1 00:00:11,720 --> 00:00:14,960 Speaker 1: Welcome to the Money Puzzle. I'm your host Julianne Sprague, 2 00:00:15,040 --> 00:00:18,520 Speaker 1: wealth editor at The Australian, filling in for James Kirby. 3 00:00:19,040 --> 00:00:22,120 Speaker 1: He's on a well deserved break. He will return next week, 4 00:00:22,680 --> 00:00:24,959 Speaker 1: but for now I get to sit in the chair 5 00:00:25,000 --> 00:00:28,080 Speaker 1: and host this episode for you. Our guest today is 6 00:00:28,120 --> 00:00:32,400 Speaker 1: a Melbourne based financial advisor, James Wrigley. He's from First Financial. 7 00:00:32,800 --> 00:00:35,599 Speaker 1: You might know him more from social media. He has 8 00:00:35,640 --> 00:00:39,920 Speaker 1: won plenty of fans for his plane speaking financial advice. 9 00:00:40,240 --> 00:00:43,120 Speaker 1: He's got more than twenty years experience and he's seen 10 00:00:43,159 --> 00:00:47,440 Speaker 1: the good, the bad and the ugly. And for his sins, 11 00:00:47,440 --> 00:00:49,559 Speaker 1: he's decided to write down his top tips and his 12 00:00:49,640 --> 00:00:52,440 Speaker 1: pen a new book. It is called Retire Life Ready. 13 00:00:52,600 --> 00:00:56,240 Speaker 1: It will be available on October twenty nine. It's a 14 00:00:56,240 --> 00:00:58,480 Speaker 1: bit of a framework to help you make better money 15 00:00:58,480 --> 00:01:01,080 Speaker 1: decisions and map your job. I need to retire and 16 00:01:01,080 --> 00:01:03,320 Speaker 1: now the book isn't out until October twenty nine. But 17 00:01:03,360 --> 00:01:05,520 Speaker 1: we are very lucky here at the Money Puzzle. We've 18 00:01:05,520 --> 00:01:08,720 Speaker 1: been able to grab James and get a first peek. 19 00:01:08,920 --> 00:01:10,760 Speaker 1: I'll look inside the book and we're gonna have a 20 00:01:10,800 --> 00:01:14,120 Speaker 1: chat to James about some of his top tips, James, really, 21 00:01:14,240 --> 00:01:15,720 Speaker 1: thanks for joining us on the money puzzle. 22 00:01:16,040 --> 00:01:18,120 Speaker 2: Julyanne, thank you for having me here, pleasure. 23 00:01:18,560 --> 00:01:22,080 Speaker 1: Congratulations on the book. That's a bit of an epic 24 00:01:22,319 --> 00:01:22,840 Speaker 1: thing to do. 25 00:01:23,800 --> 00:01:27,080 Speaker 2: Yeah, it's like I think it was probably about a 26 00:01:27,160 --> 00:01:30,280 Speaker 2: year ago now, would about October last year that I 27 00:01:30,280 --> 00:01:33,080 Speaker 2: started having conversations with the publisher and I had never 28 00:01:33,080 --> 00:01:35,959 Speaker 2: even considered writing a book, never even crossed my mind. 29 00:01:36,720 --> 00:01:38,640 Speaker 2: And they reached out and said, hey, James, if you 30 00:01:38,640 --> 00:01:40,760 Speaker 2: thought of writing a book. I said, no, is that 31 00:01:40,920 --> 00:01:42,759 Speaker 2: we think you could write one? I said, all right, 32 00:01:42,840 --> 00:01:45,680 Speaker 2: let's give it a go. And anyway, yeah, a year later, 33 00:01:45,720 --> 00:01:47,520 Speaker 2: we're just about to be on shelves. 34 00:01:47,920 --> 00:01:49,720 Speaker 1: It will be on shelves now. I've been able to 35 00:01:49,800 --> 00:01:51,680 Speaker 1: have a little bit of a sneak peek inside this, 36 00:01:51,720 --> 00:01:54,920 Speaker 1: and it is typical the plane speaking will get you 37 00:01:54,960 --> 00:01:59,960 Speaker 1: on your way. But it's called retire life. Ready now, babe, 38 00:02:00,160 --> 00:02:02,240 Speaker 1: you could explain to us why you've called it that, 39 00:02:03,040 --> 00:02:05,880 Speaker 1: and perhaps maybe if you could. Obviously people could go 40 00:02:05,960 --> 00:02:07,680 Speaker 1: read the book. But there was this lovely anecdote in 41 00:02:07,720 --> 00:02:11,000 Speaker 1: there from your fortieth birthday were you told your family 42 00:02:11,040 --> 00:02:13,240 Speaker 1: you were going to write this book and your aunt 43 00:02:13,480 --> 00:02:15,160 Speaker 1: told you something I don't know if you can recall 44 00:02:15,160 --> 00:02:16,000 Speaker 1: what that story was. 45 00:02:16,200 --> 00:02:18,919 Speaker 2: Yeah, yeah, So I think it's like in the intro 46 00:02:19,080 --> 00:02:21,639 Speaker 2: part to the book, she said to me, She's like, James, 47 00:02:21,639 --> 00:02:23,760 Speaker 2: make sure you tell people that if they don't have 48 00:02:23,800 --> 00:02:25,840 Speaker 2: any money in retirement or something to that effect, that 49 00:02:25,919 --> 00:02:28,560 Speaker 2: retirement's really boring. Like if she was kind of trying 50 00:02:28,600 --> 00:02:30,720 Speaker 2: to emphasize this point of if you're just stuck at 51 00:02:30,760 --> 00:02:33,840 Speaker 2: home watching the clock tick down, it's not a terribly 52 00:02:33,880 --> 00:02:36,920 Speaker 2: great retirement. And I think she was kind of re 53 00:02:37,040 --> 00:02:39,120 Speaker 2: very to her own retirement. But she's been on plenty 54 00:02:39,120 --> 00:02:41,359 Speaker 2: of trips and she's done plenty of things. So from 55 00:02:41,360 --> 00:02:43,639 Speaker 2: an outsider looking in on her own retirement, I would 56 00:02:43,880 --> 00:02:47,120 Speaker 2: I wouldn't say it's anything likely like it's boring, but 57 00:02:47,280 --> 00:02:48,680 Speaker 2: that's kind of what she was trying to get at. 58 00:02:49,320 --> 00:02:52,000 Speaker 1: So with that in mind, then that idea of it 59 00:02:52,040 --> 00:02:54,160 Speaker 1: would be good to have money in retirement. And I 60 00:02:54,200 --> 00:02:58,119 Speaker 1: think also the retirement stage of life is lengthening. It's 61 00:02:58,120 --> 00:03:00,760 Speaker 1: great that we all live longer where working out how 62 00:03:00,760 --> 00:03:04,400 Speaker 1: to become healthier for longer, but that also extends retirement. 63 00:03:05,080 --> 00:03:07,160 Speaker 1: When do you reckon most people get around to actually 64 00:03:07,200 --> 00:03:09,920 Speaker 1: planning retirement to really sitting there and thinking about, Oh, 65 00:03:10,000 --> 00:03:11,680 Speaker 1: I've got this other stage to think about. 66 00:03:12,560 --> 00:03:16,600 Speaker 2: I think in the past it was probably fifty five plus, 67 00:03:16,680 --> 00:03:20,600 Speaker 2: late fifties, early sixties, possibly because of the social media 68 00:03:20,639 --> 00:03:22,920 Speaker 2: stuff that I do, and I interact with a lot 69 00:03:22,960 --> 00:03:24,800 Speaker 2: of people and there's a lot of questions and comments 70 00:03:24,880 --> 00:03:28,239 Speaker 2: and things. I tend to see that aging down. I know, 71 00:03:28,240 --> 00:03:32,440 Speaker 2: if it's just a general increase in education levels around 72 00:03:32,639 --> 00:03:35,960 Speaker 2: money and finances and retirement and super and so forth, 73 00:03:36,040 --> 00:03:38,880 Speaker 2: because it's so easy to get access to some of 74 00:03:38,880 --> 00:03:40,840 Speaker 2: these things now, like you can google things, you can 75 00:03:40,840 --> 00:03:43,040 Speaker 2: go on Instagram and YouTube and all the rest of it. 76 00:03:43,120 --> 00:03:45,640 Speaker 2: So if you have any interest in any of this stuff, 77 00:03:45,680 --> 00:03:48,880 Speaker 2: there's plenty of information out there, whereas maybe ten or 78 00:03:48,880 --> 00:03:51,920 Speaker 2: fifteen years ago it wasn't quite so readily available for you. 79 00:03:51,960 --> 00:03:54,160 Speaker 2: There was plenty of books and things that you could read, 80 00:03:54,240 --> 00:03:56,440 Speaker 2: but sitting down and committing to reading a finance book 81 00:03:56,520 --> 00:03:58,760 Speaker 2: is a bit more of a bigger undertaking than watching 82 00:03:58,800 --> 00:04:01,840 Speaker 2: a few videos on Instagram might be. So, look, we're 83 00:04:01,880 --> 00:04:06,280 Speaker 2: seeing a lot of people around the age of forty something, 84 00:04:06,360 --> 00:04:09,200 Speaker 2: probably mid forties, where they're starting to think about it 85 00:04:09,280 --> 00:04:11,960 Speaker 2: really seriously. Whereas I reckon if I go back to 86 00:04:11,960 --> 00:04:12,720 Speaker 2: my earlier. 87 00:04:12,480 --> 00:04:15,280 Speaker 1: Days, maybe it's a point in the career where they're 88 00:04:15,280 --> 00:04:17,960 Speaker 1: starting to think this working things have been getting a 89 00:04:17,960 --> 00:04:18,279 Speaker 1: bit old. 90 00:04:19,000 --> 00:04:21,960 Speaker 2: That's probably it, and they're likely to peak in their career, 91 00:04:22,160 --> 00:04:25,240 Speaker 2: you know, demanding work schedule and a demanding home life 92 00:04:25,400 --> 00:04:27,240 Speaker 2: is like how much longer does this go on for? 93 00:04:27,360 --> 00:04:29,240 Speaker 2: And what can I do to get out of here sooner? 94 00:04:29,400 --> 00:04:30,640 Speaker 2: Maybe that's what's driving it. 95 00:04:30,880 --> 00:04:33,120 Speaker 1: If the boss is listening, very happy love the Australian. 96 00:04:33,200 --> 00:04:35,440 Speaker 1: I love doing the money Puzzle podcast. Everything's great, but 97 00:04:35,480 --> 00:04:37,520 Speaker 1: also wouldn't it be nice to be able to choose 98 00:04:37,560 --> 00:04:39,200 Speaker 1: to do it rather than you have to do it 99 00:04:39,240 --> 00:04:44,200 Speaker 1: to pay the mortgage. So with that in mind, if 100 00:04:44,440 --> 00:04:46,960 Speaker 1: that age is coming down, starting to think about retirement, 101 00:04:47,760 --> 00:04:49,720 Speaker 1: where do people then need to start? So, say you 102 00:04:49,760 --> 00:04:52,359 Speaker 1: are in your forties, or perhaps people listening to this 103 00:04:52,440 --> 00:04:54,320 Speaker 1: might be in their fifties, or if they're in the sixties, 104 00:04:54,320 --> 00:04:57,640 Speaker 1: but at some point you're thinking to yourself, I want 105 00:04:57,640 --> 00:04:59,840 Speaker 1: to plan for my retirement. Where do you need to 106 00:04:59,880 --> 00:05:00,359 Speaker 1: sa start? 107 00:05:01,200 --> 00:05:03,400 Speaker 2: You reference the title of the book Retire Life Ready 108 00:05:03,440 --> 00:05:05,840 Speaker 2: and the reason why we've kind of called it that 109 00:05:05,880 --> 00:05:07,520 Speaker 2: and a lot of the financial advice that we do 110 00:05:07,600 --> 00:05:10,160 Speaker 2: is centered around this idea, at least in the very 111 00:05:10,200 --> 00:05:12,719 Speaker 2: beginning of the engagement that we might have with new clients. 112 00:05:13,360 --> 00:05:15,479 Speaker 2: Is because it's all about trying to design the lifestyle 113 00:05:15,480 --> 00:05:18,760 Speaker 2: that you're aspiring to in retirement. Let's park the numbers 114 00:05:18,920 --> 00:05:21,880 Speaker 2: for a moment that they're obviously completely relevant and will 115 00:05:22,200 --> 00:05:24,560 Speaker 2: be the ones that support that retirement. But what is 116 00:05:24,600 --> 00:05:25,760 Speaker 2: it that you want to do? Where do you want 117 00:05:25,760 --> 00:05:27,279 Speaker 2: to live, who do you want to surround yourself with? 118 00:05:27,440 --> 00:05:29,600 Speaker 2: What are you going to do with your time? And 119 00:05:29,640 --> 00:05:32,000 Speaker 2: I comment on in the book and it's an odd 120 00:05:32,000 --> 00:05:34,760 Speaker 2: colleague of minding financial advice, he used to talk about 121 00:05:34,839 --> 00:05:37,919 Speaker 2: this idea of what do you do with your time 122 00:05:38,040 --> 00:05:40,599 Speaker 2: in retirement when all of your time is leisure time? 123 00:05:40,640 --> 00:05:44,039 Speaker 2: Whereas at the moment, leisure time is a break from work, 124 00:05:44,080 --> 00:05:45,839 Speaker 2: a break from the routine. But what do you do 125 00:05:45,920 --> 00:05:47,600 Speaker 2: when all of your time is leisure time? What do 126 00:05:47,640 --> 00:05:50,600 Speaker 2: you do for a break from the leisure time? And 127 00:05:50,640 --> 00:05:53,000 Speaker 2: so trying to design this lifestyle that you want And 128 00:05:53,080 --> 00:05:54,280 Speaker 2: as I said, where do you want to live, who 129 00:05:54,279 --> 00:05:56,359 Speaker 2: do you want to surround yourself with? How are you 130 00:05:56,360 --> 00:05:58,200 Speaker 2: going to occupy your time? Do you want to work 131 00:05:58,240 --> 00:05:59,760 Speaker 2: part time? Do you want to work casually or do 132 00:05:59,800 --> 00:06:02,440 Speaker 2: you want to just stop completely and spend thirty years 133 00:06:02,480 --> 00:06:05,279 Speaker 2: sitting on a beach. That's up to you, and then 134 00:06:05,320 --> 00:06:07,000 Speaker 2: we can start to look at the numbers that you 135 00:06:07,080 --> 00:06:08,800 Speaker 2: need to support that life that you want. 136 00:06:09,000 --> 00:06:10,880 Speaker 1: So, if you're looking at a break in the leisure time, 137 00:06:11,360 --> 00:06:13,560 Speaker 1: is that indicating that you might want to do some 138 00:06:13,600 --> 00:06:15,520 Speaker 1: part time work or casual work or what are the 139 00:06:15,560 --> 00:06:17,440 Speaker 1: other strategy? What are the other strategies? 140 00:06:17,880 --> 00:06:20,120 Speaker 2: That's it? So it's part time work, it's casual work, 141 00:06:20,120 --> 00:06:23,640 Speaker 2: it's volunteering work. I had a conversation with a new 142 00:06:23,640 --> 00:06:26,200 Speaker 2: client just earlier this morning, and she'd had quite a 143 00:06:26,200 --> 00:06:31,200 Speaker 2: demanding career in the particular field that she's in. Fortunately 144 00:06:31,240 --> 00:06:34,880 Speaker 2: for her, that particular industry has quite a big casual workforce, 145 00:06:34,920 --> 00:06:37,479 Speaker 2: and so she's given up the big kind of corporate leading, 146 00:06:37,560 --> 00:06:39,719 Speaker 2: a big team type job that she had for a 147 00:06:39,760 --> 00:06:41,480 Speaker 2: large part of her working life. And she's in her 148 00:06:41,480 --> 00:06:44,599 Speaker 2: mid sixties now and she just picks up casual shifts 149 00:06:44,600 --> 00:06:48,039 Speaker 2: in the particular industry that she's in, and they'll plan 150 00:06:48,160 --> 00:06:50,040 Speaker 2: a holiday and they'll go away for three weeks or 151 00:06:50,040 --> 00:06:52,839 Speaker 2: four weeks or six weeks, and obviously doesn't work and 152 00:06:52,839 --> 00:06:54,480 Speaker 2: then she'll come back and she'll pick up a couple 153 00:06:54,520 --> 00:06:56,200 Speaker 2: of shifts here and there, And she says she really 154 00:06:56,240 --> 00:06:59,000 Speaker 2: loves kind of not having the responsibility of all of 155 00:06:59,040 --> 00:07:02,160 Speaker 2: the other stuff that with that big career, as she 156 00:07:02,279 --> 00:07:04,120 Speaker 2: can show up to the workplace, do her job, and 157 00:07:04,120 --> 00:07:06,000 Speaker 2: then go home and doesn't have to worry about it. 158 00:07:06,800 --> 00:07:09,720 Speaker 2: But that then keeps her mind occupied and keeps it stimulated. 159 00:07:10,240 --> 00:07:13,280 Speaker 2: You commented before about retirement lasting a very long time, 160 00:07:13,360 --> 00:07:15,240 Speaker 2: like a lot of people will live into their nineties 161 00:07:15,280 --> 00:07:18,560 Speaker 2: and beyond. Now, if you're retiring at sixty something, you 162 00:07:18,600 --> 00:07:21,560 Speaker 2: know that's thirty forty years of your life. That there's 163 00:07:21,560 --> 00:07:22,880 Speaker 2: a lot of books that you're going to read or 164 00:07:22,880 --> 00:07:24,680 Speaker 2: that other sitting on a beach, and so you need 165 00:07:24,760 --> 00:07:27,600 Speaker 2: something to keep your mind going. And so whether it's volunteering, 166 00:07:27,760 --> 00:07:30,720 Speaker 2: getting involved with the sporting club or the church, or 167 00:07:30,760 --> 00:07:33,440 Speaker 2: the kids' school or the grandkids school, or in the 168 00:07:33,480 --> 00:07:35,360 Speaker 2: case that I was talking about, and doing some actual 169 00:07:35,440 --> 00:07:40,840 Speaker 2: paid casual work. We see those people that involve themselves 170 00:07:40,840 --> 00:07:44,160 Speaker 2: in something more than just sitting at home that actually 171 00:07:44,160 --> 00:07:46,120 Speaker 2: have the most enjoyment through their retirement. 172 00:07:46,720 --> 00:07:49,120 Speaker 1: So how do I sit down and think from mapping 173 00:07:49,120 --> 00:07:53,360 Speaker 1: it out The difficulty is trying to work out how 174 00:07:53,480 --> 00:07:57,679 Speaker 1: much I might need to sustain that lifestyle. I could 175 00:07:57,720 --> 00:08:00,960 Speaker 1: write you a fantastic list. I want first class travel, 176 00:08:01,000 --> 00:08:03,000 Speaker 1: I want to go around Europe every year and do 177 00:08:03,040 --> 00:08:04,400 Speaker 1: all these sorts of things. Is it a matter of 178 00:08:04,480 --> 00:08:07,120 Speaker 1: having there's your ultimate goal, there's a mid rank of that, 179 00:08:07,240 --> 00:08:09,040 Speaker 1: and then there's the if you don't do something now, 180 00:08:09,080 --> 00:08:12,560 Speaker 1: this is how bleak it's just going to be you, yeah, 181 00:08:13,720 --> 00:08:14,720 Speaker 1: watching Free to Wear TV. 182 00:08:15,880 --> 00:08:18,600 Speaker 2: But look, there are different levels to it, absolutely, but 183 00:08:18,720 --> 00:08:23,200 Speaker 2: by and large, we see people generally wanting to continue 184 00:08:23,240 --> 00:08:25,720 Speaker 2: to live the current life that they're living now. So 185 00:08:26,000 --> 00:08:27,960 Speaker 2: people will be earning a certain amount of money, maybe 186 00:08:27,960 --> 00:08:29,440 Speaker 2: it's a lot of money, maybe it's not a lot 187 00:08:29,440 --> 00:08:31,600 Speaker 2: of money, or somewhere in between, and they're earning whatever 188 00:08:31,600 --> 00:08:35,600 Speaker 2: they're earning now, and they're living a particular life now. 189 00:08:35,720 --> 00:08:38,040 Speaker 2: Very rarely do we come across people that are really 190 00:08:38,160 --> 00:08:42,080 Speaker 2: unhappy with the life that they're leading now. Whatever they're doing, 191 00:08:42,240 --> 00:08:44,960 Speaker 2: wherever they're living, whatever they're doing with their time, they're 192 00:08:45,000 --> 00:08:47,480 Speaker 2: generally reasonably happy with that, and kind of the starting 193 00:08:47,520 --> 00:08:50,000 Speaker 2: point tends to be we'd really love to be able 194 00:08:50,040 --> 00:08:53,040 Speaker 2: to continue doing what we're doing today through our retirement. 195 00:08:53,760 --> 00:08:56,080 Speaker 2: So there's some exercises in the book where I talk 196 00:08:56,160 --> 00:08:58,560 Speaker 2: to and you can kind of get into the nitty 197 00:08:58,559 --> 00:09:01,480 Speaker 2: gritty of try and work get what you're spending today 198 00:09:01,840 --> 00:09:05,280 Speaker 2: on all of the things that your life costs. Your mortgage, 199 00:09:05,320 --> 00:09:08,599 Speaker 2: you know, school fees if you're having to deal with that, holidays, 200 00:09:08,679 --> 00:09:11,360 Speaker 2: grow throes, all of these kind of things, and then 201 00:09:11,360 --> 00:09:13,880 Speaker 2: you can cross off the bits and pieces that will 202 00:09:13,880 --> 00:09:17,040 Speaker 2: stop by the time you're retired. So hopefully you've paid 203 00:09:17,040 --> 00:09:19,640 Speaker 2: off your mortgage. For example, by the time you're retired. 204 00:09:19,559 --> 00:09:22,040 Speaker 1: Very much looking forward to putting a line through that line, and. 205 00:09:21,960 --> 00:09:24,840 Speaker 2: So you cross off. For a lot of people, there's 206 00:09:24,840 --> 00:09:27,280 Speaker 2: some work to do in getting the mortgage done, but 207 00:09:27,559 --> 00:09:29,760 Speaker 2: hopefully by the time you're retired, the mortgage is paid 208 00:09:29,760 --> 00:09:31,400 Speaker 2: off in some way, shape or formance. So you can 209 00:09:31,480 --> 00:09:34,600 Speaker 2: kind of cross a line through these different things and say, okay, well, 210 00:09:35,200 --> 00:09:37,000 Speaker 2: today I go to work and I earn a particular 211 00:09:37,080 --> 00:09:39,679 Speaker 2: amount it's being spent in these different areas, but by 212 00:09:39,679 --> 00:09:41,880 Speaker 2: the time I retire one, two, three, and four, I 213 00:09:41,880 --> 00:09:44,120 Speaker 2: won't need to pay for so I'm only left with 214 00:09:44,160 --> 00:09:46,440 Speaker 2: whatever's left over. And then you can work on how 215 00:09:46,520 --> 00:09:47,840 Speaker 2: much do you need to fund retirement. 216 00:09:48,520 --> 00:09:50,440 Speaker 1: But also if I think about it, that my health 217 00:09:50,480 --> 00:09:53,840 Speaker 1: costs I'm going to imagine will be higher. I'm doing 218 00:09:53,840 --> 00:09:56,000 Speaker 1: my level best, James, So I'm trying to do weight 219 00:09:56,040 --> 00:09:58,320 Speaker 1: training now three times a week. I don't care about 220 00:09:58,360 --> 00:09:59,920 Speaker 1: needing to be slim. I just want to be strong 221 00:10:00,000 --> 00:10:01,679 Speaker 1: so I can get up and downstairs and not need 222 00:10:01,720 --> 00:10:03,280 Speaker 1: to be assisted. All that sort of stuff is in 223 00:10:03,280 --> 00:10:06,040 Speaker 1: my mind now. But presumably my health costs are going 224 00:10:06,080 --> 00:10:08,280 Speaker 1: to go up, or my private health and premiums will rise. 225 00:10:08,320 --> 00:10:09,880 Speaker 1: Do you sort of is there sort of a way 226 00:10:09,920 --> 00:10:12,320 Speaker 1: where you just have to sort of factor that in 227 00:10:12,400 --> 00:10:13,800 Speaker 1: you just have a stab at it and say, okay, 228 00:10:13,840 --> 00:10:15,720 Speaker 1: well let's just put twenty or thirty percent on that, 229 00:10:15,800 --> 00:10:17,880 Speaker 1: Or how do you advise people to work out. 230 00:10:17,960 --> 00:10:19,560 Speaker 2: You're going to have some ups and downs through the 231 00:10:19,640 --> 00:10:23,679 Speaker 2: different elements that you're spending money on through retirement. So 232 00:10:24,480 --> 00:10:27,120 Speaker 2: the common way that people address this all bit as 233 00:10:27,200 --> 00:10:30,800 Speaker 2: changing as retirement lasts longer. You have an active period 234 00:10:30,840 --> 00:10:32,880 Speaker 2: of your retirement in the earlier years where you may 235 00:10:32,880 --> 00:10:34,719 Speaker 2: be traveling and you're getting out and about and you're 236 00:10:34,720 --> 00:10:37,000 Speaker 2: doing things and you're taking off those bucket list items. 237 00:10:37,480 --> 00:10:39,199 Speaker 2: Eventually you're going to get to a stage where you've 238 00:10:39,240 --> 00:10:40,920 Speaker 2: seen and done all of the big things that you 239 00:10:41,000 --> 00:10:44,800 Speaker 2: wanted to do, and that starts to slow down. Maybe 240 00:10:44,800 --> 00:10:47,040 Speaker 2: it's because you've seen all done all the things. Maybe 241 00:10:47,080 --> 00:10:49,200 Speaker 2: it's because your health starts to limit what you can do. 242 00:10:49,240 --> 00:10:51,480 Speaker 2: But at a point in time that starts to slow down, 243 00:10:52,240 --> 00:10:54,360 Speaker 2: and so you have this more active phase. You have 244 00:10:54,440 --> 00:10:56,680 Speaker 2: this period of time where you've done all the big 245 00:10:56,679 --> 00:10:58,400 Speaker 2: things that you want to do, you slow down a 246 00:10:58,400 --> 00:11:00,679 Speaker 2: little bit, and then we tend to see the period 247 00:11:00,720 --> 00:11:04,000 Speaker 2: where the health starts to rise. But you've got and 248 00:11:04,040 --> 00:11:06,000 Speaker 2: it's horrible to think about it like this, but the 249 00:11:06,040 --> 00:11:08,720 Speaker 2: activity start to slow down, but then the health costs 250 00:11:08,800 --> 00:11:11,720 Speaker 2: start to go up. So you're spending less on one 251 00:11:11,760 --> 00:11:14,040 Speaker 2: area but maybe more on another if you've got these 252 00:11:14,120 --> 00:11:16,439 Speaker 2: rising health costs as you age. 253 00:11:16,440 --> 00:11:18,960 Speaker 1: One seat, so you've got a sort of rough mudmap 254 00:11:19,000 --> 00:11:20,600 Speaker 1: of what you think you would like to be spending 255 00:11:20,640 --> 00:11:23,920 Speaker 1: to have an enjoyable retirement. So then you're sort of 256 00:11:23,920 --> 00:11:25,720 Speaker 1: looking at that, what's the next step, What do I 257 00:11:25,720 --> 00:11:27,960 Speaker 1: need to do if I suddenly go okay? That looks 258 00:11:27,960 --> 00:11:28,959 Speaker 1: like a fairly large number. 259 00:11:30,160 --> 00:11:33,240 Speaker 2: The starting point and the whole kind of Australian retirement 260 00:11:33,280 --> 00:11:36,600 Speaker 2: system and help from Center Lincon Services Australia and so forth, 261 00:11:36,720 --> 00:11:39,520 Speaker 2: is all geared towards you owning your own home. So 262 00:11:40,080 --> 00:11:41,800 Speaker 2: in order of priority, if we try and keep this 263 00:11:41,880 --> 00:11:43,720 Speaker 2: as simple as possible, you want to own your own 264 00:11:43,720 --> 00:11:46,120 Speaker 2: home or wherever that may be, and whatever that looks like, 265 00:11:46,280 --> 00:11:50,440 Speaker 2: and different people will have different aspirations there owning your 266 00:11:50,440 --> 00:11:53,239 Speaker 2: own home and then enough money to support that retirement. 267 00:11:54,240 --> 00:11:56,480 Speaker 2: The target that we like to try and encourage people 268 00:11:56,520 --> 00:11:58,920 Speaker 2: to get to as much as they possibly can. Now, 269 00:11:59,240 --> 00:12:00,880 Speaker 2: not a whole lot of people will eventually end up 270 00:12:00,920 --> 00:12:04,440 Speaker 2: getting there. Is you've got this income target, multiply that 271 00:12:04,480 --> 00:12:06,720 Speaker 2: by twenty times, call it the rule of twenty times. 272 00:12:06,760 --> 00:12:08,680 Speaker 2: So if you wanted to live off one hundred thousand 273 00:12:08,720 --> 00:12:12,040 Speaker 2: dollars a year of spending money in retirement, multip apply 274 00:12:12,120 --> 00:12:14,559 Speaker 2: that by twenty which is two million, and so you 275 00:12:14,600 --> 00:12:17,079 Speaker 2: don't want to have your house paid off and two 276 00:12:17,160 --> 00:12:20,760 Speaker 2: million dollars worth of other assets to support that retirement. 277 00:12:21,880 --> 00:12:24,400 Speaker 2: At that level, now, not a whole lot of people 278 00:12:24,440 --> 00:12:26,200 Speaker 2: get there. Certainly plenty of people do, but not a 279 00:12:26,280 --> 00:12:29,360 Speaker 2: huge portion of the population. If you get to that level, 280 00:12:29,400 --> 00:12:33,720 Speaker 2: you're at a level where it's highly unlikely you'll spend 281 00:12:33,800 --> 00:12:36,480 Speaker 2: your money through retirement. You'll mostly be just living off 282 00:12:36,520 --> 00:12:40,920 Speaker 2: the earnings of your money, and then it goes in inheritance. Now, 283 00:12:40,920 --> 00:12:44,240 Speaker 2: if you're at fifteen times or less than twenty times, 284 00:12:44,240 --> 00:12:46,400 Speaker 2: you get this kind of slowly, you get this curve 285 00:12:46,440 --> 00:12:49,280 Speaker 2: of your slowly yeating into your capital, which is fine 286 00:12:49,320 --> 00:12:52,280 Speaker 2: that that's the reality for most people in retirement, and 287 00:12:52,280 --> 00:12:54,559 Speaker 2: then eventually laid it down the track you qualify for 288 00:12:54,760 --> 00:12:56,760 Speaker 2: some age pension factor into the equation. 289 00:12:57,280 --> 00:13:00,520 Speaker 1: It is tricky, though, isn't it? Because I understand the here, 290 00:13:00,520 --> 00:13:02,400 Speaker 1: but there is an awful lot of people who are 291 00:13:03,000 --> 00:13:07,840 Speaker 1: leaving money to future generations and every person's situation is different. 292 00:13:07,920 --> 00:13:09,640 Speaker 1: But I sort of think, if you've done so much 293 00:13:09,720 --> 00:13:14,760 Speaker 1: hard work, you've really sacrificed and made decisions in your 294 00:13:14,800 --> 00:13:16,559 Speaker 1: life to build up this wealth, and then all of 295 00:13:16,600 --> 00:13:19,240 Speaker 1: a sudden, maybe you're not spending the way that you 296 00:13:19,240 --> 00:13:22,200 Speaker 1: thought you would in retirement, And I guess, I mean, look, 297 00:13:22,240 --> 00:13:24,319 Speaker 1: I look at it. My mum didn't get to retire. 298 00:13:24,400 --> 00:13:27,520 Speaker 1: She was diagnosed with terminal cancer three months out from 299 00:13:27,559 --> 00:13:32,320 Speaker 1: her retirement, and that on it iyo yo, between let's 300 00:13:32,320 --> 00:13:33,920 Speaker 1: do the good things that's paid down the mortgage and 301 00:13:33,960 --> 00:13:35,920 Speaker 1: we're going to go on a family holiday this year, 302 00:13:35,960 --> 00:13:37,880 Speaker 1: because you never know what's going to happen in retirement. 303 00:13:38,679 --> 00:13:40,959 Speaker 1: What is your advice to your clients when they're talking 304 00:13:40,960 --> 00:13:44,080 Speaker 1: to you about they want to have these goals, but 305 00:13:44,120 --> 00:13:46,640 Speaker 1: you need to sort of factor in lifestyle while you're 306 00:13:46,640 --> 00:13:47,160 Speaker 1: a bit younger. 307 00:13:47,320 --> 00:13:49,640 Speaker 2: You're absolutely right. So it's kind of one of the 308 00:13:49,720 --> 00:13:52,280 Speaker 2: questions that we ask people in the earlier stages of 309 00:13:52,320 --> 00:13:54,960 Speaker 2: getting to know them, is what is their view on 310 00:13:55,280 --> 00:13:58,520 Speaker 2: leaving an inheritance to whoever it might be. Some people 311 00:13:58,600 --> 00:14:00,320 Speaker 2: have this view that we want to try and maintain 312 00:14:00,440 --> 00:14:02,960 Speaker 2: everything and leave as much as possible to the next generation, 313 00:14:03,840 --> 00:14:06,040 Speaker 2: maybe because they want to, maybe because they need to. 314 00:14:06,080 --> 00:14:09,319 Speaker 2: You know, certain kids might have some need some extra 315 00:14:09,360 --> 00:14:11,439 Speaker 2: support for whatever reason, and so they need to leave 316 00:14:11,480 --> 00:14:14,160 Speaker 2: a lot of money behind. Most of the time, though 317 00:14:14,200 --> 00:14:16,560 Speaker 2: we actually see people saying, look, we're happy to just 318 00:14:16,960 --> 00:14:19,120 Speaker 2: kind of live off the money over time, and if 319 00:14:19,120 --> 00:14:21,240 Speaker 2: there's less than what we started with, fine, that was 320 00:14:21,280 --> 00:14:24,640 Speaker 2: the whole intent of it. So people say that in 321 00:14:24,720 --> 00:14:27,560 Speaker 2: the beginning, but the reality of working with a lot 322 00:14:27,560 --> 00:14:30,720 Speaker 2: of retiree is over quite a length of time, rightly, 323 00:14:30,800 --> 00:14:34,320 Speaker 2: so everyone's petrified of running out of money, And so 324 00:14:35,600 --> 00:14:38,240 Speaker 2: we find some people are stricter on this than others. 325 00:14:38,400 --> 00:14:41,240 Speaker 2: They try to only spend the earnings of what they've 326 00:14:41,240 --> 00:14:43,920 Speaker 2: got rather than spending the capital because they're petrified of 327 00:14:44,000 --> 00:14:46,960 Speaker 2: running out of money. And so we spend a lot 328 00:14:46,960 --> 00:14:48,960 Speaker 2: of time with these people saying, look, if you continue 329 00:14:48,960 --> 00:14:52,000 Speaker 2: on this particular trajectory, you're going to die with one 330 00:14:52,000 --> 00:14:54,160 Speaker 2: and a half million dollars in your super fund plus 331 00:14:54,160 --> 00:14:56,040 Speaker 2: the value of your house, Like, do your kids really 332 00:14:56,080 --> 00:14:59,080 Speaker 2: need that much money? What are you forging now versus 333 00:14:59,560 --> 00:15:01,480 Speaker 2: what extra would you like to do? And some people 334 00:15:01,480 --> 00:15:04,160 Speaker 2: are doing all that they want to do, and that 335 00:15:04,280 --> 00:15:08,960 Speaker 2: might mean that they're living on a relatively low retirement income. Fantastic. 336 00:15:08,960 --> 00:15:10,560 Speaker 2: It's not up to me to tell them they need 337 00:15:10,600 --> 00:15:12,200 Speaker 2: to spend a whole lot more money. If they're doing 338 00:15:12,240 --> 00:15:14,640 Speaker 2: all the things, it's my job to help them try 339 00:15:14,680 --> 00:15:17,120 Speaker 2: and identify are they holding back on things that they 340 00:15:17,120 --> 00:15:20,160 Speaker 2: would really want to do. The other part to that 341 00:15:20,360 --> 00:15:23,800 Speaker 2: is is then looking at for people that have the means. 342 00:15:24,640 --> 00:15:27,680 Speaker 2: Would your children or whoever may inherit from you in time, 343 00:15:27,840 --> 00:15:30,720 Speaker 2: would they be better off receiving some money from you now? 344 00:15:30,920 --> 00:15:33,160 Speaker 2: And then, as a consequence, a whole lot less when 345 00:15:33,200 --> 00:15:36,720 Speaker 2: you're gone, versus receiving this great big pile of money 346 00:15:36,720 --> 00:15:38,960 Speaker 2: when they're maybe sixty years old and retired themselves and 347 00:15:39,000 --> 00:15:41,160 Speaker 2: they don't really need it anymore. And so we kind 348 00:15:41,160 --> 00:15:43,880 Speaker 2: of have that conversation around when is the appropriate time 349 00:15:43,920 --> 00:15:45,560 Speaker 2: to actually start to leave this money. 350 00:15:45,880 --> 00:15:48,440 Speaker 1: It is an interesting conversation. We might pick up some 351 00:15:48,520 --> 00:15:50,440 Speaker 1: of that when we come back from this break. I 352 00:15:50,480 --> 00:15:52,960 Speaker 1: also want to have a chat to you, James, about 353 00:15:53,360 --> 00:15:55,880 Speaker 1: the common mistakes that you see. There must be a 354 00:15:55,920 --> 00:15:57,800 Speaker 1: few of them over the journey in twenty years or 355 00:15:57,840 --> 00:16:00,680 Speaker 1: so in financial advice, the common mistakes people are making 356 00:16:00,720 --> 00:16:03,000 Speaker 1: and if you could just give people one little bit 357 00:16:03,000 --> 00:16:05,200 Speaker 1: of advice on how to manage their money better. We'll 358 00:16:05,240 --> 00:16:06,840 Speaker 1: have that chat when we come back from this break. 359 00:16:14,600 --> 00:16:17,640 Speaker 1: Welcome back to the Money Puzzle. I'm your host, Julianne Sprague, 360 00:16:17,720 --> 00:16:21,160 Speaker 1: wealth editor at The Australian, filling in for James Kirby 361 00:16:21,440 --> 00:16:25,240 Speaker 1: and our guest today, Melbourne based financial advisor from First Financial, 362 00:16:25,400 --> 00:16:29,080 Speaker 1: James Wrigley, a bit of a social media star at 363 00:16:29,080 --> 00:16:31,280 Speaker 1: his pend to book it is out on October twenty nine, 364 00:16:31,320 --> 00:16:34,080 Speaker 1: called Retire Life Ready. We've been having a chat about 365 00:16:34,080 --> 00:16:35,720 Speaker 1: what you need to do to make sure you can 366 00:16:35,720 --> 00:16:38,640 Speaker 1: have the retirement that you actually want, rather than being 367 00:16:38,680 --> 00:16:41,200 Speaker 1: completely bored and wondering when it all ends. There is 368 00:16:41,240 --> 00:16:43,680 Speaker 1: a better way to do it. James, thanks very much 369 00:16:43,720 --> 00:16:46,680 Speaker 1: for the top tips. I would have thought that part 370 00:16:46,720 --> 00:16:48,960 Speaker 1: of planning for a retirement is actually just getting your 371 00:16:48,960 --> 00:16:51,480 Speaker 1: house in order and being better with your money from 372 00:16:51,560 --> 00:16:55,120 Speaker 1: the get go. You've been a financial advisor for a 373 00:16:55,200 --> 00:16:57,480 Speaker 1: while now, is there a common mistake you see and 374 00:16:57,520 --> 00:16:59,000 Speaker 1: you just want to bash your head against the wall 375 00:16:59,040 --> 00:17:00,600 Speaker 1: and just wish people would up doing it. 376 00:17:01,800 --> 00:17:05,119 Speaker 2: You're probably the one that, yeah, that I'll finish meetings 377 00:17:05,119 --> 00:17:07,000 Speaker 2: with people say oh I wish I just had done 378 00:17:07,000 --> 00:17:09,560 Speaker 2: this and done that. Is is generally people trying to 379 00:17:09,560 --> 00:17:12,320 Speaker 2: make things too complicated, Like it doesn't need to be 380 00:17:12,520 --> 00:17:15,960 Speaker 2: that hard. There's paying off your house and trying to 381 00:17:15,960 --> 00:17:17,560 Speaker 2: have as much money and other things to kind of 382 00:17:17,560 --> 00:17:20,840 Speaker 2: pay off that retirement. But people come to us and say, oh, 383 00:17:20,840 --> 00:17:22,600 Speaker 2: do I need this trust or this company, or do 384 00:17:22,640 --> 00:17:25,159 Speaker 2: I buy a fourth investment property a fifth investment property 385 00:17:25,200 --> 00:17:27,800 Speaker 2: and negative gearing, and like there's so many different things 386 00:17:27,840 --> 00:17:29,680 Speaker 2: out there when we need to just take a step 387 00:17:29,720 --> 00:17:32,399 Speaker 2: back and say, let's just look at where you're at it, 388 00:17:32,440 --> 00:17:33,919 Speaker 2: What are the things that we need to do to 389 00:17:33,960 --> 00:17:37,760 Speaker 2: help you to help you get there. On various occasions, 390 00:17:37,760 --> 00:17:40,440 Speaker 2: we've had meetings with people that in the last couple 391 00:17:40,480 --> 00:17:42,560 Speaker 2: of years of their working life they've decided to go 392 00:17:42,560 --> 00:17:44,959 Speaker 2: and buy another investment property, and so, well, how are 393 00:17:44,960 --> 00:17:47,000 Speaker 2: you ever going to pay off the debt associated with 394 00:17:47,040 --> 00:17:49,120 Speaker 2: this property when you've only got another couple of years 395 00:17:49,119 --> 00:17:52,200 Speaker 2: to work? How are you ever possibly going to afford 396 00:17:52,240 --> 00:17:54,280 Speaker 2: to pay off this property? They've bought it just because 397 00:17:54,320 --> 00:17:56,639 Speaker 2: of the negative gearing benefits to try and save some 398 00:17:56,760 --> 00:18:00,760 Speaker 2: tax without actually thinking that step further to say, how 399 00:18:00,760 --> 00:18:02,520 Speaker 2: can I retire when I have all of this debt 400 00:18:02,560 --> 00:18:05,600 Speaker 2: associated with the property? It ends up needing to be sold, 401 00:18:05,680 --> 00:18:08,200 Speaker 2: and so they got all the transaction costs to buy 402 00:18:08,280 --> 00:18:08,760 Speaker 2: and sell. 403 00:18:08,880 --> 00:18:10,840 Speaker 1: I would have thought that someone thinks, well, what tenants 404 00:18:10,880 --> 00:18:12,360 Speaker 1: and they'll pay the rent and we'll just make a 405 00:18:12,480 --> 00:18:14,720 Speaker 1: dent into it first couple of years and then we'll 406 00:18:14,760 --> 00:18:18,040 Speaker 1: be right. But you're saying that, actually, you've overextended yourself 407 00:18:18,080 --> 00:18:21,280 Speaker 1: at the wrong period of time, and now that's it, because. 408 00:18:21,080 --> 00:18:23,800 Speaker 2: You end up in this position where yet, yes, the 409 00:18:23,840 --> 00:18:26,680 Speaker 2: tenant's paying your rent and that can go towards the mortgage, 410 00:18:26,720 --> 00:18:29,280 Speaker 2: but there's all this kind of value tied up in 411 00:18:29,320 --> 00:18:32,280 Speaker 2: the property that the money's coming in for the mortgage, 412 00:18:32,280 --> 00:18:35,280 Speaker 2: but then there's nothing left over to spend. It's trying 413 00:18:35,320 --> 00:18:37,919 Speaker 2: to get people around to this mindset of when it 414 00:18:37,920 --> 00:18:40,679 Speaker 2: comes to retirement, it doesn't matter quite so much what 415 00:18:40,960 --> 00:18:43,520 Speaker 2: the value of all of these assets are that you own. 416 00:18:44,160 --> 00:18:46,280 Speaker 2: What matters more is your ability to get your hands 417 00:18:46,280 --> 00:18:49,720 Speaker 2: on some cash to spend when the fortnightly or the 418 00:18:49,720 --> 00:18:53,040 Speaker 2: monthly pay stops being dropped into your bank account. So 419 00:18:53,080 --> 00:18:54,919 Speaker 2: you might have this great, big pool of assets, but 420 00:18:54,920 --> 00:18:57,600 Speaker 2: if you've got too much debt associated with it, any 421 00:18:57,600 --> 00:18:59,960 Speaker 2: income you're generating from those investments just goes to pay 422 00:19:00,200 --> 00:19:01,960 Speaker 2: off the debt and there's nothing left over for you 423 00:19:02,000 --> 00:19:03,600 Speaker 2: to spend, and so you can't retire. 424 00:19:04,160 --> 00:19:06,359 Speaker 1: Well again, it goes to this inheritance pool too, So 425 00:19:06,400 --> 00:19:08,480 Speaker 1: then you're going to be keeping working to pay for 426 00:19:08,480 --> 00:19:10,280 Speaker 1: an asset that you don't have to have access to, 427 00:19:10,400 --> 00:19:11,560 Speaker 1: but it will go to your kids. 428 00:19:11,320 --> 00:19:13,520 Speaker 2: And your grandkids something else will get it later on. 429 00:19:14,320 --> 00:19:17,960 Speaker 1: Lucky them. Does this then feed into that idea of 430 00:19:18,240 --> 00:19:21,200 Speaker 1: you shouldn't really be making financial decisions for the tax purposes. 431 00:19:21,240 --> 00:19:23,760 Speaker 1: So if the tax benefit is your primary motivator, probably 432 00:19:23,800 --> 00:19:24,399 Speaker 1: step away. 433 00:19:25,200 --> 00:19:27,639 Speaker 2: That's it. So the tax benefit needs to be the 434 00:19:27,720 --> 00:19:31,800 Speaker 2: kind of the secondary consideration that if you're whatever investing 435 00:19:31,880 --> 00:19:33,760 Speaker 2: that you're doing, you're generally going to be doing that 436 00:19:33,800 --> 00:19:36,439 Speaker 2: with a view to try and build your assets in 437 00:19:36,440 --> 00:19:39,520 Speaker 2: one way, shape or form. And then yes, whenever you're 438 00:19:39,560 --> 00:19:41,720 Speaker 2: buying something, whatever it is that you're buying, then you 439 00:19:41,760 --> 00:19:43,800 Speaker 2: want to consider how do I own that? How do 440 00:19:43,840 --> 00:19:45,840 Speaker 2: I fund it? Is there some way that I can 441 00:19:46,160 --> 00:19:49,000 Speaker 2: optimize my tax situation here? Yes, but that shouldn't be 442 00:19:49,359 --> 00:19:51,280 Speaker 2: step one. That should be step two. It should be 443 00:19:51,600 --> 00:19:55,600 Speaker 2: I'm buying this thing for some other wealth creation reason. 444 00:19:56,480 --> 00:19:59,040 Speaker 1: Is there something you think most people should be able 445 00:19:59,080 --> 00:20:02,320 Speaker 1: to do and it would improve their financial position almost 446 00:20:02,320 --> 00:20:05,680 Speaker 1: overnight if they started to do this one thing. So 447 00:20:05,800 --> 00:20:08,120 Speaker 1: I've just thrown sort of a lot at you, But. 448 00:20:10,119 --> 00:20:12,840 Speaker 2: I think the one the one thing that we see 449 00:20:12,880 --> 00:20:15,520 Speaker 2: time and time again is potentially leaving it too late 450 00:20:15,560 --> 00:20:18,280 Speaker 2: to actually start the investing side of the equation. When 451 00:20:18,560 --> 00:20:21,399 Speaker 2: we get this question all the time about should I 452 00:20:21,400 --> 00:20:23,320 Speaker 2: pay off my mortgage fast, or should I put money 453 00:20:23,359 --> 00:20:25,360 Speaker 2: in my super fund or should I do something else 454 00:20:25,400 --> 00:20:27,160 Speaker 2: with this extra dollar I've got. Where should I put 455 00:20:27,160 --> 00:20:30,640 Speaker 2: this dollar that I've got? The maths says you should 456 00:20:30,640 --> 00:20:32,959 Speaker 2: probably put it into your superannuation. But then people are 457 00:20:32,960 --> 00:20:35,119 Speaker 2: worried about rules changing and taxes and bits. 458 00:20:35,000 --> 00:20:37,600 Speaker 1: And pieces, so you can blame them when the result 459 00:20:37,760 --> 00:20:40,360 Speaker 1: the rade going on. Now, I appreciate three million dollar 460 00:20:40,400 --> 00:20:42,080 Speaker 1: super balance seems like a lot to a lot of people, 461 00:20:42,119 --> 00:20:44,119 Speaker 1: but it won't be indexed, and everyone's thinking, well, why 462 00:20:44,160 --> 00:20:46,000 Speaker 1: would I pull more into that? Because who knows at 463 00:20:46,000 --> 00:20:48,720 Speaker 1: what point will that impact me? I understand white people. 464 00:20:48,840 --> 00:20:49,159 Speaker 1: That's it. 465 00:20:49,520 --> 00:20:52,119 Speaker 2: That's it. And so you've got this idea or what 466 00:20:52,160 --> 00:20:53,960 Speaker 2: do I do with this dollar in a mortgage or not? 467 00:20:54,880 --> 00:20:57,520 Speaker 2: And maths is one thing. Reality is a different story. 468 00:20:57,560 --> 00:21:00,239 Speaker 2: But the maths suggests that you should probably pay off 469 00:21:00,240 --> 00:21:03,119 Speaker 2: your mortgage a little bit slower and instead invest a 470 00:21:03,160 --> 00:21:05,719 Speaker 2: little bit of money in shares or property or suprawl 471 00:21:05,920 --> 00:21:09,199 Speaker 2: or whatever it might be. That the growth return and 472 00:21:09,240 --> 00:21:11,560 Speaker 2: the compounding that you get on investing that dollar is 473 00:21:11,600 --> 00:21:14,239 Speaker 2: generally better than the interest saved on the mortgage. Now 474 00:21:14,240 --> 00:21:16,360 Speaker 2: it's not all of one or all of the other, 475 00:21:16,440 --> 00:21:18,679 Speaker 2: but for most people it's a balance of both. But 476 00:21:18,720 --> 00:21:21,120 Speaker 2: we see a lot of people that have just paid 477 00:21:21,160 --> 00:21:22,720 Speaker 2: off their mortgage and done nothing else. 478 00:21:23,440 --> 00:21:29,200 Speaker 1: That used to be the gold standard advice. Pay off 479 00:21:29,240 --> 00:21:31,320 Speaker 1: your mortgage, do nothing else, throw it all at that, 480 00:21:31,359 --> 00:21:33,120 Speaker 1: paid off as fast and as quick as you can, 481 00:21:33,640 --> 00:21:36,280 Speaker 1: and then do the rest. Has that now shifted because 482 00:21:36,280 --> 00:21:40,480 Speaker 1: property prices have galloped away. And if you spend all 483 00:21:40,520 --> 00:21:42,840 Speaker 1: of your time and money and effort paying down that mortgage, 484 00:21:42,880 --> 00:21:44,600 Speaker 1: but you'll pay it off by the time you retire, 485 00:21:44,600 --> 00:21:46,840 Speaker 1: but they won't. You won't, like you said, there won't 486 00:21:46,840 --> 00:21:49,000 Speaker 1: be time in market for the other investments. 487 00:21:48,720 --> 00:21:50,600 Speaker 2: Won't be much else. Yeah, And so then people are 488 00:21:50,680 --> 00:21:52,960 Speaker 2: left with this decision. All of this money's tied up 489 00:21:53,000 --> 00:21:54,920 Speaker 2: in my house. I haven't done much of anything else 490 00:21:54,960 --> 00:21:58,000 Speaker 2: in the way of investing. Maybe I could have afforded to, 491 00:21:58,040 --> 00:21:59,879 Speaker 2: Maybe I couldn't have afforded to. Who knows. It depends 492 00:21:59,880 --> 00:22:02,159 Speaker 2: on someone's situation. And then they're kind of faced with 493 00:22:02,240 --> 00:22:05,160 Speaker 2: this downsizing scenario. Just say, okay, well, do I now 494 00:22:05,240 --> 00:22:07,440 Speaker 2: need to sell my expensive house that I've paid off 495 00:22:07,440 --> 00:22:09,880 Speaker 2: over the last twenty five years and it's grown exponentially 496 00:22:09,920 --> 00:22:13,240 Speaker 2: in value to then move into something cheaper to release 497 00:22:13,280 --> 00:22:17,040 Speaker 2: some money, and that can work. We kind of rather 498 00:22:17,119 --> 00:22:19,399 Speaker 2: see people doing a bit of both, and depending on 499 00:22:19,440 --> 00:22:22,400 Speaker 2: an individual, it might be more mortgage and less investing, 500 00:22:22,440 --> 00:22:24,439 Speaker 2: and others it might be more investing and less and 501 00:22:24,440 --> 00:22:25,639 Speaker 2: more gadgets about getting the. 502 00:22:25,640 --> 00:22:28,199 Speaker 1: Balance right and what about the investing piece? Should it 503 00:22:28,280 --> 00:22:30,600 Speaker 1: just be go try something? It doesn't. You don't have 504 00:22:30,600 --> 00:22:32,840 Speaker 1: to sit there and have this huge pool of cash 505 00:22:32,880 --> 00:22:35,200 Speaker 1: sitting there. You could. It's pretty easy to get into 506 00:22:35,200 --> 00:22:37,480 Speaker 1: some different investments these days. You know, maybe it's five 507 00:22:37,520 --> 00:22:39,200 Speaker 1: hundred bucks for an eat. I'm not sure what you 508 00:22:39,240 --> 00:22:41,360 Speaker 1: would recommend to people. But does it just get started? 509 00:22:41,840 --> 00:22:43,760 Speaker 2: It is actually just get started. Whatever it is that 510 00:22:43,800 --> 00:22:45,600 Speaker 2: you do, just get started. It's so easy to just 511 00:22:45,680 --> 00:22:46,879 Speaker 2: kind of put it off and put it off and 512 00:22:46,920 --> 00:22:48,879 Speaker 2: put it off. And as you said, you know, if 513 00:22:48,920 --> 00:22:51,200 Speaker 2: a share market investing in particular in some way, shape 514 00:22:51,280 --> 00:22:53,959 Speaker 2: or form, there's so many means out there to actually 515 00:22:53,960 --> 00:22:56,719 Speaker 2: start that with a really low amount of money. And 516 00:22:56,760 --> 00:22:59,760 Speaker 2: then it's kind of it's the habits that you're getting into. 517 00:23:00,119 --> 00:23:01,800 Speaker 2: Are you starting to put some money in, You're like, 518 00:23:01,840 --> 00:23:03,639 Speaker 2: oh wow, look it's going up or it's going and 519 00:23:03,720 --> 00:23:05,560 Speaker 2: it might go down from time to time. And then 520 00:23:06,000 --> 00:23:07,520 Speaker 2: as you get a pay rise, maybe you add a 521 00:23:07,520 --> 00:23:09,040 Speaker 2: little bit of extra into it when you get a 522 00:23:09,080 --> 00:23:11,360 Speaker 2: pay rise, and so you just kind of start slowly. 523 00:23:11,400 --> 00:23:13,399 Speaker 2: Obviously with all of these things, the earlier that you 524 00:23:13,400 --> 00:23:16,840 Speaker 2: can start, the better. But it's putting a few dollars 525 00:23:16,920 --> 00:23:19,320 Speaker 2: in learning about it, feeling and touching it, see how 526 00:23:19,359 --> 00:23:21,600 Speaker 2: it goes. And then with confidence you then start to 527 00:23:21,640 --> 00:23:23,600 Speaker 2: add more, and you add more, and you add more, 528 00:23:24,359 --> 00:23:26,240 Speaker 2: and then if you do it for long enough, it 529 00:23:26,280 --> 00:23:27,600 Speaker 2: works out well for you over time. 530 00:23:27,720 --> 00:23:30,560 Speaker 1: And hopefully you can write out the downturns, because they 531 00:23:30,600 --> 00:23:32,480 Speaker 1: do happen, don't they. James, I feel like we're in 532 00:23:32,480 --> 00:23:35,560 Speaker 1: a miraculous time. Markets are booming, property markets are going up. 533 00:23:35,560 --> 00:23:38,240 Speaker 1: But I tell you what, as the financial listen me 534 00:23:38,320 --> 00:23:40,280 Speaker 1: is just IM just sitting here watching it, thinking it's 535 00:23:40,320 --> 00:23:43,119 Speaker 1: a matter of time. That's a matter of time, and. 536 00:23:43,240 --> 00:23:45,320 Speaker 2: Look at it happens that that's the thing. From time 537 00:23:45,320 --> 00:23:48,199 Speaker 2: to time you have these downturns. If you're in the 538 00:23:48,240 --> 00:23:50,240 Speaker 2: building up stage. As I say to a number of 539 00:23:50,240 --> 00:23:52,280 Speaker 2: people that I talk to, the crazy thing is if 540 00:23:52,280 --> 00:23:55,000 Speaker 2: you're still working and earning a salary, and you've got 541 00:23:55,000 --> 00:23:56,919 Speaker 2: plenty of years of that working life ahead of you. 542 00:23:57,600 --> 00:23:59,399 Speaker 2: As crazy as this might sound, the best thing that 543 00:23:59,440 --> 00:24:01,720 Speaker 2: can actually open to you is there is a downturn 544 00:24:01,760 --> 00:24:03,760 Speaker 2: in the property market or the share market or whatever 545 00:24:03,800 --> 00:24:06,800 Speaker 2: it is, and gives you that opportunity to buy whatever 546 00:24:06,840 --> 00:24:09,880 Speaker 2: you're buying at lower prices than what you could then 547 00:24:09,960 --> 00:24:13,439 Speaker 2: to get the recovery heading to retirement. That's the ideal 548 00:24:13,480 --> 00:24:17,200 Speaker 2: scenario now those but the right time. Yeah, if you're 549 00:24:17,200 --> 00:24:19,879 Speaker 2: retired at the other end, living off your money, then 550 00:24:19,920 --> 00:24:22,440 Speaker 2: you clearly don't want it to go down, do you. 551 00:24:22,040 --> 00:24:24,400 Speaker 1: No, exactly, you justify. It's the same with interest rates 552 00:24:24,480 --> 00:24:26,840 Speaker 1: when we have stories at the Australian on interest rates. 553 00:24:26,880 --> 00:24:28,760 Speaker 1: It depends which side of the fence you're on. If 554 00:24:28,760 --> 00:24:32,040 Speaker 1: you're relatively new into the property market, have a very 555 00:24:32,080 --> 00:24:35,679 Speaker 1: significant mortgage, there's so much relief. There's those who have 556 00:24:35,680 --> 00:24:39,440 Speaker 1: paid off their properties and they're living on income from 557 00:24:39,560 --> 00:24:41,200 Speaker 1: savings accounts and their rates are going down. 558 00:24:41,240 --> 00:24:41,920 Speaker 2: So it's just. 559 00:24:43,560 --> 00:24:46,240 Speaker 1: Depends which start of the coin you're on. We'll get 560 00:24:46,240 --> 00:24:48,520 Speaker 1: to some questions from some of the listeners in just 561 00:24:48,560 --> 00:24:49,800 Speaker 1: a set, but I did want to talk to you 562 00:24:49,800 --> 00:24:52,520 Speaker 1: about the social media profile that you've built up. Did 563 00:24:52,560 --> 00:24:55,399 Speaker 1: you have any idea that you could build this massive 564 00:24:55,400 --> 00:24:58,320 Speaker 1: social media profile when you started it? How did you 565 00:24:58,359 --> 00:24:59,920 Speaker 1: get into it and what did it involve? 566 00:25:00,480 --> 00:25:02,840 Speaker 2: Not at all? So I just started. It was years 567 00:25:02,840 --> 00:25:05,040 Speaker 2: and years back now. I started recording some videos and 568 00:25:05,040 --> 00:25:08,880 Speaker 2: putting it up on LinkedIn. I've been actively posting other 569 00:25:08,920 --> 00:25:11,160 Speaker 2: things on LinkedIn as it means to try and find 570 00:25:11,160 --> 00:25:14,200 Speaker 2: new clients in the financial advice business that I work in. 571 00:25:14,880 --> 00:25:17,520 Speaker 2: When I was posting on LinkedIn, they ended up sending 572 00:25:17,520 --> 00:25:20,320 Speaker 2: me a message saying, hey, we're going to try video 573 00:25:20,520 --> 00:25:22,720 Speaker 2: on LinkedIn. Up until that point, you couldn't put a 574 00:25:22,800 --> 00:25:26,880 Speaker 2: video up. We noticed you've been pretty actively posting written content. 575 00:25:26,960 --> 00:25:29,600 Speaker 2: Would your mind being like a tester of the video thing, 576 00:25:29,680 --> 00:25:31,480 Speaker 2: I said, all right, sure, I'll give it a go. 577 00:25:31,560 --> 00:25:34,000 Speaker 2: And at that point I hadn't recorded a video whatsoever, 578 00:25:34,760 --> 00:25:36,399 Speaker 2: and so I said, yeah, I'd give it a go, 579 00:25:36,760 --> 00:25:39,600 Speaker 2: as it means kind of I stood out a little bit. Anyway, 580 00:25:39,600 --> 00:25:41,159 Speaker 2: that years and years went on. Of that, not a 581 00:25:41,160 --> 00:25:43,280 Speaker 2: whole lot happened. But then maybe too. 582 00:25:43,720 --> 00:25:46,159 Speaker 1: Video So you're talking about you just get your your phone. 583 00:25:46,400 --> 00:25:48,199 Speaker 1: You're just as simple as that. You're just talking to 584 00:25:48,240 --> 00:25:52,119 Speaker 1: your phone about simple bits of financial advice up onto LinkedIn. 585 00:25:52,480 --> 00:25:55,280 Speaker 2: Yeah, yeah, like a selfie type video. And I look 586 00:25:55,320 --> 00:25:57,560 Speaker 2: back if I scrolled back far enough on my LinkedIn 587 00:25:57,680 --> 00:25:59,280 Speaker 2: is where as I said it, where for as the 588 00:25:59,359 --> 00:26:01,040 Speaker 2: video is a whole horrible I look at it like, 589 00:26:01,080 --> 00:26:03,639 Speaker 2: oh my god, this is so bad, but you know, 590 00:26:03,720 --> 00:26:06,439 Speaker 2: you just do it, and like anything is just repeat, repeat, repeat, 591 00:26:06,560 --> 00:26:09,159 Speaker 2: And now I'm really comfortable doing it. And then just 592 00:26:09,320 --> 00:26:12,159 Speaker 2: in the last couple of years, the way Instagram and 593 00:26:12,200 --> 00:26:15,640 Speaker 2: Facebook and TikTok and the way some of these platforms 594 00:26:15,720 --> 00:26:20,760 Speaker 2: work has changed dramatically in my favor, I guess is 595 00:26:20,800 --> 00:26:23,000 Speaker 2: probably the way to put it. These platforms are now 596 00:26:23,080 --> 00:26:27,240 Speaker 2: work on an interests basis, not how many followers did 597 00:26:27,240 --> 00:26:29,600 Speaker 2: you have. So when I opened my Instagram account that 598 00:26:29,640 --> 00:26:31,800 Speaker 2: I posted my videos on, I had no followers. But 599 00:26:31,840 --> 00:26:35,760 Speaker 2: because people became interested in these kind of little finance 600 00:26:35,800 --> 00:26:39,520 Speaker 2: tips that I was posting, that started to gather momentum. 601 00:26:39,600 --> 00:26:41,880 Speaker 2: People watch it, they share it, and it grows, and 602 00:26:42,680 --> 00:26:44,080 Speaker 2: you know, here we are today and there's a lot 603 00:26:44,080 --> 00:26:44,720 Speaker 2: of followers there. 604 00:26:44,760 --> 00:26:47,960 Speaker 1: It's grown quite a lot. So how much time do 605 00:26:47,960 --> 00:26:50,399 Speaker 1: you have to put into this now? So if you manage, 606 00:26:50,400 --> 00:26:51,439 Speaker 1: have you found a way that if you've got an 607 00:26:51,440 --> 00:26:52,439 Speaker 1: AI clone that's. 608 00:26:53,400 --> 00:26:56,480 Speaker 2: Doing it, So I have to I do it all myself. 609 00:26:56,680 --> 00:26:59,200 Speaker 2: I just record some videos, but I found what I've 610 00:26:59,240 --> 00:27:02,639 Speaker 2: learned over time is the more raw and kind of 611 00:27:02,760 --> 00:27:05,800 Speaker 2: just I don't know, spur of the moment type video 612 00:27:05,880 --> 00:27:08,359 Speaker 2: that I post the better. So I used to worry 613 00:27:08,359 --> 00:27:10,960 Speaker 2: about it being perfect and record and edit it down 614 00:27:11,080 --> 00:27:12,800 Speaker 2: and you know, trying like I was a newsreader on 615 00:27:12,880 --> 00:27:15,120 Speaker 2: Channel seven or something like that. But it doesn't matter 616 00:27:16,359 --> 00:27:18,959 Speaker 2: me just walking to the gym or I don't know, 617 00:27:19,000 --> 00:27:21,400 Speaker 2: sitting here in the room where I'm recording with you. 618 00:27:21,960 --> 00:27:23,520 Speaker 2: If I got some idea in my head, I just 619 00:27:23,520 --> 00:27:25,119 Speaker 2: record a video O for a minute and a HALFNM, 620 00:27:25,119 --> 00:27:27,639 Speaker 2: post it and forget about it. And that has just 621 00:27:27,760 --> 00:27:30,040 Speaker 2: worked so much better than trying to make it perfect. 622 00:27:30,800 --> 00:27:31,760 Speaker 2: The ums and the ass. 623 00:27:31,600 --> 00:27:34,199 Speaker 1: Are just normal also, probably because it's just you as 624 00:27:34,240 --> 00:27:36,920 Speaker 1: opposed to being the Channel seven or Channel nine version 625 00:27:36,920 --> 00:27:37,720 Speaker 1: of James Wrigley. 626 00:27:37,800 --> 00:27:37,919 Speaker 2: Right. 627 00:27:37,960 --> 00:27:40,040 Speaker 1: I mean, if you want, you could try a newsreader 628 00:27:40,119 --> 00:27:43,600 Speaker 1: voice for us now if you can affect that, give 629 00:27:43,640 --> 00:27:46,240 Speaker 1: it a night ago. Okay, been there, you've done that. 630 00:27:46,760 --> 00:27:49,920 Speaker 1: We do have some listeners with some questions giving you 631 00:27:49,960 --> 00:27:52,159 Speaker 1: a financial advisor. I thought i'd put them to you. 632 00:27:52,720 --> 00:27:56,080 Speaker 1: We'll get the answers when we come back. But there 633 00:27:56,160 --> 00:27:59,280 Speaker 1: is one of our listeners who is just pondering what 634 00:27:59,320 --> 00:28:02,600 Speaker 1: the point of an actual advisor actually is if they 635 00:28:02,600 --> 00:28:05,880 Speaker 1: can't really actively outperform the market, and they can't really 636 00:28:05,920 --> 00:28:07,920 Speaker 1: time the market, So what's the whole point. I'll get 637 00:28:07,960 --> 00:28:09,520 Speaker 1: you to respond to that when we come back. We've 638 00:28:09,520 --> 00:28:18,000 Speaker 1: got another one to get to too. Well. Welcome back 639 00:28:18,000 --> 00:28:20,800 Speaker 1: to the Money Puzzle. I'm your host, Julianne Sprague, joined 640 00:28:20,800 --> 00:28:24,879 Speaker 1: by financial advisor James Wrigley, and we've been talking about 641 00:28:25,160 --> 00:28:28,439 Speaker 1: how to get retirement ready. It is for James's new book. 642 00:28:28,560 --> 00:28:33,280 Speaker 1: His first book is out on October twenty nine, Retire 643 00:28:33,440 --> 00:28:36,760 Speaker 1: Life Ready. It is called We've gone through some top steps. 644 00:28:38,120 --> 00:28:40,479 Speaker 1: How did enjoy wat Chat James? And now we're up 645 00:28:40,480 --> 00:28:43,080 Speaker 1: to the nitty gritty part of the money Puzzle. We 646 00:28:43,120 --> 00:28:46,240 Speaker 1: have listeners who love listening to, usually James Kirby, and 647 00:28:46,240 --> 00:28:48,160 Speaker 1: he will be back next week. We'll have a few 648 00:28:48,240 --> 00:28:50,280 Speaker 1: questions fired in and I thought, James, I've just put 649 00:28:50,320 --> 00:28:52,560 Speaker 1: this one to you from Andrew. He says, I have 650 00:28:52,600 --> 00:28:55,560 Speaker 1: a question about the value of financial advisors in relation 651 00:28:55,720 --> 00:28:59,000 Speaker 1: to investment performance. So I appreciate there ore aspects of 652 00:29:00,240 --> 00:29:03,680 Speaker 1: up trust structures and all these other parts of financial 653 00:29:03,680 --> 00:29:07,880 Speaker 1: advisors but Andrew says it's been observed on the Money 654 00:29:07,920 --> 00:29:10,840 Speaker 1: Puzzle that active stock picking does not usually beat the 655 00:29:10,840 --> 00:29:13,200 Speaker 1: market over time, and that timing the market is not 656 00:29:13,240 --> 00:29:16,360 Speaker 1: a winning strategy. So therefore, what exactly does a financial 657 00:29:16,360 --> 00:29:19,280 Speaker 1: advisor do? Why would I pay them? Andrew wants to know, 658 00:29:19,320 --> 00:29:20,880 Speaker 1: what do you reckon, James? Here you are in defense 659 00:29:20,880 --> 00:29:21,600 Speaker 1: of your industry. 660 00:29:21,880 --> 00:29:26,840 Speaker 2: Yeah, yeah, defense. So that kind of the investment selection 661 00:29:27,000 --> 00:29:29,320 Speaker 2: and the timing of the placing of the investments and 662 00:29:29,360 --> 00:29:32,680 Speaker 2: so forth is generally part of the process that people 663 00:29:32,680 --> 00:29:36,480 Speaker 2: will go through. But if you're going to a financial 664 00:29:36,520 --> 00:29:40,200 Speaker 2: advisor expecting them to have some type of crystal ball 665 00:29:40,280 --> 00:29:42,920 Speaker 2: that's going to help them, you know, identify better investments 666 00:29:42,960 --> 00:29:45,520 Speaker 2: than someone else and the perfect timing and they when 667 00:29:45,600 --> 00:29:47,440 Speaker 2: to buy and when to sell, that's not it. You 668 00:29:47,440 --> 00:29:50,880 Speaker 2: would go to a financial advisor to help you kind 669 00:29:50,880 --> 00:29:53,280 Speaker 2: of work through some type of complication that you might 670 00:29:53,320 --> 00:29:55,880 Speaker 2: have in your life. More most of the time it's 671 00:29:55,920 --> 00:29:58,920 Speaker 2: around some type of transition, like we've been talking about retirement, 672 00:29:59,040 --> 00:30:01,880 Speaker 2: and so there's this work around. Okay, you look like 673 00:30:01,920 --> 00:30:04,600 Speaker 2: this today, you aspire to get to this particular point 674 00:30:04,640 --> 00:30:07,680 Speaker 2: in the future. How do we connect the dots what's 675 00:30:07,720 --> 00:30:09,840 Speaker 2: the path for you to follow, and what are the 676 00:30:09,880 --> 00:30:12,600 Speaker 2: steps for you to do. Now, part of that may 677 00:30:12,720 --> 00:30:16,160 Speaker 2: very well be about investing. Maybe it's changing the investing 678 00:30:16,200 --> 00:30:18,640 Speaker 2: that someone's doing, Maybe it's getting them to start investing 679 00:30:18,640 --> 00:30:21,080 Speaker 2: in the first place. And then you'd go on to 680 00:30:21,200 --> 00:30:26,200 Speaker 2: conversations around what's the individual's appetite for risk and return 681 00:30:26,280 --> 00:30:28,200 Speaker 2: and reward and all of these kind of things, and 682 00:30:28,240 --> 00:30:30,720 Speaker 2: then you start to look at the types of investments 683 00:30:30,720 --> 00:30:33,640 Speaker 2: that might be appropriate for that client. So it's not 684 00:30:33,680 --> 00:30:36,760 Speaker 2: necessarily about stock picking. And I would never claim to 685 00:30:36,800 --> 00:30:38,640 Speaker 2: say I'm going to pick the best stocks and get 686 00:30:38,640 --> 00:30:41,520 Speaker 2: you the best returns. If someone's coming to us or 687 00:30:41,560 --> 00:30:45,160 Speaker 2: any other financial advisor and they're suggesting that, you probably 688 00:30:45,200 --> 00:30:47,240 Speaker 2: want to go and find someone else to be talking to. 689 00:30:47,760 --> 00:30:49,600 Speaker 1: Now, are there some red flags that people should be 690 00:30:49,640 --> 00:30:51,800 Speaker 1: aware of when it comes to financial advisors. They're not 691 00:30:51,840 --> 00:30:53,640 Speaker 1: all created ecal. I mean, obviously they are sure, come 692 00:30:53,680 --> 00:30:54,560 Speaker 1: see you, James, but. 693 00:30:56,800 --> 00:31:01,120 Speaker 2: So look red flags is a difficult one that promises 694 00:31:01,120 --> 00:31:04,880 Speaker 2: of returns. If someone's leading the conversation with you around 695 00:31:05,000 --> 00:31:08,520 Speaker 2: promises of returns, we'll help you get better returns than 696 00:31:08,640 --> 00:31:11,440 Speaker 2: your current super fund or whatever else that you're doing. 697 00:31:12,000 --> 00:31:13,880 Speaker 2: That's a bit of a red flag, so no one 698 00:31:13,920 --> 00:31:17,480 Speaker 2: can guarantee returns. And if they're leading with that, as 699 00:31:17,480 --> 00:31:19,720 Speaker 2: I said, I'd probably wanting to go and talk to. 700 00:31:19,680 --> 00:31:22,040 Speaker 1: Someone else, maybe just go and seek a second opinion. 701 00:31:22,160 --> 00:31:24,080 Speaker 1: Way are at it? Okay? Fair enough? 702 00:31:24,480 --> 00:31:24,800 Speaker 2: All right? 703 00:31:24,800 --> 00:31:29,880 Speaker 1: Now Paul has written in Now it's a little bit convolated, 704 00:31:29,920 --> 00:31:31,680 Speaker 1: but I think we'll get we'll get to this. So 705 00:31:31,720 --> 00:31:34,960 Speaker 1: he says, I'm interested to know if I contributed my 706 00:31:35,400 --> 00:31:39,960 Speaker 1: concessional contribution, so the thirty thousand dollars concessional contribution to 707 00:31:40,000 --> 00:31:42,520 Speaker 1: my super on the first day of the new financial year, 708 00:31:43,640 --> 00:31:46,680 Speaker 1: and then submitted the notice of intent on the last 709 00:31:46,720 --> 00:31:49,440 Speaker 1: day of the financial year, so that's thirtieth of June. 710 00:31:49,960 --> 00:31:52,720 Speaker 1: Would the super fund only deduct the fifteen percent tax 711 00:31:52,760 --> 00:31:54,880 Speaker 1: on the thirteenth of June, or would I be earning 712 00:31:54,960 --> 00:31:58,040 Speaker 1: the growth on the full thirty thousand rather than in 713 00:31:58,080 --> 00:32:00,840 Speaker 1: Paul says twenty five thousand, five hundred after tax. So 714 00:32:00,960 --> 00:32:03,080 Speaker 1: you're saying it's not substantial over twelve months, but could 715 00:32:03,080 --> 00:32:06,040 Speaker 1: mean five hundred dollars extra than if I submitted the 716 00:32:06,120 --> 00:32:09,760 Speaker 1: notice of intent on the first of July. So I 717 00:32:09,800 --> 00:32:11,400 Speaker 1: think he's saying he's going to chuck in an extra 718 00:32:11,440 --> 00:32:12,960 Speaker 1: five hundred dollars. But what happened? 719 00:32:14,400 --> 00:32:18,000 Speaker 2: Yeah, I know what he's talking about. Yep, yep, Yeah. 720 00:32:18,360 --> 00:32:22,360 Speaker 2: So he's talking about the concessional superannuation contribution that you 721 00:32:22,360 --> 00:32:26,320 Speaker 2: can make, which is tax deductible. Now, assuming the person 722 00:32:26,360 --> 00:32:29,560 Speaker 2: asking the question isn't in paid employment and then they're 723 00:32:29,560 --> 00:32:33,160 Speaker 2: collecting contributions from their employer, if you could do like 724 00:32:33,240 --> 00:32:36,160 Speaker 2: he's asked in the question, putting your thirty thousand dollars 725 00:32:36,160 --> 00:32:39,960 Speaker 2: at some point throughout the financial year, Now, the question 726 00:32:40,040 --> 00:32:42,000 Speaker 2: kind of gets to some of the nitty gritty of 727 00:32:42,040 --> 00:32:44,400 Speaker 2: how the super funds actually operate in this space. So 728 00:32:44,440 --> 00:32:47,920 Speaker 2: when you're putting your thirty thousand dollars contribution, most super 729 00:32:47,920 --> 00:32:50,080 Speaker 2: funds will have a certain B pay code or something 730 00:32:50,160 --> 00:32:52,800 Speaker 2: like that to notify them that they call it a 731 00:32:52,840 --> 00:32:56,560 Speaker 2: particular type of contribution. Even though you notify them through 732 00:32:56,600 --> 00:32:58,680 Speaker 2: a particular B pay code or whatever it might be, 733 00:32:59,160 --> 00:33:01,400 Speaker 2: the super funds you'll count that as what's called a 734 00:33:01,480 --> 00:33:06,120 Speaker 2: non concessional contribution, so one they don't deduct tax from. 735 00:33:06,560 --> 00:33:10,360 Speaker 2: It's not until you lodge this form that then the 736 00:33:10,400 --> 00:33:12,959 Speaker 2: super fund will then kind of change that overcall it 737 00:33:13,000 --> 00:33:16,680 Speaker 2: the concession or contribution and therefore deduct the tax. So, 738 00:33:16,760 --> 00:33:18,959 Speaker 2: as you suggested, if you put in the contribution at 739 00:33:18,960 --> 00:33:21,680 Speaker 2: the beginning of the financial year and then don't lodge 740 00:33:21,680 --> 00:33:23,600 Speaker 2: this notice until the end of the financial year, they 741 00:33:23,640 --> 00:33:27,360 Speaker 2: won't deduct the tax. But they're they won't deduct a 742 00:33:27,440 --> 00:33:29,240 Speaker 2: tax until the end of the financial year. So it's 743 00:33:29,320 --> 00:33:31,240 Speaker 2: right that you could have more money in your superfund 744 00:33:31,320 --> 00:33:34,400 Speaker 2: invested in whatever it's in, potentially earning more for the year, 745 00:33:34,480 --> 00:33:37,560 Speaker 2: rather than having some tax deducted that sits in a 746 00:33:37,600 --> 00:33:39,440 Speaker 2: reserve with the superfund that doesn't even go to the 747 00:33:39,440 --> 00:33:40,200 Speaker 2: ATO Australia. 748 00:33:40,800 --> 00:33:43,160 Speaker 1: That seems quite clever. But you just have to make 749 00:33:43,200 --> 00:33:45,200 Speaker 1: sure you do the paperwork in time, right, So you 750 00:33:45,200 --> 00:33:47,280 Speaker 1: put you you put the concessional and you put your 751 00:33:47,280 --> 00:33:49,040 Speaker 1: thirty k in at the beginning of the financial year, 752 00:33:49,040 --> 00:33:51,160 Speaker 1: and you've just got to make sure sort of. I 753 00:33:51,160 --> 00:33:53,040 Speaker 1: would say not to June thirty. I'd say maybe the 754 00:33:53,080 --> 00:33:55,320 Speaker 1: middle of June to get the paperwork because the super 755 00:33:55,320 --> 00:33:56,719 Speaker 1: Fund's cut it off a little bit earlier. 756 00:33:57,440 --> 00:34:00,240 Speaker 2: Yeah, so the paperwork. It's interesting that the time of 757 00:34:00,280 --> 00:34:02,280 Speaker 2: that paperwork you don't have to lodge. You have to 758 00:34:02,320 --> 00:34:06,480 Speaker 2: lodge that notice with your superfund the earlier of before 759 00:34:06,520 --> 00:34:09,520 Speaker 2: you lodge your tax return for the particular year, okay, 760 00:34:10,080 --> 00:34:13,120 Speaker 2: or the end of the following financial year. So you 761 00:34:13,120 --> 00:34:14,759 Speaker 2: can leave it until after the end of the year, 762 00:34:14,800 --> 00:34:17,279 Speaker 2: but don't forget it. I want to add something else 763 00:34:17,360 --> 00:34:20,319 Speaker 2: to don't forget to do it. The other missing piece 764 00:34:20,320 --> 00:34:23,160 Speaker 2: of the puzzle here, though, is when you lodge your 765 00:34:23,200 --> 00:34:26,400 Speaker 2: tax return, you also have to claim the tax deduction 766 00:34:26,520 --> 00:34:29,880 Speaker 2: in your tax return. Over the years that I've been 767 00:34:29,920 --> 00:34:32,200 Speaker 2: doing this, there's plenty of people I've come across where 768 00:34:32,200 --> 00:34:35,719 Speaker 2: they've made the super contribution. They've lodged the notice with 769 00:34:35,800 --> 00:34:38,600 Speaker 2: the super fund, so the superfund has it recorded properly. 770 00:34:39,640 --> 00:34:43,319 Speaker 2: Even then, the superfund still reports the contribution to the 771 00:34:43,320 --> 00:34:47,160 Speaker 2: ATO is what's called a non concessional contribution. It's not 772 00:34:47,320 --> 00:34:50,640 Speaker 2: until you've claimed the deduction in your tax return that 773 00:34:50,920 --> 00:34:53,000 Speaker 2: the whole thing all marries up and it all gets 774 00:34:53,360 --> 00:34:58,279 Speaker 2: treated properly, so you can This happens from time to time. 775 00:34:58,320 --> 00:35:01,200 Speaker 2: You can fall into a position where you forget to 776 00:35:01,680 --> 00:35:04,400 Speaker 2: claim it in your tax return, and so then the 777 00:35:04,400 --> 00:35:08,000 Speaker 2: superfund has taken tax out, but it was never a 778 00:35:08,080 --> 00:35:10,560 Speaker 2: you never claim the tax deduction forward and then can 779 00:35:10,640 --> 00:35:13,440 Speaker 2: end up with excess contributions. It's a whole mess. You 780 00:35:13,480 --> 00:35:15,560 Speaker 2: need to remember to claim the tax deduction at in 781 00:35:15,640 --> 00:35:16,640 Speaker 2: your tax return too. 782 00:35:17,360 --> 00:35:21,640 Speaker 1: Okay, very good advice. I'm glad I got that. Not 783 00:35:21,719 --> 00:35:23,920 Speaker 1: that I'm in that particular friend of mine right now, 784 00:35:23,960 --> 00:35:26,040 Speaker 1: but it has made me aware that tax returns I 785 00:35:26,080 --> 00:35:29,600 Speaker 1: should probably get one done, right. Yeah. Yeah, Thank you 786 00:35:29,719 --> 00:35:31,799 Speaker 1: very much for joining us on the Money's Puzzle, and 787 00:35:31,840 --> 00:35:34,319 Speaker 1: good luck with the launch of the book out on 788 00:35:34,440 --> 00:35:40,080 Speaker 1: October twenty nine. Retire Life ready, presuming you can get 789 00:35:40,080 --> 00:35:43,239 Speaker 1: it from all good bookstores and digitally. 790 00:35:45,440 --> 00:35:47,000 Speaker 2: So you can pre order it from a whole lot 791 00:35:47,000 --> 00:35:49,840 Speaker 2: of online retailers, and then the physical books from the 792 00:35:49,840 --> 00:35:52,799 Speaker 2: twenty ninth. There'll be the ebook version on the kind 793 00:35:52,840 --> 00:35:55,719 Speaker 2: of the kindle readers and all those kind of things, 794 00:35:55,760 --> 00:35:58,080 Speaker 2: and there's also an audiobook too, so all of the different. 795 00:35:57,840 --> 00:36:00,600 Speaker 1: Formats and I'm looking forward to it. Wriggly, thank you 796 00:36:00,640 --> 00:36:03,680 Speaker 1: very much, Thank you for having me, James Riggly. They're 797 00:36:03,760 --> 00:36:06,719 Speaker 1: joining us now, James Kirby. He will be back in 798 00:36:07,040 --> 00:36:09,800 Speaker 1: the chair next week hosting the Money Puzzle. Thank you 799 00:36:09,960 --> 00:36:12,600 Speaker 1: very much for letting me step in while he's been away. 800 00:36:13,080 --> 00:36:15,879 Speaker 1: If you want more financial insights, you can head over 801 00:36:15,920 --> 00:36:20,359 Speaker 1: to the Australian dot com dot au slash wealth. We've 802 00:36:20,400 --> 00:36:22,879 Speaker 1: got plenty of money tips sitting there for you. Thanks 803 00:36:22,880 --> 00:36:23,440 Speaker 1: for joining me.