Speaker 1: Now on afternoons.
Speaker 2: All things finance with Blake were from Pretzel Wealth. Organize
Speaker 2: your free consultation at Pretzelwealth dot com dot au twenty.
Speaker 1: Two to two.
Speaker 2: Yes, money, money, money, indeed, let's talk about our money
Speaker 2: with Blake went of course from Pretzel Wealth. You can
Speaker 2: answer your questions on home loans, superannuation, investments, other general
Speaker 2: financial advices you might need a bit of a hand on.
Speaker 1: Already had a couple of emails and texts come.
Speaker 2: Through, so if you've got a question calls always do
Speaker 2: take priority one three one eight seven three. Take advantage
Speaker 2: of the free advice Blake. Good afternoon.
Speaker 1: Look at a Michael.
Speaker 2: Now we've just had the inflation and not inflation, we've
Speaker 2: had the GDP numbers come out.
Speaker 1: Really it's it's looking pretty weak. Yeah, lower than expected.
Speaker 3: So quarter on quarter growth was sitting at point two
Speaker 3: percent where the market was expecting point four. Year on
Speaker 3: year one point three percent was the outcome, whereas the
Speaker 3: market was expecting one and a half percent, so lower
Speaker 3: than expected. The market's performed quite well, the stock market
Speaker 3: because what that means in rate just rate cuts, which
Speaker 3: is great for businesses and economic activity. So well, that
Speaker 3: number will be welcomed by those with a home loan,
Speaker 3: less welcome with those with cash in the bank.
Speaker 2: Okay, so we're barely growing. If it weren't for population increases,
Speaker 2: we'd be going backwards. We are going backwards per person.
Speaker 2: But you also made the point to be during the
Speaker 2: ad break that there was some number in all of
Speaker 2: this sowing that government spending is a percentage of the
Speaker 2: economies the lower since twenty seventeen.
Speaker 1: Is that right, That's right.
Speaker 3: It's government spending pulled back, which obviously has an impact
Speaker 3: on economic growth. So their spending level has reduced this
Speaker 3: last quarter. So it's interesting to see and so that
Speaker 3: does play into economic activity.
Speaker 2: Well, that fact seems to uncountered all of the rhetoric,
Speaker 2: the numbers I've seen for well for at least the
Speaker 2: last six months.
Speaker 3: Well, yeah, certainly, and that's what sort of the shocking
Speaker 3: sort of message out of it all that what's happened
Speaker 3: to spaning. So I haven't dived into that and see
Speaker 3: where what's benefit to there, but just interesting to see
Speaker 3: that government spending is down. That can have an impact
Speaker 3: on GDP figures if they're not spending or maybe people
Speaker 3: are out of work. Okay, what is that, what's the
Speaker 3: flow on effect to all that? And so Yeah, interesting
Speaker 3: to see that the market was expecting higher figures come
Speaker 3: in lower, expect more rate cuts to come.
Speaker 2: Okay, fine, Now if people have the question of course
Speaker 2: one three, one eight seven three, we are approaching the
Speaker 2: beginning of the new financial year, or if you want
Speaker 2: to look at the other way, we're coming to the
Speaker 2: end of this one mirror accounts talk to me about these.
Speaker 3: Yes, So often often we have clients who first priority,
Speaker 3: of course, is to build Super. Get money into SUPER.
Speaker 3: It's great, you get to retirement, it's tax free. So
Speaker 3: that's sort of the first priority that we want to do.
Speaker 3: But often we're seeing people who have cash they want
Speaker 3: to allocate it into Super, but for whatever reason, they
Speaker 3: can't get it in. Maybe they're over seventy five years
Speaker 3: of age. You cut it out from adding moneys into Super.
Speaker 3: Maybe you've already maximized your contributions into SUPER and there's
Speaker 3: funds flying around. You could have received an inheritance, you
Speaker 3: may have sold a property. There's cash that needs to
Speaker 3: be allocated somewhere. Now, the last couple of years has
Speaker 3: been great. We've had interest rates at higher levels and
Speaker 3: so your cash is generating enough of an income for
Speaker 3: you to say, well, I'll keep it out of the
Speaker 3: stock market, or I won't invest the funds, I'll just
Speaker 3: get my cash. Now that's changing. There's now concern that
Speaker 3: interest rates are coming down, cash is not producing as much,
Speaker 3: and so we have to do something else with the money.
Speaker 3: Hence a mirror account. Now, a mirror account is simply
Speaker 3: personal investments that mirror your superannuation. So you could have
Speaker 3: your SUPER fund invested in ETFs, BHP shares, common Wealth Bank,
Speaker 3: whatever you want. Inside of Super. We can do the
Speaker 3: same thing outside of Super. Different tax arrangement. There was
Speaker 3: different tax arrangement, yeah, personally taxed. Now the mirror account
Speaker 3: can provide a vehicle for you to invest the money
Speaker 3: is get similar returns to what you're getting in Super,
Speaker 3: and then once Super opens up again, maybe you allocate
Speaker 3: those funds back in. So it's a way to try
Speaker 3: to generate a better return than just simply holding moneys
Speaker 3: in the bank or in cash. And what we want
Speaker 3: to do is make sure that you know, if we
Speaker 3: are impacted by further rate cards. You know, we're currently
Speaker 3: getting about four percent on cash at the moment. If
Speaker 3: that goes down to three or two and a half.
Speaker 3: Unlikely in the short term, but may end up being
Speaker 3: the case. Well, at least we're getting that money working
Speaker 3: and we're getting a higher rate of return for our funds.
Speaker 3: So mirror accounts are great. I'd encourage everyone. If you've
Speaker 3: got cash floating around and you want to allocate that,
Speaker 3: speak to your financial advisor. Remember you are taking on
Speaker 3: risk when you are investing, and so just be mindful
Speaker 3: of what you're getting yourself into before taking that plunge.
Speaker 2: Okay, let's get to questions. That's what this is all about.
Speaker 2: Of course, it's about you. And if you've got a
Speaker 2: question one three one eight seven three a grame road.
Speaker 2: Earlier on the email, he says, I'm fifty two, may
Speaker 2: have in excess to three million by retirement. This obviously
Speaker 2: super if this new tax on super fund's over three
Speaker 2: million comes in. If I have, say three point three million,
Speaker 2: is a balance? Is the text calculated on the full
Speaker 2: return on three point three million or the return on
Speaker 2: the three hundred thousand above the threshold.
Speaker 3: Yeah, so it's it's a percentage. So there's a formula
Speaker 3: that gets applied and they work out the percentage of
Speaker 3: growth in excess of three million based on your account balance,
Speaker 3: so good example, in Graham's case, he starts with three
Speaker 3: point three, has a good year, ends up with three
Speaker 3: and a half million, so two hundred thousand gain. Irrespective
Speaker 3: of selling the asset or not, there is tax on
Speaker 3: that gain. On a two hundred thousand dollars gain, in
Speaker 3: Graham's case, there would be tax of about four three
Speaker 3: hundred dollars, which if you look at that as a
Speaker 3: percentage of the gain, it's a two hundred thousand works
Speaker 3: out to be about two point one percent, So it's
Speaker 3: not it's not a straight fifteen percent. It's a proportional
Speaker 3: tax that applies, and so it's worthwhile keeping that in
Speaker 3: mind because you know, there's a lot of people out
Speaker 3: there making irrational decisions right now, selling properties, looking to
Speaker 3: liquidate share portfolios, trying to get away from having as
Speaker 3: much money in SUPO, and you know, my advice at
Speaker 3: the moment is just to keep a level head, work
Speaker 3: out what the implication looks like for yourself, and just
Speaker 3: remember that it may not be as bad as I
Speaker 3: originally thought. It's still a new tax, so it's not welcomed,
Speaker 3: but it's certainly not as bad as what people may
Speaker 3: believe it is.
Speaker 2: I mean, as we discussed, and we've discussed this now
Speaker 2: even before the election, you were raising this whole issue
Speaker 2: with me. We were one of the first in radio
Speaker 2: to be looking at this. The advice I think from
Speaker 2: you was Okay, the principle here stinks, but in practice
Speaker 2: many people may not be better off trying to dodge it. Yes,
Speaker 2: because the tax arrangements outside correct me if I'm wrong,
Speaker 2: but ure saying the tax arrangement outside of super could
Speaker 2: be more punitive than if you just cop it whilst
Speaker 2: remaining within Super.
Speaker 3: Exactly a right. So you take that money out of SURPA,
Speaker 3: you're investing in what we just spoke about, a mirror
Speaker 3: account as an example, You're then subject to a personal
Speaker 3: tax being applied. So you know, maybe it's not the
Speaker 3: best move to be shifting money's outside of Super. Maybe
Speaker 3: it's okay to accept the tax that's going to be
Speaker 3: on there. Again, it's not welcomed, but maybe it's better
Speaker 3: than investing personally.
Speaker 1: Okay, Dan's got a question.
Speaker 4: Hi, Dan, just on a mirrored accounts you it's walking
Speaker 4: to about is it possible to have a strategy like
Speaker 4: that with a linked offset, So you're putting all your
Speaker 4: money in, for example, to share the investments with etms,
Speaker 4: but you're also that's also against you, that you will
Speaker 4: between you say, not interested?
Speaker 1: Good, good question, Daniel.
Speaker 3: The simple answer that is, it's not possible to have
Speaker 3: shares or an investment account that's attached to the home
Speaker 3: loan because the bank wants to use that cash. So
Speaker 3: they want you to come in get your home loan
Speaker 3: with them, and then have a cash account that's linked
Speaker 3: to the home loan as an offset account. And so
Speaker 3: what the bank can then do is take that cash
Speaker 3: and go and lend it out again. So they don't
Speaker 3: want you investing in shares to offset debts. So unfortunate.
Speaker 3: That would be a great a great vehicle for the
Speaker 3: banks to have if they if they could, but they're
Speaker 3: wanting to use that money to make more money, to
Speaker 3: make them more profits, I suppose. So now, unfortunately, not
Speaker 3: Daniel can't have an investment count.
Speaker 2: What a pity that same logic doesn't apply to government
Speaker 2: super and text, so that we've actually got to have
Speaker 2: the cash before they can taxt it.
Speaker 3: Well, exactly, you can't just print money, Diane, good afternoon, Good.
Speaker 5: After the name Blake. My question, I'm sixty four, hobby
Speaker 5: is eighty two, so we may have the season last
Speaker 5: year for me to retire. And I have two allocated pensions.
Speaker 5: One is a thousand a month and the other one
Speaker 5: is five hundred or fortnight. Now, we did a twenty
Speaker 5: thousand redraw, Chris, the can't blew up in this current
Speaker 5: financial year, but we're thinking we're going to need to
Speaker 5: do another redraw? Are there tax implications because I'm only
Speaker 5: sixty four? Are their tax implications on our recourse?
Speaker 3: When you say redraw, Diane, are you referring to pulling
Speaker 3: funds out of that allocated pension and withdrawing No, they.
Speaker 5: Came out as the accumulation super.
Speaker 3: Okay, yes, so if you withdraw money out of SUPER
Speaker 3: over the age of sixty, there's no tax implications. However,
Speaker 3: if you've got an accumulation account where the money isn't
Speaker 3: providing you with a pension, it's just simply there invested.
Speaker 3: There are potential tax consequences for selling investments in accumulation phase,
Speaker 3: and so there could be capital gains tax to consider
Speaker 3: if you are liquidating investments from the accumulation account. If
Speaker 3: you were to take it out of an allocated pension
Speaker 3: or an account based pension, there's no tax in that environment.
Speaker 3: So consider potentially taking it out from the account based
Speaker 3: pension as a priority to the accumulation account first and foremost, though, Diane,
Speaker 3: I'd encourage you just to get some advice around making
Speaker 3: the withdrawal, just to understand whether or not there are
Speaker 3: tax consequences on the accumulation side if you are wanting
Speaker 3: to withdrawal from that account. But certainly over the age
Speaker 3: of sixty, if you pull money out of supun there's
Speaker 3: no tax on that withdrawal. It's just behind the scenes,
Speaker 3: maybe there's some tax involved.
Speaker 2: All right, good question, Diane, Thank you for that. One
Speaker 2: three one eight seven three. We'll get to some more
Speaker 2: questions in just a moment. I was speaking earlier, as
Speaker 2: you would have heard to a dancing experts, thinking to
Speaker 2: Georgia Freeman, that is, she's going to be part of
Speaker 2: Burn the Floor, and you'll be there on it because
Speaker 2: you'll be dancing. Man, you're a student of history. Perhaps
Speaker 2: you can help me out here. This just came through
Speaker 2: from Darryl, he said, Michael. In the eighteenth century, not
Speaker 2: everyone was happy with dancing. In fact, the Methodist Church
Speaker 2: banned six in case it led to dancing. Oh jeez,
Speaker 2: I suspect it's meant to be the other way around.
Speaker 2: They banned dancing in case it led to six.
Speaker 3: Maybe they didn't like dancing as.
Speaker 1: Because I'm just thinking. I mean, I don't know, but
Speaker 1: I'm just thinking.
Speaker 2: Most religious institutions like to have repeat customers, you know,
Speaker 2: and the next generation come through to maintain the buildings.
Speaker 2: And what if you ban sex unless you've found Methodists
Speaker 2: among the Catholics, for example, you'd run out of parishioners
Speaker 2: pretty quick, wouldn't you.
Speaker 1: But it's a number of questions for you.
Speaker 3: Right, Well, I don't know how this is a numbers question,
Speaker 3: but okay, well, well we've.
Speaker 2: Got one plus one equals two. They get together and
Speaker 2: make three. But if they can't add the course, you.
Speaker 1: Track the population growth and more dancers adds a sign
Speaker 1: curve to the Yes, that's that's right. Yeah, they carry
Speaker 1: the four. Yeah, all right. John on the text says
Speaker 1: perhaps there was Methodist in the madness.
Speaker 2: Nice one, John, one of your best. Jerry says, no,
Speaker 2: I won't read that one.
Speaker 3: Thank you.
Speaker 1: Jerry.
Speaker 2: By the way, Blake Waders hear from Pretzel. We're talking finance,
Speaker 2: among other things. You can book that complimentary consultation with
Speaker 2: Blake today.
Speaker 1: You should do it.
Speaker 2: Visit pretzelwealth dot com dot au. Back to calls Peter
Speaker 2: good afternoon.
Speaker 6: Yeah, good a, Michael good A, Blake. Just a quick
Speaker 6: question for you, Blake, just following up on what you
Speaker 6: were saying about the mirrored accounts. Yes, you would then
Speaker 6: obviously you would pay personal income tax on the on
Speaker 6: the income derived from those. But wouldn't you, on the
Speaker 6: other hand, have franking credits as an offset.
Speaker 3: Exactly right, Yeah, franking credits would come in to that equation.
Speaker 3: If we're investing in Australian shares that provide a franking
Speaker 3: credit to help offset some of that, so you could
Speaker 3: expect to get a decent amount of income from that
Speaker 3: that is quite tax efficient. It's just sort of a
Speaker 3: general point of call because if we compare investing personally
Speaker 3: with investing through super, especially in retirement phase, it is
Speaker 3: quite tax effective investing through superinnuation. So we want to
Speaker 3: try to focus there first.
Speaker 1: But there are.
Speaker 3: Cases where we can't get can't get the money's into
Speaker 3: super and so you know, as a good example, over
Speaker 3: seventy five years of age, or you've used up or
Speaker 3: your contribution capacity, and so you know, a mirror account
Speaker 3: could be a good solution to still get some good
Speaker 3: returns on the investment, subject to what the markets are
Speaker 3: doing and subjects are taking on a little bit of risk.
Speaker 3: But you know, these accounts or account types are quite
Speaker 3: effective at making sure that you know you're trying to
Speaker 3: build wealth. I suppose I have the long term and
Speaker 3: it also comes into playoffs. Suppose down the track, if
Speaker 3: you're thinking about passing on wealth to kids, if you've
Speaker 3: got money sitting in the bank and it's going you
Speaker 3: know it's getting eroded by the effects of inflation, investing
Speaker 3: the funds can be a good solution to try to
Speaker 3: preserve the wealth that gets passed onto the kids. But
Speaker 3: great observation the Peter. There there could be some franking
Speaker 3: credits for investing in austrange shares.
Speaker 2: Okay, good question, Well done, Peter, Thank you for that.
Speaker 2: Now back to this situation with the super text. I
Speaker 2: was saying to you earlier, I think the government of
Speaker 2: trying to weage the coalition here, and I've got a
Speaker 2: bit of a fear that the coalition are going to
Speaker 2: tumble for it. I'll say some more about this after too.
Speaker 2: But the Prime ministers, according to many reports today, open
Speaker 2: the door to rewriting the proposed superannuation tax hikes. Now
Speaker 2: I can only imagine that would involve a slightly different
Speaker 2: threshold or something like that.
Speaker 3: Perhaps perhaps indexation, perhaps, yeah, hopefully a higher threshold. You know,
Speaker 3: we yet to see.
Speaker 2: I suppose the guess the question for you, Blake, is
Speaker 2: in your opinion, is there a way to actually make
Speaker 2: this a worthwhile reform? Is there anything reform aligned with
Speaker 2: this at all?
Speaker 3: I suppose increasing the threshold would be a start getting
Speaker 3: rid of it is also probably a good idea. It
Speaker 3: goes against really the nature of our taxation system here.
Speaker 3: You know, we don't tax unrealized gains, and so that
Speaker 3: that's really what's behind it all. This is why so
Speaker 3: many people are upset. People who don't have three million
Speaker 3: dollars in super are upset as well, mind je, because
Speaker 3: it goes against the nature or what the intent has
Speaker 3: always been. Now, if they're opening the doors up to
Speaker 3: tax unrealife gains, and I get it, they're taxing people
Speaker 3: with large super innovation balance and not all of us
Speaker 3: are impacted by this. But you know, if they're going
Speaker 3: through that process, well then what's to say that they
Speaker 3: don't open the doors up further elsewhere unlikely not being
Speaker 3: talked about at the moment and not being considered, I'm sure,
Speaker 3: but you know it does open the doors potentially to say, well,
Speaker 3: we've done it on super Maybe we look at family trusts,
Speaker 3: maybe we look at businesses.
Speaker 2: Whatever that's the concern. All right, we'll speak again next week.
Speaker 2: Thank you, Blake.
Speaker 1: Seeing that Blake went there from Pretzel, Will