing it for tax reasons and getting 114 00:05:59,480 --> 00:06:02,000 Speaker 2: the best ali for where you invest. Now, if you 115 00:06:02,160 --> 00:06:05,440 Speaker 2: straple out that over ten twenty thirty years, the actual 116 00:06:05,560 --> 00:06:08,080 Speaker 2: growth ends up being far more than if you were 117 00:06:08,120 --> 00:06:09,599 Speaker 2: to just live in your own home and pay the 118 00:06:09,640 --> 00:06:15,159 Speaker 2: mortgage off. And there's a lot of individuals out there 119 00:06:15,279 --> 00:06:18,560 Speaker 2: with property portfolios worth tens of millions of dollars, hundreds 120 00:06:18,560 --> 00:06:20,560 Speaker 2: of millions. And the one thing I found in common 121 00:06:20,640 --> 00:06:23,280 Speaker 2: listening to them in podcasts, it's the YouTube channels on 122 00:06:23,320 --> 00:06:26,960 Speaker 2: the radio. Most of them don't actually own their own homes. 123 00:06:27,240 --> 00:06:30,720 Speaker 2: They all rent invest They've got a twenty million plus 124 00:06:30,760 --> 00:06:33,159 Speaker 2: property portfolio and they don't even own their own home. 125 00:06:33,600 --> 00:06:35,520 Speaker 1: Do you worry at all that it turns heavily on 126 00:06:35,600 --> 00:06:39,160 Speaker 1: negative gearing, and negative gearing might someday nupp be as 127 00:06:39,160 --> 00:06:39,960 Speaker 1: good as it is now? 128 00:06:41,440 --> 00:06:44,840 Speaker 2: Yes, potentially, you know, that could have an impact as well. 129 00:06:45,120 --> 00:06:46,880 Speaker 2: I don't think you should just look at it through. 130 00:06:47,480 --> 00:06:52,080 Speaker 2: Negative gearing can be a good aspect to property investment, 131 00:06:52,120 --> 00:06:53,920 Speaker 2: but you shouldn't just look at getting into a property 132 00:06:54,000 --> 00:06:57,000 Speaker 2: purely for negative gearing to make the tax loss, because 133 00:06:57,040 --> 00:06:59,280 Speaker 2: otherwise than you just buy the worst property possible if 134 00:06:59,279 --> 00:07:01,360 Speaker 2: you could make them biggest loss available. 135 00:07:01,839 --> 00:07:05,000 Speaker 1: You're zoning in on the tax and deductibility of the debt. 136 00:07:05,040 --> 00:07:09,159 Speaker 1: That this is basically the attractive part, that simple delineation 137 00:07:09,240 --> 00:07:11,320 Speaker 1: between if you have if you're paying off your home, 138 00:07:11,600 --> 00:07:13,360 Speaker 1: the mortgage bill comes in, you pay out of your 139 00:07:13,360 --> 00:07:15,960 Speaker 1: salary basically post tax. But if you have an investment 140 00:07:16,000 --> 00:07:19,560 Speaker 1: properly you can pay and get you're actually getting the 141 00:07:19,560 --> 00:07:20,680 Speaker 1: expenses deductible. 142 00:07:21,640 --> 00:07:24,160 Speaker 2: Yeah, you upset what the income is, the rent you're paying, 143 00:07:24,760 --> 00:07:27,520 Speaker 2: So naturally it's something to impact your cash flows as hard. 144 00:07:27,600 --> 00:07:29,920 Speaker 2: And if you invest it sounds like you are a 145 00:07:30,440 --> 00:07:33,800 Speaker 2: keen supporter of it. Re Investing aren't everyone's options. Again, 146 00:07:33,840 --> 00:07:36,880 Speaker 2: I'm not going to recommend properly specifically for the individuals, 147 00:07:36,920 --> 00:07:39,240 Speaker 2: but it can be a great strategy and you should 148 00:07:39,360 --> 00:07:41,480 Speaker 2: look into it and nessess whether it's best for you 149 00:07:41,600 --> 00:07:42,880 Speaker 2: or speak to an advise. 150 00:07:42,600 --> 00:07:45,520 Speaker 1: Or that more generally, would you give it when we 151 00:07:45,560 --> 00:07:47,520 Speaker 1: think about for every one hundred dollars that you don't 152 00:07:47,520 --> 00:07:51,760 Speaker 1: pay down the mortgage with and you use elsewhere, are 153 00:07:51,800 --> 00:07:55,120 Speaker 1: you thinking diversified portfolio? Are you thinking of growth? Are 154 00:07:55,120 --> 00:07:57,840 Speaker 1: you thinking of growth in listed equities? What are you 155 00:07:57,880 --> 00:07:59,720 Speaker 1: thinking of when someone When you're putting that forward to 156 00:07:59,720 --> 00:08:01,239 Speaker 1: someone as a concept. 157 00:08:01,600 --> 00:08:03,840 Speaker 2: There's a number of different options. For example, you think 158 00:08:04,320 --> 00:08:07,520 Speaker 2: you could put in the superannuation where it's highly tax effective. 159 00:08:07,680 --> 00:08:10,680 Speaker 2: You gain taxes when you work in a top one 160 00:08:10,760 --> 00:08:13,360 Speaker 2: rate of fifteen percent compared to you in your own 161 00:08:13,440 --> 00:08:15,560 Speaker 2: personal name, where it could be up to forty seven percent. 162 00:08:16,120 --> 00:08:20,000 Speaker 2: And again you look at share markets which lineball figure 163 00:08:20,040 --> 00:08:24,000 Speaker 2: average ten percent of you or slightly under that conversion 164 00:08:24,120 --> 00:08:28,640 Speaker 2: as well, if you directed it to a propertly in 165 00:08:28,680 --> 00:08:30,800 Speaker 2: a growth sign where it's where you're going to get 166 00:08:30,800 --> 00:08:33,560 Speaker 2: more bank for back, rather than say just investment strictly 167 00:08:33,559 --> 00:08:34,960 Speaker 2: where you want to live in which may not have 168 00:08:35,040 --> 00:08:37,720 Speaker 2: the same growth opportunities. Right. 169 00:08:37,840 --> 00:08:39,760 Speaker 1: And then on the wider picture, you've met the point 170 00:08:39,800 --> 00:08:43,160 Speaker 1: that this sort of thinking, which is pay down the mortgage, 171 00:08:43,240 --> 00:08:46,839 Speaker 1: give everything to the mortgage, get your home, focus on that. 172 00:08:47,400 --> 00:08:49,240 Speaker 1: It's when you've got to paid off to other things. 173 00:08:50,080 --> 00:08:53,239 Speaker 1: You've been pointing out, that's actually given us an economy 174 00:08:53,240 --> 00:08:57,600 Speaker 1: where property, this sort of property has become the dominant asset. 175 00:08:57,640 --> 00:09:01,240 Speaker 1: It's become what the economy is substantially about. And that's 176 00:09:01,240 --> 00:09:02,400 Speaker 1: not a good thing, really, is it. 177 00:09:03,760 --> 00:09:07,960 Speaker 2: Yeah. I'm very much against that, mainly for what it 178 00:09:08,000 --> 00:09:10,120 Speaker 2: does the country in the long term. It's very interesting. 179 00:09:10,600 --> 00:09:13,320 Speaker 2: My partner comes from Palo Alto in the US, which 180 00:09:13,360 --> 00:09:16,599 Speaker 2: is also known as Silicon Valley, very entrepreneurial part of 181 00:09:16,640 --> 00:09:18,520 Speaker 2: the world, and every time I go over there, you 182 00:09:18,520 --> 00:09:21,040 Speaker 2: expect everyone they're in a startup. You know, they're involved 183 00:09:21,080 --> 00:09:24,840 Speaker 2: in business, growing things. They're all entrepreneurs, innovators, and it's 184 00:09:24,920 --> 00:09:26,760 Speaker 2: really amazing to see. And then I look at the 185 00:09:26,760 --> 00:09:30,000 Speaker 2: Australian landscape and every time I speak to someone about 186 00:09:30,320 --> 00:09:33,439 Speaker 2: getting wealthy or getting rich, no one's talking about investing 187 00:09:33,480 --> 00:09:36,880 Speaker 2: in the business, creating a company which employs people, adds 188 00:09:36,960 --> 00:09:39,920 Speaker 2: high paying wages for the individuals out there. It's all 189 00:09:40,160 --> 00:09:42,920 Speaker 2: how can I put as much money possible into property, 190 00:09:43,120 --> 00:09:46,200 Speaker 2: you know, very tunnel vision waves saying that is the 191 00:09:46,240 --> 00:09:48,800 Speaker 2: only way in this country you can get rich and 192 00:09:49,840 --> 00:09:52,240 Speaker 2: digging holes and building houses. Is that all we do. 193 00:09:52,679 --> 00:09:55,840 Speaker 1: It's pretty helpless for a productivity you'd imagine in releation 194 00:09:56,000 --> 00:09:58,200 Speaker 1: to this economic summit that's coming up. But just on 195 00:09:58,320 --> 00:10:02,880 Speaker 1: that then, in terms of going back to your core 196 00:10:02,960 --> 00:10:07,760 Speaker 1: notion that the home is a poor investment because it's 197 00:10:07,800 --> 00:10:11,600 Speaker 1: not tax deductible, because it's an inert asset compared to 198 00:10:11,640 --> 00:10:12,800 Speaker 1: an innovative asset, so. 199 00:10:12,720 --> 00:10:13,439 Speaker 2: That you might do. 200 00:10:15,320 --> 00:10:17,719 Speaker 1: Predictably okay, but you're never going to shoot out the 201 00:10:17,760 --> 00:10:19,680 Speaker 1: light's like someone in Palo Alto who gets into the 202 00:10:19,720 --> 00:10:23,680 Speaker 1: right start up. Are you also concerned as part of 203 00:10:23,720 --> 00:10:28,079 Speaker 1: what you're saying involved that maybe property is not as 204 00:10:28,120 --> 00:10:29,960 Speaker 1: good going forward as it has been. This whole thing 205 00:10:30,000 --> 00:10:31,560 Speaker 1: that you used to double every ten years, I think 206 00:10:31,600 --> 00:10:33,040 Speaker 1: that has faded to some degree. 207 00:10:34,840 --> 00:10:37,000 Speaker 2: If you can generally speaking right, you'll get the law 208 00:10:37,080 --> 00:10:39,760 Speaker 2: of averages. And realistically, I can't tell you what's going 209 00:10:39,840 --> 00:10:41,319 Speaker 2: to happen next year, in the next ten years to 210 00:10:41,360 --> 00:10:43,040 Speaker 2: twenty years, but if you look back at the last 211 00:10:43,040 --> 00:10:48,160 Speaker 2: twenty years, we've had above average returns, far above what 212 00:10:48,200 --> 00:10:50,360 Speaker 2: you expect for the last one hundred years. You've got 213 00:10:50,360 --> 00:10:53,400 Speaker 2: to ask the question, really, if it does increase at 214 00:10:53,440 --> 00:10:56,320 Speaker 2: the same right, which it has the last ten years, 215 00:10:56,440 --> 00:10:58,679 Speaker 2: last twenty years, who'll be able to afford it? I 216 00:10:58,720 --> 00:11:01,680 Speaker 2: think I did some numbers right. SEENEWA to continue growing 217 00:11:02,200 --> 00:11:04,559 Speaker 2: at the same growth rate which it has the last 218 00:11:04,559 --> 00:11:07,600 Speaker 2: twenty five years, in something like twenty forty five twenty fifty, 219 00:11:07,679 --> 00:11:10,800 Speaker 2: the average price behind we'd be about four million dollars 220 00:11:11,120 --> 00:11:15,480 Speaker 2: when we've seen also no real material changing incomes as well. 221 00:11:16,000 --> 00:11:19,200 Speaker 1: Okay, just to challenge the re investing idea, which are 222 00:11:19,760 --> 00:11:22,680 Speaker 1: I can see the merit of because it sidesteps that 223 00:11:22,760 --> 00:11:25,800 Speaker 1: issue of you are still in property or in fact 224 00:11:25,840 --> 00:11:27,480 Speaker 1: you have loose cash to do anything you like with 225 00:11:27,800 --> 00:11:32,000 Speaker 1: diversified investing and you are renting. The only thing Jack, 226 00:11:32,080 --> 00:11:34,400 Speaker 1: is that sooner or later you probably do have to 227 00:11:34,400 --> 00:11:37,880 Speaker 1: buy a home. And unless that strategy is very successful, 228 00:11:37,920 --> 00:11:40,400 Speaker 1: is there a risk that the homes fly up faster 229 00:11:40,480 --> 00:11:44,240 Speaker 1: basically than the investments investments that you were preoccupied with. 230 00:11:46,000 --> 00:11:50,200 Speaker 2: Yeah, potentially. No, that is always a risk out there 231 00:11:50,440 --> 00:11:52,880 Speaker 2: that's attached, and it really depends on what you're doing 232 00:11:52,920 --> 00:11:54,360 Speaker 2: with your excess capital as well. 233 00:11:55,160 --> 00:11:57,559 Speaker 1: If people are leveraging. You mentioned that the very star 234 00:11:57,679 --> 00:12:00,280 Speaker 1: people leaverage, right, so they take no risks, right, don't 235 00:12:00,320 --> 00:12:03,800 Speaker 1: They're very slowed to start startup, or to invest in 236 00:12:03,920 --> 00:12:07,560 Speaker 1: alternative assets, or to try something different. But they'll take 237 00:12:07,600 --> 00:12:09,520 Speaker 1: a million dollar loan. They've never taken a loan in 238 00:12:09,559 --> 00:12:11,199 Speaker 1: their lives. They take a million dollar loan to buy 239 00:12:11,360 --> 00:12:14,439 Speaker 1: residential property. As you say, it may not be optimal 240 00:12:14,840 --> 00:12:19,400 Speaker 1: and its future price trajectory is unclear, may not be 241 00:12:19,400 --> 00:12:22,160 Speaker 1: as good as it was in the past. So people 242 00:12:22,160 --> 00:12:24,360 Speaker 1: are willing to do that, but they're not willing to 243 00:12:24,400 --> 00:12:27,680 Speaker 1: do it in any other area. When you say that 244 00:12:27,840 --> 00:12:30,480 Speaker 1: you should think about investing outside the home, does it 245 00:12:30,520 --> 00:12:31,679 Speaker 1: include leverage investing? 246 00:12:31,720 --> 00:12:36,480 Speaker 2: Does it include gearing up potentially? Again, this is a 247 00:12:36,520 --> 00:12:39,280 Speaker 2: hard one. Don't know an individual situation, what their risk 248 00:12:39,280 --> 00:12:41,679 Speaker 2: ap its heid is like, and what they capacity for 249 00:12:41,800 --> 00:12:44,199 Speaker 2: growth fee, so it's a bit hard to answer that. 250 00:12:45,640 --> 00:12:48,679 Speaker 1: Yeah, but if someone gears up to buy a home, 251 00:12:49,280 --> 00:12:51,160 Speaker 1: I mean they're gearing up three, four or five times 252 00:12:51,200 --> 00:12:53,800 Speaker 1: their salary to buy a home, then it wouldn't be 253 00:12:53,920 --> 00:12:56,840 Speaker 1: unreasonable to do some element of gearing in the investing 254 00:12:56,880 --> 00:12:57,520 Speaker 1: outside the home. 255 00:12:59,080 --> 00:13:03,360 Speaker 2: Yes, No, with the homies as well. Tradtionally speaking, it 256 00:13:03,440 --> 00:13:07,079 Speaker 2: has been good in the way that consistent raturns and 257 00:13:07,160 --> 00:13:10,600 Speaker 2: destroying the value. If you did leverage up for other areas, 258 00:13:10,640 --> 00:13:14,000 Speaker 2: for example, shares for example, and number one, no one's 259 00:13:14,160 --> 00:13:17,680 Speaker 2: gonna let you take out a million dollar margin loan 260 00:13:17,800 --> 00:13:22,840 Speaker 2: on shares really to do that. Look over the long run, yes, 261 00:13:22,880 --> 00:13:26,079 Speaker 2: the numbers absolutely do stack up. Shares over the last 262 00:13:26,080 --> 00:13:29,040 Speaker 2: one hundred years have performed better than property. But the 263 00:13:29,080 --> 00:13:32,040 Speaker 2: issue with that strategy, right is it shares are also 264 00:13:32,559 --> 00:13:35,120 Speaker 2: a lot more volatile. That's why you get the greater returns. 265 00:13:35,240 --> 00:13:38,360 Speaker 2: So what happens if you have a JFC like event 266 00:13:38,600 --> 00:13:41,360 Speaker 2: or Trump tariffs and you have a margin call and 267 00:13:41,400 --> 00:13:44,559 Speaker 2: you don't have the assets outside to be able to 268 00:13:44,600 --> 00:13:45,120 Speaker 2: pay for that. 269 00:13:45,720 --> 00:13:47,400 Speaker 1: Okay, well take a break. I think that's a very 270 00:13:47,400 --> 00:13:50,720 Speaker 1: interesting point about the tax folks. It's something that you know, 271 00:13:50,720 --> 00:13:53,280 Speaker 1: maybe we're a little bit preoccupied with the alleged tax 272 00:13:53,320 --> 00:13:58,240 Speaker 1: benefits of home ownership, capital gains, tax exemption, other exemptions 273 00:13:58,280 --> 00:14:00,719 Speaker 1: down the track, but we'd never think about the opportunity cost, 274 00:14:00,760 --> 00:14:02,600 Speaker 1: if you like, of that, which is what I think 275 00:14:02,840 --> 00:14:05,280 Speaker 1: was really interesting that Jack has brought up with this 276 00:14:05,400 --> 00:14:08,400 Speaker 1: notion that your home is a very poor investment. In fact, 277 00:14:08,400 --> 00:14:10,280 Speaker 1: he said it was the worst investment you'll make, and 278 00:14:10,320 --> 00:14:22,320 Speaker 1: most likely undercurrent conditions we'll be back in a moment. Hello, 279 00:14:22,440 --> 00:14:25,200 Speaker 1: welcome back to the Australians Money Puzzle podcast. I'm James 280 00:14:25,280 --> 00:14:28,000 Speaker 1: Kirby and we're talking to Jack Tussl of the Partners 281 00:14:28,320 --> 00:14:32,480 Speaker 1: Wealth Group, which is a very large financial advisory operation 282 00:14:32,800 --> 00:14:36,880 Speaker 1: which is nitionwide. Now, Jack, one of the things also, 283 00:14:37,080 --> 00:14:39,240 Speaker 1: I know that you are something of an influencer, and 284 00:14:39,280 --> 00:14:41,880 Speaker 1: I use it in the best possible way because it's 285 00:14:42,080 --> 00:14:44,960 Speaker 1: it's got a mixed reputation, this notion of influencer. But 286 00:14:45,040 --> 00:14:47,440 Speaker 1: I actually have no problem with finn influencers as long 287 00:14:47,440 --> 00:14:50,200 Speaker 1: as they're influencing, as long as it's convincing and it's 288 00:14:50,320 --> 00:14:53,960 Speaker 1: well researched and documented, et cetera. But of course there's 289 00:14:54,200 --> 00:14:57,160 Speaker 1: basically no gatekeepers or editors in that field, and so 290 00:14:57,440 --> 00:15:00,920 Speaker 1: you know, some absolute rubbish gets through. You've had a 291 00:15:00,960 --> 00:15:03,320 Speaker 1: look at that area as well, And I just want 292 00:15:03,360 --> 00:15:06,080 Speaker 1: to concentrate on property because I know, even on the 293 00:15:06,080 --> 00:15:09,240 Speaker 1: show people say social media, even on really basics, they 294 00:15:09,240 --> 00:15:11,520 Speaker 1: can selling a property these days, you should have a 295 00:15:11,560 --> 00:15:15,800 Speaker 1: social media campaign. Property investors are very tuned into social 296 00:15:15,800 --> 00:15:19,000 Speaker 1: media in terms of trends and data, which is all fine. 297 00:15:19,200 --> 00:15:22,440 Speaker 1: What have you seen in terms of the influencers in 298 00:15:22,520 --> 00:15:26,200 Speaker 1: the property investment market, residential property investment market sort of 299 00:15:26,240 --> 00:15:27,600 Speaker 1: what's cut your eye. 300 00:15:28,840 --> 00:15:31,560 Speaker 2: It's interesting. I don't know if this is just my 301 00:15:31,880 --> 00:15:35,560 Speaker 2: algorithm specifically, but recently, of the last twelve minds, I 302 00:15:35,680 --> 00:15:40,760 Speaker 2: have seen an explosion of the amount of property gurus, 303 00:15:40,800 --> 00:15:45,360 Speaker 2: property investment and analy analysis the buyers agents out there, 304 00:15:45,400 --> 00:15:48,040 Speaker 2: and interesting, like a lot of them probably don't look 305 00:15:48,080 --> 00:15:50,640 Speaker 2: old enough to shave they were twenty one and twenty es. 306 00:15:51,800 --> 00:15:56,120 Speaker 2: I have some queries about that sphere, what the qualifications 307 00:15:56,160 --> 00:15:58,640 Speaker 2: are behind them, whether they actually do have any backing 308 00:15:58,720 --> 00:16:01,920 Speaker 2: or not. I'm not actually sure how ACID regulates proper 309 00:16:02,000 --> 00:16:05,040 Speaker 2: advisors in the same way they do financial advisors like myself, 310 00:16:05,080 --> 00:16:08,800 Speaker 2: But there has been an explosion in social media of 311 00:16:08,840 --> 00:16:10,239 Speaker 2: those types of individuals. 312 00:16:10,440 --> 00:16:12,520 Speaker 1: And what do you think of the quality of what's 313 00:16:12,600 --> 00:16:16,440 Speaker 1: the quality of information and for one of a better word, 314 00:16:16,520 --> 00:16:20,240 Speaker 1: advice that's going through those with that big lift in activity. 315 00:16:20,720 --> 00:16:23,440 Speaker 2: I'm very skeptical of this. It's a bit of a 316 00:16:23,480 --> 00:16:26,360 Speaker 2: canary in the coal mine sort of situation for me, 317 00:16:26,480 --> 00:16:29,520 Speaker 2: especially talking with other advisors as a touched and I've 318 00:16:29,560 --> 00:16:32,000 Speaker 2: seen a lot of these proper gurus so to speak, 319 00:16:32,040 --> 00:16:33,600 Speaker 2: to look very young and don't look like they've got 320 00:16:33,640 --> 00:16:38,040 Speaker 2: any qualifications. Often talking about all these new builds and 321 00:16:38,040 --> 00:16:40,560 Speaker 2: the opportunities, I'm a bit skeptical. I'd like to know, 322 00:16:40,680 --> 00:16:43,240 Speaker 2: are you actually getting any kickbacks from that? Do you 323 00:16:43,280 --> 00:16:46,640 Speaker 2: have a vested interest from the developers regarding that? And 324 00:16:46,640 --> 00:16:50,200 Speaker 2: then just some information as well, which is just unreally sick. 325 00:16:50,440 --> 00:16:52,880 Speaker 2: So the other day I saw one talking about how 326 00:16:53,200 --> 00:16:55,760 Speaker 2: could easily get one of their clients to purchase a 327 00:16:55,800 --> 00:16:58,640 Speaker 2: home for six hundred thousand dollars and then make a 328 00:16:58,720 --> 00:17:02,560 Speaker 2: one hundred grand return in twelve months. Yes, that's absolutely possible. 329 00:17:02,560 --> 00:17:06,679 Speaker 2: But the way to sprook it is guaranteed it's a 330 00:17:06,840 --> 00:17:08,800 Speaker 2: very decent return, right. 331 00:17:09,320 --> 00:17:13,959 Speaker 1: It's an exceptional return. Yeah, and this is put forward 332 00:17:14,000 --> 00:17:19,080 Speaker 1: as probable exactly. Well, the way I saw it was 333 00:17:19,080 --> 00:17:21,160 Speaker 1: put forward is more than probable. 334 00:17:20,840 --> 00:17:23,760 Speaker 2: Is expected to be honest, And if you didn't get that, 335 00:17:23,840 --> 00:17:27,919 Speaker 2: well that's the unexpected return. So it's I find it 336 00:17:27,960 --> 00:17:32,240 Speaker 2: quite an army to be honest again, working in that space. 337 00:17:32,440 --> 00:17:34,560 Speaker 1: Yes, because you've gone and done all the exams and 338 00:17:34,600 --> 00:17:36,600 Speaker 1: you've gone through everything to become an advisor. 339 00:17:37,640 --> 00:17:40,399 Speaker 2: Yeah, exactly. I don't know if the property industries are 340 00:17:40,400 --> 00:17:43,520 Speaker 2: always gone through that. That's soul searching and looking for 341 00:17:43,600 --> 00:17:47,000 Speaker 2: professionalism that the financial advice industry has had to go through. 342 00:17:47,560 --> 00:17:50,879 Speaker 1: Yes, went through in fairly brutal fashion, didn't it, And literally, 343 00:17:50,960 --> 00:17:54,560 Speaker 1: quite literally every second advisor left the scene. There was 344 00:17:54,640 --> 00:17:56,800 Speaker 1: thirty ten years ago and now there's fifteen. 345 00:17:56,880 --> 00:18:00,680 Speaker 2: Yeah, about forty to fifty percent decline in advice since 346 00:18:00,800 --> 00:18:01,600 Speaker 2: the Royal Commission. 347 00:18:02,480 --> 00:18:06,440 Speaker 1: So to our listeners who would listen, You know, one 348 00:18:06,480 --> 00:18:08,719 Speaker 1: podcast is as good as the other basically when it's 349 00:18:08,760 --> 00:18:10,159 Speaker 1: put in front of you, un should you give it 350 00:18:10,200 --> 00:18:13,480 Speaker 1: a try? We don't know what the selection mechanism that 351 00:18:13,520 --> 00:18:15,840 Speaker 1: puts a podcast in front of you or a YouTube 352 00:18:15,920 --> 00:18:18,119 Speaker 1: video in front of you. As you say, there are algorithms, 353 00:18:18,240 --> 00:18:20,639 Speaker 1: but what do you think our listeners should just what 354 00:18:20,640 --> 00:18:23,159 Speaker 1: should they watch out for? This is an area that 355 00:18:23,160 --> 00:18:25,159 Speaker 1: we just don't look at enough, We don't get advice 356 00:18:25,320 --> 00:18:28,560 Speaker 1: enough on because properly, it's strange in some ways, it 357 00:18:28,640 --> 00:18:32,480 Speaker 1: sort of falls slightly outside the jurisdiction if you like, 358 00:18:32,520 --> 00:18:36,119 Speaker 1: traditional jurisdiction of financial advice and mortgage brokeus for instance, 359 00:18:36,160 --> 00:18:38,320 Speaker 1: are in a world of their own to some degree 360 00:18:38,320 --> 00:18:40,639 Speaker 1: from a regulatory point of view. So what should people 361 00:18:40,680 --> 00:18:42,520 Speaker 1: look out for what should they watch out for from 362 00:18:42,600 --> 00:18:45,000 Speaker 1: social media education and advice. 363 00:18:47,200 --> 00:18:49,720 Speaker 2: Well, this is just the hardest thing, and I've raised 364 00:18:49,760 --> 00:18:53,480 Speaker 2: this a number of times. The issue with social media is, 365 00:18:53,520 --> 00:18:55,720 Speaker 2: generally speaking, those who are the best of it and 366 00:18:55,880 --> 00:18:59,080 Speaker 2: highly engaging and putting content in front of you which 367 00:18:59,080 --> 00:19:02,360 Speaker 2: you want to watch. Recently speaking, aren't the ones who 368 00:19:02,400 --> 00:19:04,919 Speaker 2: have the best level of knowledge, the education you can 369 00:19:04,960 --> 00:19:07,640 Speaker 2: actually get it out there. And that's a significant issue 370 00:19:08,080 --> 00:19:10,720 Speaker 2: with the industries are dealing with. And partly I'm helping 371 00:19:10,720 --> 00:19:11,560 Speaker 2: a bridge as well. 372 00:19:12,080 --> 00:19:16,080 Speaker 1: Yes, and I take your point that the ability to 373 00:19:16,160 --> 00:19:21,960 Speaker 1: catch surprise privolk have a dazzlingly effective video is not 374 00:19:23,359 --> 00:19:26,159 Speaker 1: actually the same as offering good advice. 375 00:19:26,440 --> 00:19:28,639 Speaker 2: But the way the algorithms work is it's all about 376 00:19:28,680 --> 00:19:31,680 Speaker 2: keeping attention. So if you say something engaging and people 377 00:19:31,760 --> 00:19:33,840 Speaker 2: watching it, it's going to push to more and more people. 378 00:19:34,080 --> 00:19:37,359 Speaker 2: The algorithm could not care less whether what you're saying 379 00:19:37,560 --> 00:19:40,040 Speaker 2: is right or wrong or downright dangerous. 380 00:19:41,040 --> 00:19:45,640 Speaker 1: Right, it's alarming, It is alarming. Often it's the investments 381 00:19:45,720 --> 00:19:47,640 Speaker 1: with at least knowledge and experience that. 382 00:19:47,720 --> 00:19:49,359 Speaker 2: I was just going to touch on it. I think 383 00:19:50,440 --> 00:19:53,119 Speaker 2: looking at from a financial advisors perspective, with the average 384 00:19:53,119 --> 00:19:56,199 Speaker 2: financial advisors Add's fifty two in a male. Now, I 385 00:19:56,240 --> 00:20:00,199 Speaker 2: don't imagine many of those guys are posting the hit 386 00:20:00,280 --> 00:20:06,480 Speaker 2: talk Instagram, reo so or even writing engaging content on LinkedIn. Yes, 387 00:20:07,000 --> 00:20:07,600 Speaker 2: but you are. 388 00:20:07,920 --> 00:20:09,680 Speaker 1: So you're aware of the world. That's a different milieu 389 00:20:09,720 --> 00:20:11,359 Speaker 1: that you're in, and you're aware of that, and then 390 00:20:11,400 --> 00:20:14,440 Speaker 1: you see Then you see the gaps basically in terms 391 00:20:14,480 --> 00:20:18,119 Speaker 1: of qualifications that perhaps others don't see. Okay, we'll be 392 00:20:18,119 --> 00:20:33,000 Speaker 1: back at the moment. Hello, Welcome back to The Australian's 393 00:20:33,000 --> 00:20:35,440 Speaker 1: Money Puzzle podcast. I'm James Kirby and I'm talking to 394 00:20:35,520 --> 00:20:37,719 Speaker 1: Jack Tussl from the Partner's Wealth Group and we've been 395 00:20:37,720 --> 00:20:41,359 Speaker 1: covering some very interesting material. Jack's point that you're you know, 396 00:20:41,520 --> 00:20:43,480 Speaker 1: the investment that you're home is probably one of the 397 00:20:43,480 --> 00:20:46,760 Speaker 1: worst investments you will make is really interesting. It sounds 398 00:20:46,800 --> 00:20:50,159 Speaker 1: unconvincing at first glance what he's saying is compared to 399 00:20:50,400 --> 00:20:53,840 Speaker 1: other investments from a tax perspective. Then you start to 400 00:20:53,840 --> 00:20:56,639 Speaker 1: see the weakness, this share of the distinct weakness in 401 00:20:56,760 --> 00:21:02,119 Speaker 1: home ownership against successful investing that is tax deductible, something 402 00:21:02,160 --> 00:21:06,640 Speaker 1: we should look more at. Also, the social media influencers. 403 00:21:07,240 --> 00:21:09,639 Speaker 1: I was asked to speak at an ACT conference on 404 00:21:09,960 --> 00:21:13,199 Speaker 1: where there was a segment on fin influencers recently, and 405 00:21:13,280 --> 00:21:16,199 Speaker 1: I think the regulators are at sea really about what 406 00:21:16,280 --> 00:21:19,000 Speaker 1: to do about that, because you can have someone who's 407 00:21:19,080 --> 00:21:22,919 Speaker 1: highly qualified on social media, like you, Jack, and then 408 00:21:22,960 --> 00:21:27,520 Speaker 1: you can have someone who has zilsh qualifications and the 409 00:21:27,720 --> 00:21:31,320 Speaker 1: algorithm will trade both of you the same. So it's 410 00:21:31,320 --> 00:21:33,640 Speaker 1: a very tricky area to regulate. That's not to say 411 00:21:33,640 --> 00:21:36,200 Speaker 1: that it shouldn't be regulated, because it's going to cause 412 00:21:36,240 --> 00:21:40,600 Speaker 1: problems very soon, if not already. Okay, if you questions, David, 413 00:21:40,840 --> 00:21:43,520 Speaker 1: your recent episode on the Retirement Suite spot was great, 414 00:21:43,560 --> 00:21:46,399 Speaker 1: but did have one misleading statement. Your guest said you 415 00:21:46,480 --> 00:21:48,240 Speaker 1: need about a million of your own money to gain 416 00:21:48,280 --> 00:21:51,600 Speaker 1: an equivalent income to the pension. This is wrong since 417 00:21:51,640 --> 00:21:53,680 Speaker 1: the starting bands would leave you with about a million 418 00:21:53,680 --> 00:21:55,879 Speaker 1: in the bank when you die, but the pension doesn't 419 00:21:55,920 --> 00:22:00,560 Speaker 1: leave you anything. Yeah, absolutely, David, you're correct. The point 420 00:22:00,640 --> 00:22:03,639 Speaker 1: I suppose that Hugh Robertson was making is that you 421 00:22:03,680 --> 00:22:06,720 Speaker 1: can have someone who has the government pension getting say 422 00:22:06,760 --> 00:22:10,960 Speaker 1: a couple getting forty something thousand a year in income, 423 00:22:11,240 --> 00:22:13,720 Speaker 1: another couple who doesn't have a government pension has to 424 00:22:13,760 --> 00:22:17,200 Speaker 1: have a million dollars to bank roll an income of 425 00:22:17,440 --> 00:22:20,520 Speaker 1: forty something thousand a year, and if they both live 426 00:22:20,600 --> 00:22:23,680 Speaker 1: for forty more years, they both have that same dynamic. 427 00:22:23,800 --> 00:22:27,879 Speaker 1: That's the issue, Nathan a question. I understand the logic 428 00:22:28,000 --> 00:22:31,760 Speaker 1: of not including the value of the home in pension calculations. 429 00:22:31,800 --> 00:22:33,520 Speaker 1: No one wants to see Betty kicked out of her 430 00:22:33,520 --> 00:22:37,439 Speaker 1: family at ninety. But when Betty passes away with a 431 00:22:37,440 --> 00:22:39,800 Speaker 1: five million dollar home, should the taxpayer not get some 432 00:22:39,880 --> 00:22:41,800 Speaker 1: of that pension back from the sale of her house. 433 00:22:42,119 --> 00:22:45,560 Speaker 1: I wonder Jack, going back to the original thoughts at 434 00:22:45,560 --> 00:22:47,720 Speaker 1: the start of the show about how the home is 435 00:22:47,760 --> 00:22:50,960 Speaker 1: such a poor investment, there's a lot of things in 436 00:22:50,960 --> 00:22:53,480 Speaker 1: the tax system that help it along, isn't there. The 437 00:22:53,520 --> 00:22:56,360 Speaker 1: home isn't included in pension asset test, the home isn't 438 00:22:56,400 --> 00:22:58,440 Speaker 1: included in capital gains. Do you think if we flattened 439 00:22:58,440 --> 00:23:01,359 Speaker 1: out those taxes what you're saying become much more obvious. 440 00:23:02,160 --> 00:23:04,439 Speaker 2: Yeah, and it's interesting you look at that. The ability 441 00:23:04,440 --> 00:23:07,520 Speaker 2: to have a five million dollar house and still able 442 00:23:07,520 --> 00:23:09,719 Speaker 2: to get a full government pension. The millennials out there 443 00:23:09,720 --> 00:23:11,440 Speaker 2: would be seen in in the minute. 444 00:23:12,359 --> 00:23:15,080 Speaker 1: It would, Yes, they would, And you can make that 445 00:23:15,119 --> 00:23:16,800 Speaker 1: a ten million dollar house if you want. It is 446 00:23:16,880 --> 00:23:19,520 Speaker 1: really quite remarkable that it's come to that. I don't 447 00:23:19,560 --> 00:23:22,320 Speaker 1: think when they excluded the value of the family home, 448 00:23:22,960 --> 00:23:26,000 Speaker 1: they weren't thinking of fourteen million dollar houses on Sydney 449 00:23:26,000 --> 00:23:27,160 Speaker 1: Harbor being excluded. 450 00:23:27,359 --> 00:23:30,119 Speaker 2: No. I think the smartest thing to do would be, 451 00:23:30,200 --> 00:23:32,960 Speaker 2: say you just capture two million dollars or three million, 452 00:23:33,119 --> 00:23:35,439 Speaker 2: which is going to be probably eighty percent of the 453 00:23:35,440 --> 00:23:37,600 Speaker 2: population really, and then you're going to pay tax on 454 00:23:37,640 --> 00:23:41,240 Speaker 2: the level above. That would be a more equable Thinger. 455 00:23:41,400 --> 00:23:44,880 Speaker 2: You just got to ask the question, right, given how 456 00:23:45,280 --> 00:23:50,560 Speaker 2: much debt is expanding, right, can younger generation, say millennials, example, 457 00:23:50,560 --> 00:23:54,200 Speaker 2: we were paying forty seven percent tax on income above 458 00:23:54,200 --> 00:23:56,560 Speaker 2: one hundred and ninety thousand dollars. How long can they 459 00:23:56,720 --> 00:23:59,320 Speaker 2: subsidize someone who's living in a five million dollar property 460 00:23:59,359 --> 00:24:01,440 Speaker 2: to get paid for government pension? And do we say 461 00:24:01,440 --> 00:24:03,800 Speaker 2: that is equitable in the long run? Yeah? 462 00:24:03,960 --> 00:24:05,399 Speaker 1: Yeah, I think that's something that will come up in 463 00:24:05,440 --> 00:24:07,919 Speaker 1: the Economic Summit actually next week, which we will have 464 00:24:08,000 --> 00:24:11,040 Speaker 1: special on this starting on the nineteenth. The Economic Summit, 465 00:24:11,119 --> 00:24:14,679 Speaker 1: which has quickly been repackaged in some parts as the 466 00:24:14,720 --> 00:24:17,960 Speaker 1: Tax Summit or even the Wealth Tax summit. Perhaps okay, 467 00:24:18,040 --> 00:24:21,840 Speaker 1: final question from Peter. It's very specific. We'll have a go. 468 00:24:22,680 --> 00:24:25,040 Speaker 1: This has never advised information only, he says. He gets 469 00:24:25,040 --> 00:24:28,680 Speaker 1: a question regarding the cost space of his ETF distributions. 470 00:24:28,960 --> 00:24:31,760 Speaker 1: He gets his cast distributions during the year from his 471 00:24:31,880 --> 00:24:34,439 Speaker 1: Vanguard ETF. At the end of the tax year, I 472 00:24:34,440 --> 00:24:37,200 Speaker 1: get the tax profile with the breakdown of the components 473 00:24:37,200 --> 00:24:40,920 Speaker 1: of the distribution. One particular line has him puzzled. A 474 00:24:41,000 --> 00:24:44,760 Speaker 1: mighty cost base net amount dash shortfall increase in the 475 00:24:44,800 --> 00:24:48,720 Speaker 1: cost space, which for twenty twenty five tax year, Peter says, 476 00:24:48,920 --> 00:24:50,679 Speaker 1: was two hundred and fifty dollars, and he wants to 477 00:24:50,720 --> 00:24:53,320 Speaker 1: know does this mean he should go through in a 478 00:24:53,440 --> 00:24:56,560 Speaker 1: portion the amount across each of his shares and ETFs 479 00:24:56,960 --> 00:24:59,760 Speaker 1: and increase the cost space for each process. So at 480 00:24:59,800 --> 00:25:04,520 Speaker 1: the time I sell, I will decrease my capital gain fitling. 481 00:25:04,600 --> 00:25:06,879 Speaker 1: It kind of gets automated and he doesn't have to 482 00:25:06,920 --> 00:25:09,440 Speaker 1: do all that. Have you any observation on that one 483 00:25:09,640 --> 00:25:11,440 Speaker 1: Jack I blame? 484 00:25:11,720 --> 00:25:15,680 Speaker 2: Isn't that because he's technically paid more income tax now 485 00:25:15,720 --> 00:25:18,719 Speaker 2: than what he should. So effectively, what it's doing is 486 00:25:18,720 --> 00:25:21,560 Speaker 2: increasing the cost basis so that when it does get solved, 487 00:25:21,640 --> 00:25:25,239 Speaker 2: and he doesn't pay as much tax, which offsets that 488 00:25:25,359 --> 00:25:28,320 Speaker 2: initial or that in terms of applying. That's a sort 489 00:25:28,359 --> 00:25:30,200 Speaker 2: of accountant job. I think I would. 490 00:25:30,040 --> 00:25:32,879 Speaker 1: Just yes, okay, and I tend to let the accountants 491 00:25:32,920 --> 00:25:34,560 Speaker 1: do all that. I mean sometimes I do sit back 492 00:25:34,560 --> 00:25:37,399 Speaker 1: and I say, when you get your annual returns, you say, okay, 493 00:25:37,440 --> 00:25:39,600 Speaker 1: So let's say you bought some more shares in something 494 00:25:39,640 --> 00:25:41,320 Speaker 1: you had already, Like. 495 00:25:41,320 --> 00:25:43,000 Speaker 2: How exactly is that treated? 496 00:25:43,840 --> 00:25:45,800 Speaker 1: If I went in and drilled down, I could, I suppose, 497 00:25:45,800 --> 00:25:48,000 Speaker 1: spend days and days finding out whether the accountant did 498 00:25:48,000 --> 00:25:50,200 Speaker 1: that right. At a certain point you have to trust 499 00:25:50,200 --> 00:25:52,399 Speaker 1: the accountant and the order did is right. But you 500 00:25:52,440 --> 00:25:54,639 Speaker 1: could drill down forever, I suppose, if you had the time. 501 00:25:54,880 --> 00:25:56,520 Speaker 1: And that don't mean to be flippant. I just mean 502 00:25:56,560 --> 00:25:59,879 Speaker 1: that it's probably extremely difficult to track each in the 503 00:26:00,240 --> 00:26:03,280 Speaker 1: you will item sometimes that when they are routine, these 504 00:26:03,320 --> 00:26:05,480 Speaker 1: sort of covered by accountants and orders. But you could 505 00:26:05,520 --> 00:26:09,080 Speaker 1: always ask your accountant or orders or how did they 506 00:26:09,119 --> 00:26:12,320 Speaker 1: deal with that last year? For instance? That might be useful. 507 00:26:12,560 --> 00:26:15,639 Speaker 1: All right, terrific, Jack, Tossil Partners, Wealth Group, thanks for 508 00:26:15,680 --> 00:26:16,320 Speaker 1: coming on the show. 509 00:26:16,440 --> 00:26:18,720 Speaker 2: Thanks for having me again. John. It's been absolute pleasure. 510 00:26:18,960 --> 00:26:21,360 Speaker 1: Great to have you, Jack, and great to hear your 511 00:26:21,520 --> 00:26:24,320 Speaker 1: very distinct views on the market. They're very distinct views, 512 00:26:24,359 --> 00:26:28,480 Speaker 1: they're clear views, and they're often provocative. Okay, folks, let's 513 00:26:28,480 --> 00:26:31,399 Speaker 1: have some more correspondence the Money Puzzle at the Australian 514 00:26:31,520 --> 00:26:33,560 Speaker 1: dot com dot au. Talk to you soon.