1 00:00:10,200 --> 00:00:13,039 Speaker 1: Hello, and welcome to The Australian's Money Puzzle podcast. I'm 2 00:00:13,119 --> 00:00:17,640 Speaker 1: James Kirby. Welcome aboard everybody. We've been concentrating a lot 3 00:00:17,880 --> 00:00:21,480 Speaker 1: on the share market and there is just now perhaps 4 00:00:21,960 --> 00:00:25,720 Speaker 1: something of a brief calm at these last few days 5 00:00:25,800 --> 00:00:29,920 Speaker 1: on US markets. Maybe this is a chance for everyone 6 00:00:30,080 --> 00:00:34,760 Speaker 1: listening to take stock think about if they're properly set, 7 00:00:35,320 --> 00:00:37,760 Speaker 1: are they fully up to date on the threats and 8 00:00:37,840 --> 00:00:40,320 Speaker 1: the opportunities of what's been going on, which we've been 9 00:00:40,360 --> 00:00:42,199 Speaker 1: covering fairly intensity, And we will get back to it 10 00:00:42,200 --> 00:00:45,239 Speaker 1: pretty quickly. But meanwhile there's a lot of news to 11 00:00:45,280 --> 00:00:49,159 Speaker 1: catch up with for anyone interested in property, in the 12 00:00:49,280 --> 00:00:53,400 Speaker 1: value of their home, in investment property of any type, 13 00:00:53,520 --> 00:00:55,960 Speaker 1: or helping other people perhaps to get into the market, 14 00:00:56,120 --> 00:00:58,720 Speaker 1: because the federal election which we are in the thick of, 15 00:00:59,200 --> 00:01:01,800 Speaker 1: has suddenly become we'd seen in terms of handouts at 16 00:01:01,880 --> 00:01:05,399 Speaker 1: least all about home buyers first home buyers, and we 17 00:01:05,480 --> 00:01:08,399 Speaker 1: will give you a quick catch up on what's happening 18 00:01:09,160 --> 00:01:12,400 Speaker 1: there at the start of the show. Also, I want 19 00:01:12,440 --> 00:01:16,959 Speaker 1: to bring up the point and discuss the concept historical 20 00:01:17,200 --> 00:01:20,400 Speaker 1: concept really well proven that when there is a share 21 00:01:20,400 --> 00:01:24,800 Speaker 1: market shakeout, there is a shift towards property by investors, 22 00:01:24,840 --> 00:01:27,840 Speaker 1: and the evidence is there that investors are coming back 23 00:01:27,840 --> 00:01:29,959 Speaker 1: into the market. But we will talk and we will 24 00:01:30,200 --> 00:01:33,240 Speaker 1: basically interrogate that as well. My guest today is Stuart 25 00:01:33,240 --> 00:01:36,280 Speaker 1: Wems of the pro Solution Private Client Group. 26 00:01:36,319 --> 00:01:39,640 Speaker 2: How are you, Stuart, I'm really well, James plenty going on, 27 00:01:39,680 --> 00:01:40,640 Speaker 2: so thanks for having me on. 28 00:01:41,000 --> 00:01:45,160 Speaker 1: Isn't it just for the broader audience that theme that 29 00:01:45,520 --> 00:01:49,360 Speaker 1: people move back into property when there is a share 30 00:01:49,400 --> 00:01:53,560 Speaker 1: market shakeout? We saw it after COVID's that was beyond now, 31 00:01:53,640 --> 00:01:56,400 Speaker 1: that was extraordinary, thirty percent phone the stop market and 32 00:01:56,440 --> 00:01:59,000 Speaker 1: people went straight into property and there was double digital 33 00:01:59,000 --> 00:02:02,440 Speaker 1: lifts across the board. Off the back of that. We've 34 00:02:02,520 --> 00:02:08,919 Speaker 1: seen even before this share market drop. And remember that 35 00:02:08,960 --> 00:02:11,360 Speaker 1: at one point the US share market and in what 36 00:02:11,480 --> 00:02:14,280 Speaker 1: might be the frustrating we don't know what has happened 37 00:02:14,280 --> 00:02:16,919 Speaker 1: off Tarrafs was nearly down to twenty percent from the top. 38 00:02:17,480 --> 00:02:21,200 Speaker 1: But we have seen investors coming back into property in 39 00:02:21,240 --> 00:02:25,000 Speaker 1: any event before this. Some people say, oh, they couldn't 40 00:02:25,040 --> 00:02:28,040 Speaker 1: possibly you know, properties, so dear, the yields are so low, 41 00:02:29,200 --> 00:02:29,840 Speaker 1: what do you think? 42 00:02:31,240 --> 00:02:34,600 Speaker 2: It definitely has an impact volatility, because that's One of 43 00:02:34,639 --> 00:02:37,440 Speaker 2: the things with property is that has much lower volatility, 44 00:02:37,440 --> 00:02:40,079 Speaker 2: about half the rate of volatility of the share market, 45 00:02:40,440 --> 00:02:43,280 Speaker 2: and I guess we have a sense of that anyway, 46 00:02:43,440 --> 00:02:46,520 Speaker 2: a property feels secure. It's not traded every day, so 47 00:02:46,560 --> 00:02:49,799 Speaker 2: you don't get the same sort of price fluctuations, and 48 00:02:50,160 --> 00:02:52,880 Speaker 2: that makes investors feel a little bit more comfortable. So 49 00:02:53,040 --> 00:02:55,680 Speaker 2: it's always a good reminder for property investors that shure 50 00:02:55,760 --> 00:02:58,840 Speaker 2: the share market is volatile, and that's normal, that should 51 00:02:58,880 --> 00:03:02,200 Speaker 2: be expected. This nothing's going to change there. The returns 52 00:03:02,200 --> 00:03:03,919 Speaker 2: still in the long run are good, but it is 53 00:03:03,960 --> 00:03:07,000 Speaker 2: more volatile. But when we get a reminder of that, 54 00:03:07,160 --> 00:03:10,160 Speaker 2: of course, it tends to push people in the property direction, 55 00:03:10,960 --> 00:03:14,840 Speaker 2: and then future expected returns another consideration. The share markets 56 00:03:14,880 --> 00:03:17,360 Speaker 2: had a great run over last well, the US market 57 00:03:17,360 --> 00:03:21,119 Speaker 2: over the last thirteen years, and just generally in markets 58 00:03:21,120 --> 00:03:23,799 Speaker 2: maybe over the last ten. But if we don't expect 59 00:03:23,840 --> 00:03:26,160 Speaker 2: the next ten to be as good as the last decade, 60 00:03:26,520 --> 00:03:29,800 Speaker 2: well then maybe investor start looking to other asset classes. 61 00:03:30,680 --> 00:03:34,840 Speaker 2: And then finally, the backdrop of falling interest rates or 62 00:03:34,880 --> 00:03:39,240 Speaker 2: potentially falling interest rates, which is exactly what happened during COVID, 63 00:03:39,320 --> 00:03:43,360 Speaker 2: of course, and which really stimulated property. But that has 64 00:03:43,400 --> 00:03:46,280 Speaker 2: a big impact on demand for lending and then of 65 00:03:46,320 --> 00:03:49,520 Speaker 2: course more money flowing into the property market. So it's 66 00:03:49,520 --> 00:03:52,560 Speaker 2: almost a perfect storm really for the property market in 67 00:03:52,600 --> 00:03:53,480 Speaker 2: a positive sense. 68 00:03:54,000 --> 00:03:56,960 Speaker 1: Perfect conditions you mean, yeah, correct, that's what I meant. 69 00:03:57,040 --> 00:03:57,680 Speaker 2: Yet wrong word. 70 00:03:58,360 --> 00:04:00,920 Speaker 1: I wouldn't discree with you at all. The banks would 71 00:04:00,960 --> 00:04:04,960 Speaker 1: seem to be ready to lend, the yields are stable, 72 00:04:06,000 --> 00:04:11,120 Speaker 1: the prices were expected to go let's say five percent 73 00:04:11,240 --> 00:04:15,200 Speaker 1: or so. Nation might in any event if they did that, 74 00:04:15,280 --> 00:04:17,800 Speaker 1: with their yields of two and three percent being realistic 75 00:04:17,839 --> 00:04:21,680 Speaker 1: for people from many people, that would be persuasive. I'm 76 00:04:21,720 --> 00:04:24,440 Speaker 1: really talking about metropolitan properties there there are better years, 77 00:04:24,480 --> 00:04:28,200 Speaker 1: of course, and every property is local, so there's that 78 00:04:28,240 --> 00:04:31,640 Speaker 1: to consider. And the rates some of the banks starting 79 00:04:31,640 --> 00:04:35,000 Speaker 1: to move already. I see on the fixed side they 80 00:04:35,000 --> 00:04:37,400 Speaker 1: are dropping, and of course they're dropping their cash rates 81 00:04:37,440 --> 00:04:40,320 Speaker 1: as well, ever so quietly, but they're all doing it systematically. 82 00:04:40,760 --> 00:04:43,280 Speaker 1: So we have that. So you have that, you have 83 00:04:43,480 --> 00:04:48,560 Speaker 1: good conditions. You might think, on paper, what might be 84 00:04:48,640 --> 00:04:51,600 Speaker 1: the bare case here? What might stop property lifting? 85 00:04:53,360 --> 00:04:57,640 Speaker 2: Global recession and therefore an economic slow down in Australia 86 00:04:57,720 --> 00:05:00,960 Speaker 2: as well. I mean that could have an impact particularly 87 00:05:00,960 --> 00:05:03,760 Speaker 2: if we then see rising unemployment. Rising unemployment is not 88 00:05:03,800 --> 00:05:07,039 Speaker 2: good for the property market, of course, so that could 89 00:05:07,120 --> 00:05:10,160 Speaker 2: be a potential downside. And I know there's been a 90 00:05:10,200 --> 00:05:13,400 Speaker 2: bunch of economists called the probability of a recession in 91 00:05:13,480 --> 00:05:17,320 Speaker 2: the US sixty seventy percent or something like that. But 92 00:05:17,480 --> 00:05:19,560 Speaker 2: it's just retrick, isn't it. No one really knows. 93 00:05:19,839 --> 00:05:22,480 Speaker 1: I saw her gold that Sachs literally moves the last 94 00:05:22,480 --> 00:05:25,599 Speaker 1: few days. They move their probability of recession from just 95 00:05:25,680 --> 00:05:29,760 Speaker 1: over fifty to just under fifty. It's really borderline, but 96 00:05:29,800 --> 00:05:31,320 Speaker 1: it's obviously a borderline risk. 97 00:05:32,160 --> 00:05:34,640 Speaker 2: Yeah it is. And I think look, Australia is somewhat 98 00:05:34,839 --> 00:05:37,839 Speaker 2: not completely insulated, of course to a global slowdown, not 99 00:05:37,920 --> 00:05:40,360 Speaker 2: by any stretch of the imagination. But Australia's in a 100 00:05:40,400 --> 00:05:45,040 Speaker 2: pretty good position economically. So I think that's a potential downside, 101 00:05:45,080 --> 00:05:48,039 Speaker 2: but I don't think it's a real material risk that 102 00:05:48,080 --> 00:05:50,720 Speaker 2: I'd be thinking about today. It's a possibility, but I 103 00:05:50,720 --> 00:05:51,640 Speaker 2: don't think it's likely. 104 00:05:51,960 --> 00:05:54,120 Speaker 1: So you heard it here. For US folks, the conditions 105 00:05:54,120 --> 00:05:57,800 Speaker 1: aren't ideal for a probably what you might call it 106 00:05:57,839 --> 00:06:04,359 Speaker 1: better than expected return from residential property this year calendar 107 00:06:04,440 --> 00:06:08,239 Speaker 1: twenty twenty five. Certainly, I certainly think that is the case. 108 00:06:08,720 --> 00:06:10,520 Speaker 1: Or property as local as I say so, you'll probably 109 00:06:10,560 --> 00:06:12,599 Speaker 1: find that the numbers will be better, say in Victoria 110 00:06:12,680 --> 00:06:15,520 Speaker 1: than Perth, where Perth has been flying for so long 111 00:06:15,760 --> 00:06:19,080 Speaker 1: and Victoria has been so subdued for so long. One 112 00:06:19,120 --> 00:06:21,560 Speaker 1: other thing, just on that sort of big picture of 113 00:06:21,600 --> 00:06:24,119 Speaker 1: view for everybody. We were talking about first home buyers. 114 00:06:24,120 --> 00:06:25,919 Speaker 1: So there is now so many grants. I actually have 115 00:06:25,960 --> 00:06:27,640 Speaker 1: a list. I have a list of all the different 116 00:06:27,680 --> 00:06:29,680 Speaker 1: grants and I try to keep up, and now there 117 00:06:29,680 --> 00:06:32,520 Speaker 1: are two that sort of lock everything else to the sides. Really, 118 00:06:32,960 --> 00:06:36,320 Speaker 1: and we might just explain to listeners. The Labor alp 119 00:06:36,480 --> 00:06:42,520 Speaker 1: the government, their big ticket first home buyer package was 120 00:06:42,520 --> 00:06:45,599 Speaker 1: announced virtually on the same day as Peter Dutton. Now 121 00:06:45,800 --> 00:06:48,160 Speaker 1: Labor already had a shared Equity plan which we've had 122 00:06:48,200 --> 00:06:50,440 Speaker 1: a look at, that's going to be pushed to the sidelines. 123 00:06:50,520 --> 00:06:53,200 Speaker 1: I think for the simple reason that the First Home Guarantee, 124 00:06:53,200 --> 00:06:55,920 Speaker 1: which was already the most popular scheme of the country 125 00:06:55,920 --> 00:07:00,279 Speaker 1: whereby you can buy a property for five percent, that 126 00:07:00,440 --> 00:07:05,040 Speaker 1: used to be a small, smallish, restricted, totally regulated program. 127 00:07:05,120 --> 00:07:08,800 Speaker 1: It now goes universal. Basically anyone in Australia buys a 128 00:07:08,839 --> 00:07:10,840 Speaker 1: house for the first time, can do it a five 129 00:07:10,880 --> 00:07:13,880 Speaker 1: percent now, Stuart, I think that means everyone in Australia 130 00:07:14,000 --> 00:07:17,520 Speaker 1: from now on, assuming they get re elected, would be 131 00:07:17,560 --> 00:07:20,680 Speaker 1: on a five percent posit unless they happen to have 132 00:07:20,720 --> 00:07:22,520 Speaker 1: a rich mom and dad or something or there around 133 00:07:22,520 --> 00:07:25,480 Speaker 1: five hundred a year or something. So what does it 134 00:07:25,480 --> 00:07:28,400 Speaker 1: mean for the wider market if the first home buyer 135 00:07:28,560 --> 00:07:33,280 Speaker 1: market moves to a standard where most people have only 136 00:07:33,280 --> 00:07:34,360 Speaker 1: a five percent deposit? 137 00:07:34,760 --> 00:07:40,120 Speaker 2: Firstly from a housing affordability perspective, making houses more affordable 138 00:07:40,160 --> 00:07:44,280 Speaker 2: for first home buyers, I would say both sides of politics, 139 00:07:44,320 --> 00:07:49,840 Speaker 2: their policies are moronic, stupid, dumb, ineffective. I don't know 140 00:07:50,000 --> 00:07:54,200 Speaker 2: what other words I can strive it. Okay, So it's 141 00:07:54,200 --> 00:07:56,480 Speaker 2: not going to do anything really, it's not really going 142 00:07:56,520 --> 00:08:00,480 Speaker 2: to help. It's going to be inflationary for prices. And 143 00:08:00,520 --> 00:08:02,400 Speaker 2: I think the only thing, the only people it's going 144 00:08:02,440 --> 00:08:05,640 Speaker 2: to serve people that already own property. And we're seen 145 00:08:05,680 --> 00:08:07,840 Speaker 2: at time and time again with these sorts of policies. 146 00:08:07,880 --> 00:08:11,040 Speaker 2: So unfortunately they need to be looking at the supply side, 147 00:08:11,080 --> 00:08:13,920 Speaker 2: not to demand side. But if we look at first 148 00:08:13,920 --> 00:08:17,680 Speaker 2: home buyers deposities tends to be their element that restricts 149 00:08:17,680 --> 00:08:19,880 Speaker 2: them in terms of their capacity to be able to 150 00:08:20,440 --> 00:08:23,880 Speaker 2: afford to pay more or spend more on a property, 151 00:08:24,000 --> 00:08:26,720 Speaker 2: because obviously you've got with borrowing capacity. There's two elements. 152 00:08:26,720 --> 00:08:29,840 Speaker 2: There's serviceability, which is really about your income and expenses, 153 00:08:30,320 --> 00:08:33,160 Speaker 2: and then security, which is can you do you have 154 00:08:33,320 --> 00:08:35,360 Speaker 2: enough money to secure the loan? Do you have enough 155 00:08:35,360 --> 00:08:38,120 Speaker 2: assets to secure the loan? And I find first time 156 00:08:38,160 --> 00:08:42,679 Speaker 2: buyers tend to be weak on security but stronger on serviceability. 157 00:08:42,720 --> 00:08:45,559 Speaker 2: And if you look at the default rates in Australia, 158 00:08:46,080 --> 00:08:49,640 Speaker 2: they're very low and even claims on mortgage insurance. So 159 00:08:49,679 --> 00:08:52,280 Speaker 2: when people do actually borrow more than eighty percent and 160 00:08:52,320 --> 00:08:55,720 Speaker 2: they have to sell that property because they're in financial strife, 161 00:08:55,760 --> 00:08:58,439 Speaker 2: the chances of making a loss are pretty low. So 162 00:08:59,400 --> 00:09:02,679 Speaker 2: I like this game. I think it's good in terms 163 00:09:02,720 --> 00:09:06,240 Speaker 2: of really helping first time buyers get into the market because, 164 00:09:06,280 --> 00:09:08,880 Speaker 2: as I said, that saving that deposit, whether it's a 165 00:09:08,920 --> 00:09:11,880 Speaker 2: twenty percent deposit or even something smaller than that, and 166 00:09:11,920 --> 00:09:15,000 Speaker 2: then having to pay mortgage insurance, which costs about three 167 00:09:15,160 --> 00:09:19,679 Speaker 2: or four percent of a loan, really does hamper housing affordability. 168 00:09:19,760 --> 00:09:22,600 Speaker 1: Importantly, folks, if you haven't read the detail level. What's 169 00:09:22,600 --> 00:09:27,880 Speaker 1: really interesting, but this ALP offer is that it's five percent, 170 00:09:27,920 --> 00:09:29,880 Speaker 1: and even buying a house for the first time can 171 00:09:29,920 --> 00:09:33,120 Speaker 1: buy that house at five percent, and it can be 172 00:09:33,200 --> 00:09:36,200 Speaker 1: old house or a new house. That's so important from 173 00:09:36,200 --> 00:09:38,520 Speaker 1: a macro perspective. That means forget it. It's not even 174 00:09:38,559 --> 00:09:42,000 Speaker 1: attempt at getting more people or more supply into the market, 175 00:09:42,120 --> 00:09:44,560 Speaker 1: but it's sure as how opens it up because people 176 00:09:44,600 --> 00:09:46,680 Speaker 1: will say, oh, I can buy any house I like 177 00:09:46,840 --> 00:09:49,480 Speaker 1: for five percent. So that's the ALP offera. I just 178 00:09:49,480 --> 00:09:51,000 Speaker 1: want to try to whizz through this. That's to give 179 00:09:51,040 --> 00:09:54,479 Speaker 1: away from the ALP coalition to be fair, is considerably 180 00:09:54,480 --> 00:09:59,360 Speaker 1: more targeted and whatever else. It isn't allowed on existing properties. 181 00:09:59,400 --> 00:10:02,800 Speaker 1: It is strictly on new properties, isn't it. And basically 182 00:10:02,800 --> 00:10:08,920 Speaker 1: the first time buyer can slam their interest expense as 183 00:10:08,960 --> 00:10:11,160 Speaker 1: a tax deduction. Isn't that it up to twelve hundred 184 00:10:11,200 --> 00:10:15,000 Speaker 1: dollars per annum for five years in a rule, and 185 00:10:15,240 --> 00:10:17,600 Speaker 1: they get it the treatment like many other people get 186 00:10:17,600 --> 00:10:20,800 Speaker 1: our negative gearing in that they actually can get a 187 00:10:20,920 --> 00:10:24,040 Speaker 1: tax break on their home, which is quite a new thing. 188 00:10:24,280 --> 00:10:26,599 Speaker 1: What do you think of that policy that was Stutton's 189 00:10:26,720 --> 00:10:27,920 Speaker 1: offering the weekend. 190 00:10:28,520 --> 00:10:31,280 Speaker 2: I mean, it's good that it's limited to new build 191 00:10:31,440 --> 00:10:34,960 Speaker 2: houses only new build properties dwellings, I should say, only 192 00:10:34,960 --> 00:10:39,840 Speaker 2: because it will hopefully increase supply, and particularly for developers 193 00:10:39,880 --> 00:10:43,079 Speaker 2: that trying to build apartments post COVID with the cost 194 00:10:43,120 --> 00:10:46,080 Speaker 2: of constructing those apartments and then therefore the need to 195 00:10:46,200 --> 00:10:48,920 Speaker 2: charge more because it just costs them more. Of course, 196 00:10:49,360 --> 00:10:53,040 Speaker 2: that will help affordability from that perspective, but as I said, 197 00:10:53,080 --> 00:10:55,960 Speaker 2: first time buyers tend to struggle on the deposit the 198 00:10:56,040 --> 00:10:59,480 Speaker 2: security side, rather than the serviceability side, so it certainly 199 00:10:59,480 --> 00:11:02,360 Speaker 2: helps us serve stability, but I'm not really sure that's 200 00:11:02,400 --> 00:11:04,760 Speaker 2: for them getting into the market. 201 00:11:04,360 --> 00:11:07,120 Speaker 1: The people is actually getting to the heart of it, 202 00:11:07,160 --> 00:11:08,120 Speaker 1: which is the deposit. 203 00:11:09,480 --> 00:11:11,760 Speaker 2: Yeah, it is, but it's broad based, right as you 204 00:11:11,960 --> 00:11:15,000 Speaker 2: just said it's and we're spoken in these podcast on 205 00:11:15,040 --> 00:11:17,360 Speaker 2: many occasions, James over the last couple of years about 206 00:11:17,400 --> 00:11:21,559 Speaker 2: apartments versus houses, and they've started to catch up gues apartments, 207 00:11:21,840 --> 00:11:24,840 Speaker 2: but we've said the gap between house prices and apartment 208 00:11:24,880 --> 00:11:29,679 Speaker 2: prices are pretty wide, especially in Melbourne. Well, the ALP 209 00:11:29,840 --> 00:11:32,000 Speaker 2: policy will help that, won't it. You should see a 210 00:11:32,080 --> 00:11:34,840 Speaker 2: resurgence I think in the apartment market because that's really 211 00:11:34,880 --> 00:11:38,800 Speaker 2: where the more affordable dwellings, that's where you can start. 212 00:11:39,040 --> 00:11:42,120 Speaker 1: Very interesting Okay, yeah, take that on board, folks. It's 213 00:11:42,240 --> 00:11:47,400 Speaker 1: very interesting times in property. Everything that we've talked about 214 00:11:47,720 --> 00:11:52,920 Speaker 1: is about the potential of the potential to stimulate the market. Basically, 215 00:11:53,120 --> 00:11:55,240 Speaker 1: whatever else you think about the market, that is what 216 00:11:55,720 --> 00:11:58,360 Speaker 1: these issues are throwing money at for us to on buyers, 217 00:11:58,360 --> 00:12:00,840 Speaker 1: which allows them to borrow more, which allows them to 218 00:12:00,840 --> 00:12:04,920 Speaker 1: pay more. And similarly, the psycle suggests repeatedly that people 219 00:12:04,960 --> 00:12:07,760 Speaker 1: move towards property if they get scared in the share market, 220 00:12:07,920 --> 00:12:10,720 Speaker 1: and there's plenty to be scared about at the moment. Okay, short, 221 00:12:10,760 --> 00:12:25,560 Speaker 1: break back in a moment. Hello, and welcome back to 222 00:12:25,559 --> 00:12:28,800 Speaker 1: The Australian's Money Puzzled podcast. I'm James Kirby. I'm talking 223 00:12:28,800 --> 00:12:32,720 Speaker 1: to Stuart Wems pro Solution Private Clients Group, who regularly 224 00:12:32,760 --> 00:12:36,439 Speaker 1: writes a course on property and wider issues for The 225 00:12:36,640 --> 00:12:42,000 Speaker 1: Australian and is qualified on a variety of different qualifications 226 00:12:42,160 --> 00:12:45,240 Speaker 1: to talk to us in this area. Now, Stewart, you 227 00:12:45,360 --> 00:12:49,160 Speaker 1: wanted to talk to me and to our listeners about 228 00:12:50,760 --> 00:12:54,680 Speaker 1: what the tax office is up to at the moment. 229 00:12:55,080 --> 00:12:57,440 Speaker 1: In relation to property that they should know about that 230 00:12:57,520 --> 00:12:59,960 Speaker 1: isn't necessarily advertised or written about. 231 00:13:00,600 --> 00:13:04,720 Speaker 2: Yet that's right, they're on the warpath. James. We've had 232 00:13:05,200 --> 00:13:10,160 Speaker 2: more audits of clients tax returns for obviously been lodging 233 00:13:10,240 --> 00:13:14,200 Speaker 2: for the twenty four financial year over the last few months, 234 00:13:14,200 --> 00:13:17,080 Speaker 2: and we've had over the last two decades, so there's 235 00:13:17,360 --> 00:13:20,120 Speaker 2: certainly more activity there. And we saw in the budget 236 00:13:20,280 --> 00:13:23,840 Speaker 2: that there was an allocation of seventy five million towards 237 00:13:23,880 --> 00:13:27,439 Speaker 2: a personal income tax compliance program, so they're obviously throwing 238 00:13:27,480 --> 00:13:31,319 Speaker 2: more resources at it. But the challenge for taxpayers is 239 00:13:31,360 --> 00:13:34,559 Speaker 2: that the ATO doesn't really need a lot more resources 240 00:13:34,600 --> 00:13:37,440 Speaker 2: because they're getting data feeds from everywhere. They're getting data 241 00:13:37,440 --> 00:13:40,320 Speaker 2: feeds from the banks, from the titles office, so they 242 00:13:40,320 --> 00:13:43,319 Speaker 2: know when you buy and sell, from rental bond authorities 243 00:13:43,320 --> 00:13:45,120 Speaker 2: so they know when you're going to rent out of property, 244 00:13:45,720 --> 00:13:50,160 Speaker 2: and then lately they've been getting data even going back 245 00:13:50,200 --> 00:13:54,480 Speaker 2: to twenty eighteen from property management software, so they'll know 246 00:13:54,679 --> 00:13:57,880 Speaker 2: what sort of income and expenses you've been paying as well, 247 00:13:57,960 --> 00:14:00,920 Speaker 2: and they can use all that data data match and 248 00:14:01,040 --> 00:14:04,200 Speaker 2: find what they would regard as higher risk taxpayers, so 249 00:14:04,960 --> 00:14:08,120 Speaker 2: you know where there's discrepancies from what they might think 250 00:14:08,240 --> 00:14:10,320 Speaker 2: is the normal, and then send you out a letter 251 00:14:10,400 --> 00:14:13,880 Speaker 2: and say please explain. And of course it's a that 252 00:14:14,040 --> 00:14:16,800 Speaker 2: the burden of proof rests on the taxpayers, so that 253 00:14:16,880 --> 00:14:20,480 Speaker 2: ATO doesn't have to prove that the deduction is wrong 254 00:14:20,600 --> 00:14:23,160 Speaker 2: or the income is wrong. It's you You've got to 255 00:14:23,200 --> 00:14:23,680 Speaker 2: prove it. 256 00:14:23,440 --> 00:14:27,880 Speaker 1: It's a tough arrangement. Yeah, absolutely, And what would be 257 00:14:28,080 --> 00:14:32,720 Speaker 1: the for listeners? What would be the areas in which 258 00:14:32,840 --> 00:14:35,960 Speaker 1: they are phishing? Do you think? 259 00:14:36,280 --> 00:14:39,840 Speaker 2: Yep? They're tacking two main areas, repairs and maintenance and 260 00:14:39,960 --> 00:14:42,600 Speaker 2: interest deductions there tend to be the sort of two 261 00:14:42,680 --> 00:14:46,000 Speaker 2: largest if you like. And with repairs and maintenance, they're 262 00:14:46,040 --> 00:14:49,760 Speaker 2: trying to delineate between what is a genuine repair, so 263 00:14:49,800 --> 00:14:53,040 Speaker 2: it's just returning it to its original condition when you 264 00:14:53,080 --> 00:14:56,480 Speaker 2: bought the property, and what is actually an improvement. And 265 00:14:56,480 --> 00:14:59,120 Speaker 2: we had a case the other day where a client 266 00:14:59,400 --> 00:15:03,320 Speaker 2: changed switchbox, an electrical switchbox and the property and on 267 00:15:03,440 --> 00:15:08,880 Speaker 2: the invoice electrician wrote that the previous wiring didn't comply 268 00:15:09,040 --> 00:15:13,239 Speaker 2: with an outdated code, but it was a relatively new switchbox. 269 00:15:13,280 --> 00:15:16,080 Speaker 2: But anyway, and so the ATO, because that was under 270 00:15:16,120 --> 00:15:18,240 Speaker 2: an order, the ATO said well, the whole expense then 271 00:15:18,400 --> 00:15:22,040 Speaker 2: is capital. It's not a it's not a repair, which 272 00:15:22,440 --> 00:15:23,880 Speaker 2: clearly it was a repair most of it. 273 00:15:24,400 --> 00:15:26,760 Speaker 1: We thought it was definitively the mentenance. If it was 274 00:15:26,880 --> 00:15:28,880 Speaker 1: you had to do it, you weren't going to do 275 00:15:28,920 --> 00:15:29,560 Speaker 1: it anyway. 276 00:15:29,760 --> 00:15:32,680 Speaker 2: Yeah, yeah, okay, So they're pretty aggressive there. So it's 277 00:15:32,680 --> 00:15:35,920 Speaker 2: about a record keeping make sure that you review the 278 00:15:35,920 --> 00:15:38,000 Speaker 2: invoices that you're getting and there's not going to be 279 00:15:38,040 --> 00:15:40,920 Speaker 2: any room for the ATO to argue that it is 280 00:15:40,960 --> 00:15:42,680 Speaker 2: actually an improvement to the property. 281 00:15:42,960 --> 00:15:45,360 Speaker 1: The description on the invoice is very important. 282 00:15:45,400 --> 00:15:47,600 Speaker 2: Very important. Yeah, yes, that's the thing that they're going 283 00:15:47,640 --> 00:15:50,440 Speaker 2: to look for. And I would expect because of data 284 00:15:50,480 --> 00:15:55,800 Speaker 2: matching AI technology, I would expect taxpayers to experience these 285 00:15:55,800 --> 00:15:59,600 Speaker 2: type of ordits more often, particularly as property investors with 286 00:15:59,720 --> 00:16:02,600 Speaker 2: rise interest rates. The cost of negative gearing to the 287 00:16:02,640 --> 00:16:05,600 Speaker 2: ATO in terms of the tax break is a rising 288 00:16:05,680 --> 00:16:08,320 Speaker 2: cost of course something they're going to look at. And 289 00:16:08,360 --> 00:16:11,640 Speaker 2: with respect to interest, it's about making sure that there's 290 00:16:11,640 --> 00:16:15,560 Speaker 2: a direct connection between the interest that you incurred and 291 00:16:15,880 --> 00:16:19,680 Speaker 2: the asset that you're holding. So the key thing here 292 00:16:19,880 --> 00:16:23,440 Speaker 2: is being very careful about making sure there's a clear 293 00:16:23,480 --> 00:16:27,200 Speaker 2: audit trail between a new loan and a new asset, 294 00:16:27,680 --> 00:16:31,320 Speaker 2: and I would say that investors absolutely must split out 295 00:16:31,400 --> 00:16:35,840 Speaker 2: loans so that the debt just relates to that individual asset, 296 00:16:35,920 --> 00:16:37,680 Speaker 2: and you can even if you have multiple loans for 297 00:16:37,720 --> 00:16:41,600 Speaker 2: one asset. That's fine, but don't mix purposes. Certainly, don't 298 00:16:41,640 --> 00:16:45,800 Speaker 2: mix private and investment purposes. But even don't mix purposes. 299 00:16:45,840 --> 00:16:48,280 Speaker 2: Like you've got an investment loan, you use some for 300 00:16:48,320 --> 00:16:50,520 Speaker 2: a deposit for an investment property, and then some to 301 00:16:50,600 --> 00:16:53,280 Speaker 2: invest in the share market, for instance, you want to 302 00:16:53,280 --> 00:16:55,680 Speaker 2: split those two loans out, which is relatively simple, and 303 00:16:55,760 --> 00:16:57,880 Speaker 2: your mortgage broke or banker can do that for you, 304 00:16:58,360 --> 00:17:00,400 Speaker 2: but you definitely want to make sure there's a very 305 00:17:00,480 --> 00:17:04,760 Speaker 2: clear trail. And then the other two situations where people 306 00:17:04,760 --> 00:17:07,320 Speaker 2: get into trouble is where they use redraw. So if 307 00:17:07,359 --> 00:17:09,560 Speaker 2: they've repaid a loan and then they take money out again, 308 00:17:09,720 --> 00:17:13,640 Speaker 2: be very careful about doing that. And then second, secondly, 309 00:17:13,640 --> 00:17:15,679 Speaker 2: if you do a refinance during the year, and they 310 00:17:15,720 --> 00:17:18,000 Speaker 2: will know that you've done a refinance during the year 311 00:17:18,000 --> 00:17:20,600 Speaker 2: because I'll get that data. If you end up changing 312 00:17:20,680 --> 00:17:23,480 Speaker 2: loan amounts and loan balances and restructuring, just make sure 313 00:17:23,480 --> 00:17:27,119 Speaker 2: you've got good records surrounding that to demonstrate that the 314 00:17:27,160 --> 00:17:31,760 Speaker 2: loan purpose hasn't changed and it relates to certain investments, 315 00:17:31,760 --> 00:17:35,320 Speaker 2: but interest for investors, and it's our largest tax deduction, 316 00:17:35,840 --> 00:17:38,119 Speaker 2: and so it's absolutely one that you shouldn't put at 317 00:17:38,200 --> 00:17:41,760 Speaker 2: risk and only take advice from a registered tax agent too. 318 00:17:41,800 --> 00:17:44,480 Speaker 2: By the way, James, I've heard some terrible stories from 319 00:17:44,520 --> 00:17:47,760 Speaker 2: clients getting advice from a well meaning bank or or 320 00:17:47,880 --> 00:17:50,320 Speaker 2: friend to say, oh, look, just structure a loan this way. 321 00:17:50,800 --> 00:17:55,160 Speaker 2: Do this, it'll maximize your tax outcomes. But it's unfortunately 322 00:17:55,560 --> 00:17:59,800 Speaker 2: in some situations completely wrong when actually harms the tax 323 00:17:59,800 --> 00:18:02,159 Speaker 2: payer rather than helps them. So make sure if you're 324 00:18:02,160 --> 00:18:04,720 Speaker 2: going to do anything, check it with a tax agent. 325 00:18:04,840 --> 00:18:08,239 Speaker 1: So keeping those lines clean, folks. Some people, despite their 326 00:18:08,240 --> 00:18:11,720 Speaker 1: best efforts entirely earnest things can just someone will send 327 00:18:11,760 --> 00:18:13,720 Speaker 1: something into the wrong account or whatever. So just keep 328 00:18:13,760 --> 00:18:16,520 Speaker 1: those things clean, as Stuart says. And the key one 329 00:18:16,600 --> 00:18:18,760 Speaker 1: is interest, which as we've had an investment property, your 330 00:18:18,800 --> 00:18:21,360 Speaker 1: interest costs are three four times what all the other 331 00:18:21,400 --> 00:18:26,880 Speaker 1: costs are often on a property. So really good information there. 332 00:18:27,200 --> 00:18:30,160 Speaker 1: Keep it in mind or your property investors out there, 333 00:18:30,240 --> 00:18:34,520 Speaker 1: particularly if you're thinking of reassessing the market. Now that 334 00:18:34,560 --> 00:18:37,560 Speaker 1: we have the conditions which we outlead at the start 335 00:18:37,800 --> 00:18:38,600 Speaker 1: of the show. 336 00:18:39,080 --> 00:18:41,520 Speaker 2: And use an offset, James like, that's one way to 337 00:18:41,560 --> 00:18:44,159 Speaker 2: protect the tax deductible nature of a debt and not 338 00:18:44,240 --> 00:18:47,600 Speaker 2: change its original nature. So if you do have spare 339 00:18:47,640 --> 00:18:50,800 Speaker 2: cash and you want to reduce debt instead of paying 340 00:18:50,840 --> 00:18:54,440 Speaker 2: down the loan, attach an offset account and then put 341 00:18:54,440 --> 00:18:56,560 Speaker 2: it in the offset account. That way, you can always 342 00:18:56,560 --> 00:18:59,520 Speaker 2: take money out of the offset, use it for personal purposes, 343 00:18:59,560 --> 00:19:02,679 Speaker 2: whatever you want to do, but you're not impacting the 344 00:19:03,320 --> 00:19:05,679 Speaker 2: original tax darchniture of the day exactly. 345 00:19:05,720 --> 00:19:08,520 Speaker 1: That's keeping it clean. As we're saying, yes, very good, Okay, 346 00:19:08,680 --> 00:19:11,200 Speaker 1: hopefully that's very clear to everybody. I imagine it is 347 00:19:11,560 --> 00:19:14,439 Speaker 1: very good. And you can hear the voice of experience there, folks. 348 00:19:14,680 --> 00:19:16,199 Speaker 1: All right, we'll be back in a moment. We have 349 00:19:16,240 --> 00:19:33,000 Speaker 1: some very interesting questions for you. Hello, welcome back to 350 00:19:33,040 --> 00:19:36,560 Speaker 1: the Money Puzzle podcast. You know, Stuart, I wonder that 351 00:19:36,640 --> 00:19:39,080 Speaker 1: notion of elasticity, how far can you push it? Like, 352 00:19:39,720 --> 00:19:41,760 Speaker 1: I don't know how many budgets I've done, but I 353 00:19:41,800 --> 00:19:46,280 Speaker 1: have probably done at least ten or twelve or fifteen 354 00:19:46,400 --> 00:19:49,240 Speaker 1: in a row. And there's always more money for the 355 00:19:49,280 --> 00:19:52,199 Speaker 1: tax office. Every year, the pore money on, the more 356 00:19:52,280 --> 00:19:54,280 Speaker 1: money in the tax office, and I presume how it 357 00:19:54,320 --> 00:19:56,680 Speaker 1: works is for every extra dollar they put in, they 358 00:19:56,720 --> 00:19:59,399 Speaker 1: get so many dollars back. But there must be a 359 00:19:59,400 --> 00:20:04,040 Speaker 1: point in time where diminishing returns sets in. You reckon 360 00:20:04,240 --> 00:20:06,160 Speaker 1: or are we anywhere near it? You'd have to think 361 00:20:06,280 --> 00:20:08,879 Speaker 1: that perhaps there are. You were just saying that they 362 00:20:08,880 --> 00:20:10,840 Speaker 1: seem to have all the data they could possibly need. 363 00:20:11,680 --> 00:20:13,879 Speaker 2: Yeah, it's a case of productivity though, James. Over the 364 00:20:13,920 --> 00:20:17,560 Speaker 2: last five years, the amount of data they're getting and 365 00:20:17,680 --> 00:20:21,080 Speaker 2: the currency of that data, like real time data, has 366 00:20:21,119 --> 00:20:22,800 Speaker 2: increased one hundredfold. 367 00:20:23,359 --> 00:20:25,040 Speaker 1: So the data is that what you mean? 368 00:20:26,080 --> 00:20:28,199 Speaker 2: Thank giveness of the data. And so if you go 369 00:20:28,280 --> 00:20:31,280 Speaker 2: back ten years ago, they would have to do a 370 00:20:31,280 --> 00:20:33,280 Speaker 2: lot of manual work, have a lot of reporting, but 371 00:20:33,400 --> 00:20:35,960 Speaker 2: a lot of it would be manual. But it's so 372 00:20:36,000 --> 00:20:38,760 Speaker 2: easy now for them to identify you. There's ears ten 373 00:20:38,840 --> 00:20:41,560 Speaker 2: thousand taxpayers. Let's just send out a letter, cost them 374 00:20:41,560 --> 00:20:44,359 Speaker 2: no money because it's all electronic, goes through the tax 375 00:20:44,400 --> 00:20:47,040 Speaker 2: agent portal, all that sort of stuff, and then they 376 00:20:47,080 --> 00:20:49,439 Speaker 2: just create work for the rest of us. But it 377 00:20:49,480 --> 00:20:52,399 Speaker 2: doesn't cost them very much money. So the return on 378 00:20:52,600 --> 00:20:57,080 Speaker 2: investment for allocating because the total allocation to the ATO 379 00:20:57,200 --> 00:21:00,399 Speaker 2: four compliance activities in the most recent budget was just 380 00:21:00,520 --> 00:21:05,960 Speaker 2: under a billion dollars, so the return on that is significant. 381 00:21:05,960 --> 00:21:09,159 Speaker 2: It's a good use of funds because they're definitely going 382 00:21:09,200 --> 00:21:10,760 Speaker 2: to raise tax revenue as a result. 383 00:21:11,160 --> 00:21:13,240 Speaker 1: That's the figure. We'd love to see the return on 384 00:21:13,359 --> 00:21:16,400 Speaker 1: the investment as such in every budget for the ATO, 385 00:21:16,520 --> 00:21:18,800 Speaker 1: but it would seem, in fact, it would seem to 386 00:21:18,800 --> 00:21:20,639 Speaker 1: be very clear that there is a hell of a 387 00:21:20,680 --> 00:21:24,320 Speaker 1: return because they keep expanding and giving them. Now that's 388 00:21:24,440 --> 00:21:26,960 Speaker 1: true for most regulators if the ACCIC has got more 389 00:21:27,080 --> 00:21:29,560 Speaker 1: cash up lay too, but the ATEO specifically seems to 390 00:21:29,560 --> 00:21:32,840 Speaker 1: be there every single time. Some really good questions coming up. 391 00:21:32,880 --> 00:21:38,840 Speaker 1: I've just probably have time for two. One is from John. 392 00:21:39,320 --> 00:21:41,720 Speaker 1: He says, as a first home buyer looking to take 393 00:21:41,760 --> 00:21:46,360 Speaker 1: advantage of the liberal policy which we didn't mention Steorge, 394 00:21:46,359 --> 00:21:49,040 Speaker 1: which is the fifty thousand that you can use from 395 00:21:49,080 --> 00:21:52,919 Speaker 1: your own SUPER to buy a house, John says, I 396 00:21:52,960 --> 00:21:56,040 Speaker 1: am wondering what investments strategy I should have in super, 397 00:21:56,400 --> 00:21:59,080 Speaker 1: following the general advice to young people. I have had 398 00:21:59,400 --> 00:22:02,760 Speaker 1: it in high growth, which has done well. Now I 399 00:22:02,800 --> 00:22:04,520 Speaker 1: am in a dilemma, should I move to a more 400 00:22:04,560 --> 00:22:08,639 Speaker 1: conservative strategy as I tend to use the funds in 401 00:22:08,680 --> 00:22:11,720 Speaker 1: the next year, or stay in growth strategy and hope 402 00:22:11,760 --> 00:22:15,520 Speaker 1: for a rebound. John, I think we get a version 403 00:22:15,560 --> 00:22:18,439 Speaker 1: of that question almost every week. First of all, what 404 00:22:19,040 --> 00:22:22,520 Speaker 1: you know because of the markets, the settings. The second 405 00:22:22,520 --> 00:22:25,040 Speaker 1: thing I would say to you is, yes, it's true 406 00:22:25,560 --> 00:22:29,440 Speaker 1: that the Liberal policy, which is a new policy which 407 00:22:29,440 --> 00:22:32,080 Speaker 1: we didn't mention because it's as much about super as 408 00:22:32,080 --> 00:22:35,000 Speaker 1: it is about housing. But in any event, the policy 409 00:22:35,119 --> 00:22:38,520 Speaker 1: which will kick off if they win, is that you 410 00:22:38,560 --> 00:22:42,359 Speaker 1: can use up to fifty thousand of your super to 411 00:22:42,440 --> 00:22:45,919 Speaker 1: buy your first home. Crucially, the other part of that 412 00:22:45,960 --> 00:22:50,800 Speaker 1: policy is that eventually you must return that money to 413 00:22:50,880 --> 00:22:53,920 Speaker 1: your superfund on the basis of how much your home 414 00:22:54,240 --> 00:22:55,879 Speaker 1: is worth when you sell it. So if you make 415 00:22:55,960 --> 00:22:58,160 Speaker 1: one hundred percent and you put in fifty thousand, then 416 00:22:58,840 --> 00:23:01,239 Speaker 1: you'd have to replace one hundred thousand back into your 417 00:23:01,240 --> 00:23:03,760 Speaker 1: super And that is not so much a catch. That's 418 00:23:03,840 --> 00:23:06,320 Speaker 1: very logical, but it is rarely mentioned in this So 419 00:23:06,359 --> 00:23:10,840 Speaker 1: let's cut it into two parts. Stuart, they're super for 420 00:23:11,320 --> 00:23:14,800 Speaker 1: home buying controversial policy. I think it would be popular 421 00:23:14,800 --> 00:23:16,960 Speaker 1: if it gets through. I think it would be used. 422 00:23:17,000 --> 00:23:20,840 Speaker 1: Not everybody wants to be with the government in shared 423 00:23:20,880 --> 00:23:23,560 Speaker 1: equity or whatever. But I think to John and all 424 00:23:23,560 --> 00:23:25,320 Speaker 1: the John's in the world out there, it's not advice, 425 00:23:25,359 --> 00:23:28,680 Speaker 1: it's just information that is only your deliberates when John, 426 00:23:29,200 --> 00:23:32,120 Speaker 1: it's not going to happen. It is absolutely not going 427 00:23:32,160 --> 00:23:35,160 Speaker 1: to happen. The LPR in charge, they are absolutely set 428 00:23:35,200 --> 00:23:35,920 Speaker 1: against that notion. 429 00:23:37,720 --> 00:23:40,600 Speaker 2: Yeah, I know you're a fan of it, James. I've 430 00:23:40,600 --> 00:23:43,800 Speaker 2: heard you speak positively about it before. I'm neutral on it. 431 00:23:43,920 --> 00:23:46,359 Speaker 2: I appreciate the fact that you've got to repay it, 432 00:23:46,400 --> 00:23:49,000 Speaker 2: so that's the thing I really like about it. But 433 00:23:49,040 --> 00:23:53,240 Speaker 2: my concern is if we start using super for housing deposits, 434 00:23:53,359 --> 00:23:55,520 Speaker 2: is it a slippery slope? What else are we going 435 00:23:55,560 --> 00:23:57,760 Speaker 2: to start using? Yes, before it really is just for 436 00:23:57,880 --> 00:24:00,800 Speaker 2: retirement savings. But I like the fact that you got 437 00:24:00,800 --> 00:24:02,680 Speaker 2: to pipe it back, so at least you're just borrowing 438 00:24:02,720 --> 00:24:05,160 Speaker 2: from your super. If you like, that's not so bad. 439 00:24:05,520 --> 00:24:08,159 Speaker 1: My enthusiasm is more pragmatic than anything. If you can 440 00:24:08,200 --> 00:24:11,840 Speaker 1: pay for a Tommy Tuck surgery from your super, why 441 00:24:11,880 --> 00:24:13,840 Speaker 1: can't you? Why can't you do this? That's really where 442 00:24:13,840 --> 00:24:16,080 Speaker 1: I'm coming from. And also as I say, the whole 443 00:24:16,119 --> 00:24:19,600 Speaker 1: tax system is completely biased towards the homeowner, so it 444 00:24:19,680 --> 00:24:22,919 Speaker 1: is really just that pragmatic. It's a pragmatic support of 445 00:24:22,960 --> 00:24:25,360 Speaker 1: it more than anything, all Right. The second part then 446 00:24:25,560 --> 00:24:30,560 Speaker 1: was about moving from growth or it. Last week, two 447 00:24:30,640 --> 00:24:33,960 Speaker 1: different people came up to me and we're asking about 448 00:24:33,960 --> 00:24:36,960 Speaker 1: their super and whether they should change it or remove it. 449 00:24:37,040 --> 00:24:39,840 Speaker 1: This was literally the day, the scary day. So we 450 00:24:39,880 --> 00:24:43,879 Speaker 1: had the worst day since COVID on one session if 451 00:24:43,880 --> 00:24:45,600 Speaker 1: you're acall on the share market, and then we had 452 00:24:45,600 --> 00:24:48,359 Speaker 1: the best day since COVID. But everyone just remembers the 453 00:24:48,359 --> 00:24:52,399 Speaker 1: worst day. And two people that day I was in 454 00:24:52,440 --> 00:24:54,760 Speaker 1: the city, two different people who I don't know very well, 455 00:24:54,800 --> 00:24:57,080 Speaker 1: both came up to me asking about it, and it 456 00:24:57,240 --> 00:24:59,880 Speaker 1: struck me. So this must be really in people's minds. 457 00:25:00,440 --> 00:25:02,119 Speaker 1: What do you see to people who'll ring you on 458 00:25:02,200 --> 00:25:04,320 Speaker 1: it deep where the market force and say, listen, I'm 459 00:25:04,320 --> 00:25:06,720 Speaker 1: really worried. I don't know about my settings at all. 460 00:25:07,000 --> 00:25:09,520 Speaker 1: This seemed okay when everything was okay, but now I'm worried. 461 00:25:09,720 --> 00:25:10,760 Speaker 1: It tests people, doesn't it? 462 00:25:10,760 --> 00:25:14,679 Speaker 2: It tests people? And my typical response not maybe to 463 00:25:14,960 --> 00:25:16,840 Speaker 2: John because you might need to use the money or 464 00:25:16,880 --> 00:25:18,840 Speaker 2: want to use the money in a relatively short period 465 00:25:18,840 --> 00:25:21,960 Speaker 2: of time. But if you're just a general investor in superannuation, 466 00:25:22,119 --> 00:25:24,320 Speaker 2: my answer would be, if it's worrying you, stop looking 467 00:25:24,359 --> 00:25:26,840 Speaker 2: at it because it's not really helping you. You're not 468 00:25:26,880 --> 00:25:30,760 Speaker 2: going to change the outcomes. And sometimes we think as investors, 469 00:25:30,840 --> 00:25:33,639 Speaker 2: just because something changes, like a return or the price 470 00:25:33,680 --> 00:25:37,080 Speaker 2: of an asset, we should have some sort of response 471 00:25:37,119 --> 00:25:40,000 Speaker 2: to that. Well, typically we shouldn't. We should just leave 472 00:25:40,040 --> 00:25:42,639 Speaker 2: it well alone and let time do its thing, and 473 00:25:42,680 --> 00:25:44,600 Speaker 2: we know in the long run will be much better 474 00:25:44,640 --> 00:25:48,119 Speaker 2: off for it. So volatility is normal. You should expect it. 475 00:25:48,160 --> 00:25:49,880 Speaker 2: We don't like it, But if you don't like it, 476 00:25:49,960 --> 00:25:52,679 Speaker 2: just stop looking at it because otherwise you'll end up 477 00:25:52,720 --> 00:25:55,560 Speaker 2: making a mistake in terms of selling out at the 478 00:25:56,240 --> 00:25:58,160 Speaker 2: bottom and then missing the recovery. 479 00:25:58,359 --> 00:26:00,840 Speaker 1: I'm sure what you're saying is stop looking at it obsessively. 480 00:26:01,320 --> 00:26:04,240 Speaker 1: I suppose you're thinking about it strategically. Yeah. So, yes, 481 00:26:04,359 --> 00:26:07,240 Speaker 1: the fact that you can look at it every day 482 00:26:08,359 --> 00:26:10,680 Speaker 1: it's a mixed blessing. People used to just get reports 483 00:26:10,680 --> 00:26:12,679 Speaker 1: maybe once a quarter and they say, oh, it's gone up. 484 00:26:12,920 --> 00:26:16,120 Speaker 1: That's good, and they didn't have to pay attention. Now 485 00:26:16,119 --> 00:26:17,840 Speaker 1: you can look at it every day, and I know 486 00:26:17,880 --> 00:26:20,800 Speaker 1: that's great for transparency, But there's another side to it, 487 00:26:20,840 --> 00:26:26,240 Speaker 1: isn't there about how anyone who is an active investor 488 00:26:26,320 --> 00:26:28,920 Speaker 1: knows that you can overinvest. You can you know that 489 00:26:28,920 --> 00:26:33,080 Speaker 1: there's a difference between investing and trading, and you don't 490 00:26:33,119 --> 00:26:35,719 Speaker 1: want to have a trader's mindset with your super and 491 00:26:35,800 --> 00:26:39,600 Speaker 1: I imagine that's pretty useful thoughts for anyone in that area. 492 00:26:39,760 --> 00:26:42,120 Speaker 1: While we're at it, though, I think there's one other 493 00:26:42,119 --> 00:26:44,080 Speaker 1: point I just want to make on that, John, which 494 00:26:44,119 --> 00:26:46,399 Speaker 1: is that a lot of the big super funds the 495 00:26:46,480 --> 00:26:50,359 Speaker 1: classification of these three things conservative, balanced, and growth. To 496 00:26:50,520 --> 00:26:53,680 Speaker 1: the uninitiated, it seems like, well, they are what they 497 00:26:53,720 --> 00:26:56,320 Speaker 1: say on the label, but actually there's a lot of 498 00:26:56,359 --> 00:27:01,320 Speaker 1: evidence in our market that balanced is quite growth focused, 499 00:27:01,320 --> 00:27:04,840 Speaker 1: and growth is terribly growth focused. There's no legal definitions 500 00:27:04,880 --> 00:27:07,240 Speaker 1: on that, and there's a fair bit of rubber or 501 00:27:07,320 --> 00:27:10,399 Speaker 1: rubbery definition on that area, which the super funds. It 502 00:27:10,440 --> 00:27:12,880 Speaker 1: suits them and they don't want to talk about it, 503 00:27:12,960 --> 00:27:14,920 Speaker 1: and they certainly don't want a debate about it because 504 00:27:14,960 --> 00:27:17,000 Speaker 1: it suits them to have it that way. But it's 505 00:27:17,040 --> 00:27:19,280 Speaker 1: a time where you do worry about the fact that 506 00:27:19,320 --> 00:27:23,720 Speaker 1: people think they're super is more balanced or more conservative 507 00:27:23,920 --> 00:27:26,600 Speaker 1: than it actually is, or I'll just leave that one 508 00:27:26,640 --> 00:27:30,119 Speaker 1: sitting out there. The last is a question from ram 509 00:27:30,200 --> 00:27:33,359 Speaker 1: who says, and this only came in recently, so that 510 00:27:33,400 --> 00:27:34,880 Speaker 1: the budget was a couple of weeks ago. He says, 511 00:27:34,880 --> 00:27:36,879 Speaker 1: I have a question regarding the federal budget. What's the 512 00:27:36,880 --> 00:27:41,439 Speaker 1: point of a budget lock a lock in besides making 513 00:27:41,480 --> 00:27:46,720 Speaker 1: a select few feel important. I understand it's market sensitive information. 514 00:27:47,240 --> 00:27:50,480 Speaker 1: Why not release it publicly on market clothes experts have 515 00:27:50,600 --> 00:27:54,159 Speaker 1: enough time to react. Yeah, well, it came from the 516 00:27:54,200 --> 00:27:57,359 Speaker 1: whole thing of locking everybody in was on is on 517 00:27:57,480 --> 00:28:01,000 Speaker 1: the understanding that they could they weren't locked in, and 518 00:28:01,119 --> 00:28:03,239 Speaker 1: all their WiFi wasn't turned off and everything that they 519 00:28:03,280 --> 00:28:06,200 Speaker 1: could believe it orough they could move the market right, 520 00:28:06,240 --> 00:28:08,040 Speaker 1: so they could say, oh, look there's a change in 521 00:28:08,080 --> 00:28:10,359 Speaker 1: banking legislation or whatever which is going to change the 522 00:28:10,400 --> 00:28:13,479 Speaker 1: fortunes of A and Z banks, so I'll buy them now, 523 00:28:13,600 --> 00:28:15,640 Speaker 1: I tell my friend to sell them now or whatever. 524 00:28:16,160 --> 00:28:19,840 Speaker 1: It's extremely unlikely that would happen in the first place, 525 00:28:19,840 --> 00:28:21,200 Speaker 1: but that's what it's all about. And if it was 526 00:28:21,240 --> 00:28:23,399 Speaker 1: any consolation, it doesn't make you feel the slightest bit 527 00:28:23,400 --> 00:28:27,479 Speaker 1: importance to be locked inside in the room for a 528 00:28:27,600 --> 00:28:31,280 Speaker 1: long time half one to half seven, six solid hours. 529 00:28:31,800 --> 00:28:34,439 Speaker 1: So but that's the I'm sure people wonder what on 530 00:28:34,480 --> 00:28:36,320 Speaker 1: earth is it all about. That's what it's about. And 531 00:28:36,359 --> 00:28:38,960 Speaker 1: there's there's two, isn't there, Stuart. There's a media one 532 00:28:39,560 --> 00:28:41,080 Speaker 1: which is the one that gets all the attention, but 533 00:28:41,080 --> 00:28:44,000 Speaker 1: there's another one for anyone who's interested. Isn't it right? 534 00:28:44,040 --> 00:28:47,360 Speaker 1: If you work for an NGO, or you work for whatever, 535 00:28:47,880 --> 00:28:51,280 Speaker 1: senior Citizens of Queensland or something, and you want it's 536 00:28:51,280 --> 00:28:53,880 Speaker 1: important for you to be in there, you can register 537 00:28:54,040 --> 00:28:56,920 Speaker 1: and go in and that's almost as big as There's 538 00:28:56,920 --> 00:28:59,200 Speaker 1: a couple of hundred people in that one as well, 539 00:28:59,240 --> 00:29:01,400 Speaker 1: and they're under the same thing. They go in from 540 00:29:01,440 --> 00:29:05,440 Speaker 1: half one to half seven. And the tradition ram is 541 00:29:05,480 --> 00:29:09,880 Speaker 1: that you can't unleash the information until the treasure begins 542 00:29:09,960 --> 00:29:14,040 Speaker 1: his speech. The cynics in Canberra say it makes everyone 543 00:29:14,440 --> 00:29:17,400 Speaker 1: listen to the treasure. That's what it's all about. 544 00:29:18,240 --> 00:29:20,480 Speaker 2: I can think of better ways to spend my time. James. 545 00:29:20,640 --> 00:29:23,080 Speaker 1: That's right. Well, as I've mentioned on the show before, 546 00:29:23,120 --> 00:29:25,080 Speaker 1: the marvelous thing about it, the hard thing about it, 547 00:29:25,080 --> 00:29:26,800 Speaker 1: it's like it's like going for a very long run, 548 00:29:26,880 --> 00:29:29,959 Speaker 1: a marathon. But the plus side is that you remember 549 00:29:30,000 --> 00:29:32,360 Speaker 1: everything because you're in there for six hours studying and 550 00:29:32,400 --> 00:29:34,320 Speaker 1: you don't really know it for the rest of the year. 551 00:29:34,360 --> 00:29:37,080 Speaker 1: So that's I would say, I like it, but I 552 00:29:37,120 --> 00:29:40,400 Speaker 1: am I appreciate what it does for my brain in 553 00:29:40,440 --> 00:29:43,240 Speaker 1: those six hours. Okay, thank you and thank you Stewart 554 00:29:43,320 --> 00:29:45,840 Speaker 1: so much there to crunch through. Really interesting about the 555 00:29:46,240 --> 00:29:48,959 Speaker 1: share market nerves, if you like, and how that might 556 00:29:49,000 --> 00:29:53,040 Speaker 1: play into better property the even more money pushed at 557 00:29:53,040 --> 00:29:55,640 Speaker 1: the property market, which would all push up prices. Every 558 00:29:55,640 --> 00:29:57,760 Speaker 1: single one of those incentives would push up prices. We 559 00:29:57,840 --> 00:30:00,760 Speaker 1: know that, we know that's just an economic fact. May 560 00:30:00,800 --> 00:30:03,560 Speaker 1: get some young people into the market hopefully that as well. 561 00:30:03,760 --> 00:30:06,720 Speaker 1: Very interesting about the ATO I didn't know that. That's 562 00:30:06,720 --> 00:30:10,400 Speaker 1: worth keeping in mind everybody, and we will be back. 563 00:30:10,680 --> 00:30:14,960 Speaker 1: I've got Chris Cuff, the legendary Chriscuff coming up on 564 00:30:15,000 --> 00:30:18,160 Speaker 1: the next edition. We are going to talk about where 565 00:30:18,200 --> 00:30:20,040 Speaker 1: we are ano that there is something of a pose 566 00:30:20,120 --> 00:30:23,080 Speaker 1: we hope in the share market. It will give someone 567 00:30:23,200 --> 00:30:25,320 Speaker 1: a great opportunity to have a look across as to 568 00:30:25,360 --> 00:30:26,760 Speaker 1: where people have their settings. 569 00:30:27,040 --> 00:30:30,880 Speaker 2: Thanks Stewart, Thanks James, being found. As always that was. 570 00:30:30,920 --> 00:30:34,400 Speaker 1: A Stuart Wems the pro Solution Private Client Group. Very good, 571 00:30:34,880 --> 00:30:37,280 Speaker 1: keep those emails rolling in the money puzzle at the 572 00:30:37,320 --> 00:30:40,520 Speaker 1: Australian dot Com dot Au. Today's show was produced by 573 00:30:40,600 --> 00:30:41,440 Speaker 1: Leah sammag Gloom