WEBVTT - Die with zero: Why you should give it away sooner 0:00:10.160 --> 0:00:13.080 Hello and welcome to the Australians Money Puzzle podcast. I'm 0:00:13.160 --> 0:00:17.960 James Kirby. What is the idea behind your investing? What's 0:00:18.000 --> 0:00:22.280 your longtime idea? When you invest? We're going to assume 0:00:22.680 --> 0:00:25.920 that sooner or later, perhaps already you own your house, 0:00:26.600 --> 0:00:29.360 Perhaps already you have you actually have enough to retire. 0:00:29.720 --> 0:00:31.640 Maybe you don't think you do, but maybe you do. 0:00:32.880 --> 0:00:36.920 So then the thing is, if you have a family, 0:00:37.120 --> 0:00:40.680 your family, how are on earth are they going to 0:00:40.680 --> 0:00:45.040 buy a house? You know, they've just put lending limits 0:00:45.760 --> 0:00:53.040 on home mortgages at six times for the banks for 0:00:53.159 --> 0:00:56.600 twenty percent of their volume six times. No one's buying 0:00:56.600 --> 0:00:58.920 a house at six times in the major cities it's 0:00:58.960 --> 0:01:02.480 eight times, nine times, ten times. Just gives you some 0:01:02.600 --> 0:01:07.200 idea of the cost the younger generation face. We've got 0:01:07.200 --> 0:01:09.319 a lot of issues I want to talk about today, 0:01:09.800 --> 0:01:11.400 but the first thing I want to talk about with 0:01:11.440 --> 0:01:14.440 my guest Will Hamilton, regular on the Show of Hamilton 0:01:14.680 --> 0:01:18.360 were the partners and long term member of the Baron's 0:01:18.400 --> 0:01:21.199 Top one fifty distant in there again of course of late. 0:01:21.400 --> 0:01:23.360 I want to talk to him about a piece he 0:01:23.400 --> 0:01:27.760 did recently on The Australian which sparked a lot of comment. 0:01:27.880 --> 0:01:31.640 It was basically all about the notion of leaving nothing behind, 0:01:32.160 --> 0:01:34.919 or as the Americans like to call it, die with zero. 0:01:35.160 --> 0:01:38.119 That's a book that's been a bestseller over there. How 0:01:38.160 --> 0:01:38.560 are you well? 0:01:39.240 --> 0:01:41.120 Very well, James, Thank you very much for having me. 0:01:41.360 --> 0:01:43.720 I was intrigued with quite a personal piece you did. 0:01:43.760 --> 0:01:46.240 Actually I thought on this, but it is something it's 0:01:46.400 --> 0:01:48.960 kind of a paradox that a lot of people face, 0:01:49.040 --> 0:01:52.720 particularly I think property investors. You know, they are stretching themselves, 0:01:52.760 --> 0:01:55.480 they are negatively gearing. They are they are taking lists, 0:01:55.480 --> 0:01:58.760 they are going through the relatively mundane issues of running 0:01:58.800 --> 0:02:04.520 investment properties, and they're doing it with mixed success, often 0:02:04.640 --> 0:02:06.600 so that they can help their kids buy a house. 0:02:06.680 --> 0:02:10.480 A kind of a circular kind of a provise circular situation. 0:02:10.960 --> 0:02:14.960 So tell me about what this concept and your impressions 0:02:15.000 --> 0:02:16.040 of it. 0:02:16.040 --> 0:02:19.679 It's something we get into discussions with clients a lot, 0:02:19.960 --> 0:02:23.160 and you know where wholesye license and our clients generally 0:02:23.200 --> 0:02:26.680 have their in a fortunate position when we get into 0:02:26.680 --> 0:02:30.880 a state planning and also planning for how they assist children. 0:02:31.760 --> 0:02:34.239 I often there's a bookshop up in the shopping center 0:02:34.240 --> 0:02:36.320 above what we are dimicks. And I always say, on 0:02:36.400 --> 0:02:40.080 the way out, go and buy Bill Perkins, die with zero, 0:02:40.720 --> 0:02:41.640 now is that right? 0:02:42.680 --> 0:02:44.519 You don't really sell them. You didn't put a little 0:02:44.520 --> 0:02:48.520 stack a reception and make a bit of marrid is. 0:02:48.680 --> 0:02:51.120 And it's all relative. It doesn't mean die with zero. 0:02:51.480 --> 0:02:57.600 It's to give away to your children what an amount 0:02:57.639 --> 0:02:59.440 that you can afford. So you know, I had to 0:02:59.440 --> 0:03:01.480 get a little lot of emails people, and thank you 0:03:01.600 --> 0:03:04.480 very much giving me some advice on the article. But 0:03:04.600 --> 0:03:07.800 one is to the extent you can afford it, and 0:03:07.840 --> 0:03:09.839 to help your children, because it's more important to help 0:03:09.840 --> 0:03:12.120 your children while they're in their thirties and forties rather 0:03:12.120 --> 0:03:14.560 than when you die and they're in their sixties, and 0:03:14.560 --> 0:03:17.360 that's when they need it, especially with the housing differential 0:03:17.400 --> 0:03:21.240 when I am just a baby boomer. But when we 0:03:21.320 --> 0:03:23.440 went out there to buy houses and four to five 0:03:23.480 --> 0:03:26.000 times at your income level versus as you rightly said, 0:03:26.040 --> 0:03:31.240 you ten times plus today. And these are issues that 0:03:31.960 --> 0:03:35.480 our children therefore need our assistance to the extent that 0:03:35.560 --> 0:03:38.520 we can provide it. Now, there's only so much you 0:03:38.520 --> 0:03:41.080 can say in nine hundred words. And you know again, 0:03:41.160 --> 0:03:44.160 some people wrote in and one person was a little 0:03:44.200 --> 0:03:47.440 bit emotional with respect to the fact that they'd done 0:03:47.440 --> 0:03:50.120 this and then their children got divorced. So you do 0:03:50.200 --> 0:03:53.720 need to get some advice. And what I'm saying is 0:03:53.760 --> 0:03:55.640 general advice only, but you need to go and talk 0:03:55.680 --> 0:03:59.840 to your financial advisor about this, and then they're going 0:03:59.840 --> 0:04:02.080 to put you in the direction of a family lawyer, 0:04:02.880 --> 0:04:07.440 be it loan agreements, be it financial agreements that you 0:04:07.560 --> 0:04:11.000 may want to consider. And I think that's very important, 0:04:11.400 --> 0:04:14.440 important so that you protect children with the assets that 0:04:14.480 --> 0:04:15.960 they bring into a relationship. 0:04:17.360 --> 0:04:20.040 It's interesting, you know, just that issue of I suppose 0:04:20.200 --> 0:04:24.480 the how it's the house prices, the level of house 0:04:24.520 --> 0:04:29.279 prices that have sparked particular interest in this. It's always 0:04:29.320 --> 0:04:32.360 been around as a concept, but it's got an edge now, 0:04:32.720 --> 0:04:34.719 you know. I was wanted up the old joke about 0:04:34.720 --> 0:04:36.840 how do you buy a house for four hundred thousand 0:04:37.160 --> 0:04:41.160 in Sydney's North Shore? You buy it in nineteen seventy nine, 0:04:42.040 --> 0:04:44.520 you know that's what you're saying, right. I don't know 0:04:44.520 --> 0:04:46.040 how much you paid for your house or I paid 0:04:46.040 --> 0:04:48.760 for mine, but you know the figures are laughed at 0:04:49.120 --> 0:04:52.640 by the people who are buying houses now, So let's 0:04:52.640 --> 0:04:54.320 just keep it on that issue, and this is a 0:04:54.360 --> 0:04:57.080 wider issue obviously, if this could be for any reason, 0:04:57.720 --> 0:05:02.120 but I think obviously the core reason is very compelling. 0:05:02.920 --> 0:05:07.760 You know why, your son or daughter will probably be 0:05:07.839 --> 0:05:12.040 in their late sixties when they get your inheritance. Statistics 0:05:12.080 --> 0:05:15.080 would suggest, and in their late sixties if they're the 0:05:15.120 --> 0:05:19.040 type of people who are active investors, strivers, and they 0:05:19.080 --> 0:05:22.960 listen to a show like this, chances are they've paid 0:05:22.960 --> 0:05:25.520 their house off by then, and there was years where 0:05:25.520 --> 0:05:29.040 they had absolutely nothing, and maybe it wasn't necessary because 0:05:29.120 --> 0:05:32.520 you were accumulating at the same time. Now, the thing 0:05:32.640 --> 0:05:39.520 I'm skeptical about Will is this issue of financial agreements 0:05:39.520 --> 0:05:42.200 and loan agreements and sending people to the lawyers to 0:05:42.279 --> 0:05:45.920 do this, I'm assumed. Tell me why you think this 0:05:46.000 --> 0:05:53.120 is necessary and is it about keeping it literally within bloodlines? 0:05:53.320 --> 0:05:54.839 To be brutal about it. 0:05:55.080 --> 0:05:57.960 I think that depending on the age of a child, 0:05:58.760 --> 0:06:02.560 line agreements something you should consider now whilst the house 0:06:02.600 --> 0:06:06.200 price goes up and as I said, you're protecting what 0:06:06.240 --> 0:06:09.839 they bring in. I think financial agreements are a very 0:06:09.880 --> 0:06:13.120 personal thing, and we've got clients that insist on them, 0:06:13.279 --> 0:06:15.159 and we've got clients that there is no way I 0:06:15.160 --> 0:06:17.360 would ask my children to sign that, So I'm not 0:06:17.400 --> 0:06:20.960 making it. It's a judgmental call, and I'm not making 0:06:20.960 --> 0:06:23.000 a call either way. I think you need to discuss 0:06:23.040 --> 0:06:25.720 it and make a decision based on something that's right 0:06:25.760 --> 0:06:28.760 for you and your family on a lone agreement. I 0:06:28.800 --> 0:06:32.840 think that's a very different matter. That they're not even 0:06:32.880 --> 0:06:36.000 a thousand dollars for a family lawyer to prepare, and 0:06:36.040 --> 0:06:41.080 you can actually provide something which I think is a 0:06:41.120 --> 0:06:41.840 safe thing to. 0:06:41.839 --> 0:06:44.320 Do, but if it's a lot of agreement, you're not 0:06:44.360 --> 0:06:44.960 giving it to them. 0:06:45.040 --> 0:06:48.400 Correct, Well, that's on the depending of the structure that 0:06:48.440 --> 0:06:50.600 it's in and how it's done. That loan can then 0:06:50.640 --> 0:06:53.559 be forgone on your death. 0:06:54.120 --> 0:06:57.120 I see, I see all right, So what is the 0:06:57.440 --> 0:07:01.680 overarching sort of logic of these greens. It's to protect 0:07:02.520 --> 0:07:10.640 your children from unexpected events in the future, such as divorce. 0:07:10.960 --> 0:07:11.600 Am I close? 0:07:11.720 --> 0:07:13.640 Correct? I think what the logic of these And if 0:07:13.640 --> 0:07:16.920 you speak to a family lawyer, they'll say, you can protect 0:07:16.960 --> 0:07:20.240 what you bring into a relationship. You can't protect what 0:07:20.280 --> 0:07:23.800 you create in a relationship. That's openslaver and so it 0:07:23.800 --> 0:07:27.400 should be not saying that's you should protect against that 0:07:27.800 --> 0:07:29.120 you can't. You shouldn't. 0:07:30.440 --> 0:07:31.880 I wonder why people don't do it. 0:07:31.880 --> 0:07:34.440 Well, I think a lot of people don't know about it. 0:07:34.960 --> 0:07:36.920 Thinking of an email that I got from one person. 0:07:37.200 --> 0:07:38.920 It was, you know, as I said, quite emotional about 0:07:38.920 --> 0:07:40.960 that because this is what happened. They gave some money 0:07:40.960 --> 0:07:44.600 and then child got divorced. I was wondering, well, did 0:07:44.680 --> 0:07:48.560 you know about this? And that's why sometimes you should. 0:07:49.480 --> 0:07:52.360 You should go and get advice, and your financial advisor 0:07:52.680 --> 0:07:55.120 discusses that with you, and then push and then put 0:07:55.920 --> 0:07:58.320 will introduce you into a family lawyer that can have 0:07:58.360 --> 0:08:02.120 a further discussion and then not expend financial agreements. That's 0:08:02.160 --> 0:08:03.120 a different matter altogether. 0:08:04.920 --> 0:08:07.480 I mean, we see just this morning the usual here 0:08:07.520 --> 0:08:10.320 we go again, the annual sort of aspa. They all 0:08:10.320 --> 0:08:10.600 do it. 0:08:10.640 --> 0:08:10.840 Now. 0:08:10.880 --> 0:08:13.000 How much you should have to you know, be comfortable 0:08:13.040 --> 0:08:15.000 in a retirement, et cetera. And it should be seventy 0:08:15.080 --> 0:08:18.360 thousand dollars a year for a couple, and that means 0:08:18.360 --> 0:08:21.480 you need to have well, you certainly want to have 0:08:21.520 --> 0:08:23.920 a million, you know, officially it's something like one point 0:08:23.920 --> 0:08:26.480 six one point seven million, depending on the degree of 0:08:26.560 --> 0:08:28.760 risk of which you take. But the point I'm leading 0:08:28.760 --> 0:08:30.680 to is that at a certain point we clear off 0:08:30.720 --> 0:08:32.640 are at a certain point we say, okay, the house 0:08:32.720 --> 0:08:38.120 is paid off. And many investors once they have a 0:08:38.240 --> 0:08:42.360 certain number, a certain figure in super and maybe they 0:08:42.440 --> 0:08:44.680 keep working so this figure doesn't have to be anything 0:08:44.720 --> 0:08:50.840 as high as these calculators say, and many it listens 0:08:50.880 --> 0:08:52.920 to the show, will have much more than that. But 0:08:53.040 --> 0:08:59.360 I wonder is this concern about not having enough in 0:08:59.440 --> 0:09:02.839 retirement an issue that stops people doing it even if 0:09:02.840 --> 0:09:06.439 they have plenty, because they say, look, if the world collapses, 0:09:06.520 --> 0:09:09.840 there's the markets collapse, If I'm stuck on cash rates, 0:09:10.120 --> 0:09:12.760 if the banks collapse, how am I going to survive? 0:09:12.920 --> 0:09:15.440 All my retirement money is at risk. Yes, you say 0:09:15.520 --> 0:09:17.560 I have a lot, but maybe I don't really have 0:09:17.640 --> 0:09:20.200 a lot because it's all at risk, and so I 0:09:20.240 --> 0:09:23.040 can't hand it over just yet, because I worry still 0:09:23.640 --> 0:09:25.720 that I don't know how much I'm going to cost 0:09:25.880 --> 0:09:28.200 in the fullness of time. And let's say the nightmare 0:09:28.240 --> 0:09:31.480 scenario where a couple are both in some sort of 0:09:31.480 --> 0:09:35.680 elaborate age care with multiple medical bills for years and years, 0:09:35.840 --> 0:09:37.439 whether they could rack up a hell of a lot 0:09:37.480 --> 0:09:39.559 of bills. The point I'm making is do you think 0:09:39.640 --> 0:09:41.200 that's actually stopping people too. 0:09:42.080 --> 0:09:45.400 Yes, I think that it is. As I said, everything's 0:09:45.440 --> 0:09:48.360 relative and it it's personal. So I'm not saying you 0:09:48.440 --> 0:09:50.080 must do this, that you do it to the extent 0:09:50.120 --> 0:09:52.800 you can afford to do it. That's the first thing. 0:09:52.800 --> 0:09:54.160 And I also I think it's generational. 0:09:54.520 --> 0:09:57.000 No tell me about that your concept of it being 0:09:57.040 --> 0:09:58.160 general intergenerational. 0:09:58.240 --> 0:10:00.040 So well, first of all, I write this because I 0:10:00.000 --> 0:10:04.080 I do believes in and there's intergenerational inequality. And you 0:10:04.120 --> 0:10:07.040 said that created discussion through the comment section. A lot 0:10:07.080 --> 0:10:08.679 of people didn't agree on that point. 0:10:09.240 --> 0:10:12.120 Yes, the degree if they were perhaps under thirty. 0:10:11.840 --> 0:10:17.280 Though, yeah, correct, So they didn't agree on intergenerational inequality, 0:10:17.320 --> 0:10:19.480 which I do believe there is. So that's where I'm 0:10:19.480 --> 0:10:21.680 coming from, and that's what I discussed with people. But 0:10:21.760 --> 0:10:24.880 I know my parents. There is no way my parents 0:10:24.920 --> 0:10:26.920 would consider this because of a lot of the points 0:10:26.920 --> 0:10:31.120 you brought up. My mother's in her nineties and she's worried, 0:10:31.280 --> 0:10:33.959 very worried about the cost of age care and her 0:10:33.960 --> 0:10:36.520 own health. And I think that you're at a point 0:10:36.520 --> 0:10:38.080 in time when you can look at this and you 0:10:38.080 --> 0:10:40.640 can look at it objectively. There's other things where there's 0:10:40.679 --> 0:10:44.280 other points in your life when you're focused on other things. 0:10:44.800 --> 0:10:47.400 And as I stress, to the extent that you can 0:10:47.559 --> 0:10:51.480 afford it, And I understand some people can afford to 0:10:51.840 --> 0:10:54.480 a far greater degree than others. 0:10:55.720 --> 0:10:58.240 And I suppose the imperative that drives people to make 0:10:58.320 --> 0:11:02.600 money was in conflict with the different dynamic of giving 0:11:02.640 --> 0:11:06.360 it away in many cases. Whereas will that be relevant 0:11:06.400 --> 0:11:08.199 apart from homebuying? 0:11:08.400 --> 0:11:10.920 Was I said in the article, and this again, I 0:11:11.040 --> 0:11:13.680 believe in it a lot of the things Bill Perkins said, 0:11:13.679 --> 0:11:15.240 But I just want to stress in the book I 0:11:15.280 --> 0:11:16.920 was zero, But I do want to stress in the 0:11:16.920 --> 0:11:20.000 book he's obviously a very wealthy man and that comes 0:11:20.000 --> 0:11:22.640 across so you have to adjust for that. And he's American, 0:11:23.080 --> 0:11:25.360 so we have to bring it into a cultural perspective. 0:11:25.360 --> 0:11:29.080 But I also think the thing on creating experiences to 0:11:29.200 --> 0:11:30.959 again the extent you can afford it. So if you 0:11:31.000 --> 0:11:34.720 can afford to create experiences with children and grandchildren and memories, 0:11:34.760 --> 0:11:38.000 as he says, memories really important. So those experiences lead 0:11:38.040 --> 0:11:41.679 to memories, you know, because the one reality is we're 0:11:41.720 --> 0:11:43.600 not going to be here one day. And I think 0:11:43.600 --> 0:11:46.160 that's I thought that was a really lovely thing, and 0:11:46.240 --> 0:11:49.160 I thought that was it really resonated with me. And 0:11:49.200 --> 0:11:51.560 the other thing is again and some people don't agree 0:11:51.559 --> 0:11:54.199 with private school education as well, and that came back 0:11:54.240 --> 0:11:57.400 in the feedback I got. But if it is important, 0:11:57.520 --> 0:12:00.360 you know, education is you know, there's nothing more in 0:12:00.360 --> 0:12:04.120 a chance life is education, be it secondary education or 0:12:04.640 --> 0:12:09.840 tertiary education. And I know one of our clients is 0:12:10.000 --> 0:12:13.360 very philanthropic in ensuring that those that wouldn't ordinarily be 0:12:13.360 --> 0:12:16.880 able to go to university can and he gives through 0:12:16.920 --> 0:12:21.600 Melbourne University on that and I think he's it's lovely 0:12:21.640 --> 0:12:22.120 what he does. 0:12:23.160 --> 0:12:26.000 So typically this would end up being not it's obviously 0:12:26.000 --> 0:12:29.840 two days anyway for some investors to pay for their 0:12:30.600 --> 0:12:33.840 own children. By the time they get to the position 0:12:33.880 --> 0:12:38.280 we're talking about, their children will have had their school experience, 0:12:38.280 --> 0:12:40.520 whatever that might have been, and however that much that 0:12:40.600 --> 0:12:43.840 might have cast. So we're talking about grandchildren often. And 0:12:43.880 --> 0:12:45.880 it's interesting. We've got a question coming up at the 0:12:45.880 --> 0:12:49.600 breakfromt Sandral exactly about this, but on that one, is 0:12:49.640 --> 0:12:52.480 there any guidance you can give on that you mentioned 0:12:52.520 --> 0:12:58.880 about long agreements with lawyers for buying homes or perhaps 0:12:59.000 --> 0:13:01.720 assisting with the Dan Holmes I am actually, which is 0:13:01.720 --> 0:13:04.360 typically that someone pays ten percent of what the house 0:13:04.440 --> 0:13:06.319 is going to be. How about on the schools on 0:13:06.400 --> 0:13:07.079 the ideas on that. 0:13:07.040 --> 0:13:08.640 One, someone once said to me, if you can find 0:13:08.640 --> 0:13:11.400 an investment that's linked to the CPI of school, phees, 0:13:11.559 --> 0:13:12.040 go for it. 0:13:12.640 --> 0:13:15.000 CPI of school is an illegal zone. 0:13:15.000 --> 0:13:17.720 Because exactly that. So, yeah, it's a friend of mine 0:13:17.720 --> 0:13:19.080 and Sydney and he once said that to me, and 0:13:19.080 --> 0:13:21.560 I always laughed, and I've quoted that often what he said. 0:13:21.760 --> 0:13:23.040 It's more relevant every year. 0:13:23.440 --> 0:13:25.400 So there are bonds or education bonds and things like 0:13:25.440 --> 0:13:27.640 that which you can buy or you can just put 0:13:27.640 --> 0:13:32.240 something away, depending on again, to the extent that you 0:13:32.280 --> 0:13:35.600 can afford it. And that's what these are, the sum 0:13:35.679 --> 0:13:37.720 of things which I think you can consider. I'm not 0:13:37.720 --> 0:13:39.559 saying you should, but you can. 0:13:39.800 --> 0:13:41.560 Just one last thing on this before the break. We've 0:13:41.559 --> 0:13:44.080 had a lot of people on the show skeptical of 0:13:44.200 --> 0:13:47.880 education bonds. I am too, You are too, okay, So 0:13:49.040 --> 0:13:54.080 your point is perhaps to have a saving sphere correct 0:13:54.440 --> 0:13:57.240 that is focused on this issue, but it does not 0:13:57.360 --> 0:13:59.880 necessarily have to be an education bond. And the fint 0:14:00.000 --> 0:14:01.840 I always make on the show folks. Is they called 0:14:01.920 --> 0:14:04.320 education bonds but they are nothing to do with education 0:14:04.440 --> 0:14:07.880 per sale. They are marketed as such, and it's a scheme, 0:14:08.160 --> 0:14:11.319 but it wasn't designed for paying school fees. It has 0:14:11.360 --> 0:14:13.840 been adopted as such, but that was not its core. 0:14:14.320 --> 0:14:16.680 All right, really interesting. I've got some really good questions 0:14:16.760 --> 0:14:19.080 I want to get to and I've kept them for Will, 0:14:19.240 --> 0:14:20.880 who is a regular on the show and a lot 0:14:20.880 --> 0:14:24.240 of our listeners are keen obviously to get items in 0:14:24.240 --> 0:14:34.000 front of him. So back in a moment, Hello, and 0:14:34.160 --> 0:14:37.520 welcome back to The Australian's Money Puzzle podcast. James Kirby 0:14:37.560 --> 0:14:40.120 talking to Will Hamilton as I'm going to do this 0:14:40.280 --> 0:14:43.280 question second into two parts, folks, because there's two different 0:14:43.960 --> 0:14:46.880 themes that i want to pick up on. But just quickly, 0:14:47.200 --> 0:14:49.920 I had a question which came in later actually, and 0:14:49.960 --> 0:14:53.360 it's from Lily who says I can't keep up with 0:14:53.400 --> 0:14:56.800 the number of grants for first home buyers. But I 0:14:56.920 --> 0:15:02.080 see now that the latest grant for shared equity has 0:15:02.160 --> 0:15:05.880 come out, but of course it has been surpassed by 0:15:05.920 --> 0:15:10.640 the first home buyers scheme. At the same time, we've 0:15:10.680 --> 0:15:15.000 seen lending limits imposed by the banks in the same 0:15:15.080 --> 0:15:18.200 area what gives. Yeah, thank you Lily. 0:15:18.520 --> 0:15:19.080 Yeah. 0:15:19.160 --> 0:15:22.120 So they're putting lending limits exactly on the same people 0:15:22.680 --> 0:15:25.200 who are trying to buy a house, because the ones 0:15:25.200 --> 0:15:27.480 who need to go over five or six times income 0:15:28.080 --> 0:15:31.720 will substantially be made up of first home buyers. And 0:15:31.760 --> 0:15:35.080 then they're rolling out grants a universal first home deposit scheme, 0:15:35.120 --> 0:15:37.560 which is going so hot, folks, it's going so hot 0:15:37.600 --> 0:15:40.360 that the banks are putting over they're doing overtime in 0:15:40.400 --> 0:15:42.640 the departments of the banks trying to fill this out. 0:15:43.520 --> 0:15:46.880 And we're getting a super hot segment of the market, 0:15:46.880 --> 0:15:49.720 which ironically is the exact same market they're throwing the 0:15:49.720 --> 0:15:50.200 grand set. 0:15:51.080 --> 0:15:53.320 What do you think will It's like, look got enough. 0:15:53.360 --> 0:15:55.080 It still exists, but I haven't looked at it. But 0:15:55.400 --> 0:15:57.480 a couple of years ago, the Victorian pite government gave 0:15:57.760 --> 0:16:00.000 stamp duty real life up to six hundred thousand dollars, 0:16:00.160 --> 0:16:02.120 and the minuteure went over six hundred thousand dollars, you 0:16:02.200 --> 0:16:04.480 had to pay the full stamp duty. So thing you 0:16:04.520 --> 0:16:09.200 give when you don't give, And yeah, this is I 0:16:09.200 --> 0:16:12.800 do believe the federal government's latest equity share scheme that's 0:16:13.200 --> 0:16:16.880 absolutely pushed housing prices up. It can't not have the 0:16:16.880 --> 0:16:19.360 way they've structured it up to a million dollars and 0:16:19.480 --> 0:16:22.480 you shared equity. That's with a five percent deposit down. 0:16:22.520 --> 0:16:24.960 That's simple as it was only going to do that. 0:16:25.760 --> 0:16:27.400 But the other thing I worry about too is that 0:16:27.480 --> 0:16:30.320 like it overheats that particular secret action. Not only that, 0:16:30.400 --> 0:16:33.880 but like the whole market gets skewed to that segment, 0:16:33.920 --> 0:16:35.840 to this economic theory of push to price. 0:16:35.920 --> 0:16:39.080 You know that they actually it's misthought. It was a 0:16:39.440 --> 0:16:41.600 thought bubble during the election that they've had to rolla 0:16:41.840 --> 0:16:42.720 leading into the election. 0:16:43.120 --> 0:16:47.520 Hm hm, okay, well, Lily, I hope that's useful to you. 0:16:47.560 --> 0:16:50.400 All those grants are there. And by the way, there's 0:16:50.440 --> 0:16:54.320 also the first Home super Service scheme, which I think 0:16:54.320 --> 0:16:57.800 this government are very keen to to not advertise because 0:16:57.840 --> 0:17:00.280 they don't like it. I don't think they like it all. 0:17:00.400 --> 0:17:03.320 Right now, listen, folks, we got to hear. I want 0:17:03.360 --> 0:17:06.120 you to listen to this very carefully, right because it's 0:17:06.119 --> 0:17:10.119 come up again and again from listeners, and it's about 0:17:11.119 --> 0:17:13.840 super annuation caps and how much you can have and 0:17:14.119 --> 0:17:16.640 at what point various taxes kick in, like the new 0:17:16.680 --> 0:17:19.960 super at the new super tax at fifteen percent above 0:17:20.000 --> 0:17:23.440 three million. But here's David. This is what he says. 0:17:23.920 --> 0:17:27.920 Someone on the show mentioned that, based on current legislation, 0:17:28.400 --> 0:17:33.040 the amount in the pension account can increase tax free 0:17:33.119 --> 0:17:35.240 without limit. I want to know, is he right? If 0:17:35.240 --> 0:17:39.640 I retire at sixty and I transfer two million into 0:17:39.720 --> 0:17:43.720 my pension account, and assuming this balance grows yearly, the 0:17:43.720 --> 0:17:48.000 full amount in the pension account will always be tax free. 0:17:48.160 --> 0:17:51.359 The fifteen percent tax coming in at division two nine 0:17:51.440 --> 0:17:55.200 six does not apply to this the pension amount. Okay, 0:17:55.720 --> 0:17:59.679 just to reiterate, the day you retire, if you have 0:17:59.760 --> 0:18:03.920 up to two million, that once it's in the box, basically, 0:18:03.920 --> 0:18:08.880 once it's in the can inside the supersystem the TBC. 0:18:09.040 --> 0:18:12.240 To be precise, it won't be taxed even if it 0:18:12.280 --> 0:18:14.880 grows to three million, four million, yep? Right or wrong? 0:18:15.240 --> 0:18:19.560 Right? In fact, Thomas asks a question where he answers. 0:18:20.119 --> 0:18:23.760 He answers it in his question itself and that that's interesting, 0:18:23.760 --> 0:18:26.240 And he says, Jim Chalmers, I only talked about division 0:18:26.240 --> 0:18:29.080 two nine six, which is fifteen percent on tesB more 0:18:29.080 --> 0:18:31.760 than three million. The situation of between two and three 0:18:31.800 --> 0:18:34.920 million appears been overinterpreted. So if I have two point 0:18:34.920 --> 0:18:37.680 four million in super phase I transfer two million into 0:18:37.720 --> 0:18:40.440 account based pension at the age of sixty five, I 0:18:40.480 --> 0:18:43.920 will have to leave four hundred into the accumulation phase. Correct, 0:18:44.119 --> 0:18:46.480 that's if you convinced on that. But my two million 0:18:46.560 --> 0:18:50.000 retirement phase can grow to organically, he says two point 0:18:50.000 --> 0:18:53.760 four million, and the earnings is tax free, not fifteen percent. Correct. Correct. 0:18:55.040 --> 0:18:59.080 Yeah, so that's just a final word on that, folks. Okay, 0:18:59.200 --> 0:19:04.400 that's how it works. The fifteen percent tax, the new 0:19:04.400 --> 0:19:07.879 one is on amounts above three million. And so for instance, 0:19:07.880 --> 0:19:11.080 how that might occur is, for instance, if you had 0:19:13.000 --> 0:19:15.280 three million this, if you had four million the day 0:19:15.320 --> 0:19:20.320 you retire, well that only two of that would go 0:19:20.359 --> 0:19:23.239 into that can grow forever and never be taxes. That's right. 0:19:23.280 --> 0:19:25.440 Yeah, you got to an accumulation phase and. 0:19:25.359 --> 0:19:26.720 The other two well, you can do what you like 0:19:26.720 --> 0:19:28.200 with it. You're probably going to let it fall into 0:19:28.200 --> 0:19:32.160 accumulation because it's it becomes fifteen and that's hard to beat. Okay, 0:19:32.520 --> 0:19:34.600 very interesting. Of course, there are people who also have 0:19:34.680 --> 0:19:38.200 more than two million, and they haven't even retired. They're 0:19:38.240 --> 0:19:40.760 relevant two. So we try to cover all angles here. 0:19:41.200 --> 0:19:44.800 This is easier sometimes, folks, to pin down in in 0:19:44.880 --> 0:19:47.480 print than it is when we're talking. Because it's a print. 0:19:47.520 --> 0:19:51.000 J Obvis is more precise. All right. I have very 0:19:51.000 --> 0:19:54.360 interesting question from Sandra which is on the theme that 0:19:54.720 --> 0:19:57.280 we'll started with, so we'll come back to that one second. 0:20:08.960 --> 0:20:12.080 Hello and welcome back to The Australian's Money Puzzle podcast. 0:20:12.160 --> 0:20:16.920 James Kirby talking to Will Hamilton. Okay, Will, question from 0:20:17.000 --> 0:20:20.399 Sandro which does kind of correspond or echo some of 0:20:20.440 --> 0:20:22.520 the issues we talked about at the start of the 0:20:22.600 --> 0:20:26.200 show about leaving the extreme version of dying with zero. 0:20:26.280 --> 0:20:28.560 But it's not, of course dying with zero. It's about 0:20:30.280 --> 0:20:34.800 thinking about whether you should help people in your life 0:20:34.840 --> 0:20:38.200 earlier rather than later. Sandro, I want to invest for 0:20:38.240 --> 0:20:41.360 my grandchildren. My initial thoughts are to add approximately two 0:20:41.359 --> 0:20:45.440 thousand per child annually on their birthday into the ASX 0:20:45.480 --> 0:20:47.800 two hundred and etf. I suppose that is or something 0:20:47.840 --> 0:20:51.719 similar and this should compound to something significant in twenty 0:20:51.840 --> 0:20:55.760 years when they go to buy a house. I'm interested 0:20:55.800 --> 0:20:57.960 in some ideas and strategies on how to set this 0:20:58.119 --> 0:21:01.080 up the most cost effective and today who was named 0:21:01.080 --> 0:21:05.960 should be in most tax effective way, et cetera. Any 0:21:06.200 --> 0:21:10.720 information would be much appreciated. Okay, sandral not you say 0:21:10.720 --> 0:21:11.080 you will. 0:21:11.320 --> 0:21:13.320 Yes, So first of all, Sandra, go and talk to 0:21:13.359 --> 0:21:15.800 an accountant. I presume they might to ask you to 0:21:15.840 --> 0:21:19.320 set this up in your name, in the parents' name, 0:21:19.480 --> 0:21:23.880 as in trust for the children. That's the first thing. 0:21:23.960 --> 0:21:27.600 So just otherwise that there is tax at the full 0:21:27.840 --> 0:21:30.399 marginal rate for children, so you might just want to 0:21:30.400 --> 0:21:32.919