Speaker 1: Now on afternoons, all things finance with Blake.
Speaker 2: Work from Pretzel Wealth.
Speaker 1: Organize your free consultation at Pretzelwealth dot com dot au. Okay,
Speaker 1: bit of abba means it's time to dive into finance
Speaker 1: with the one and he, mister Blake, went from Pretzel Wealth.
Speaker 1: He's here in the studio with us. Hello, Blake A Michael,
Speaker 1: all right, we're getting our money's working and thad aba
Speaker 1: down if you want not Now, if you've got a
Speaker 1: question for Blake one three one eight seven three, anything
Speaker 1: about your home loan or super or investments or you know,
Speaker 1: other general financial advices you might need, take advantage of
Speaker 1: the free advice one three one eight seven three. There's
Speaker 1: always that complimentary consultation we tell people about as well
Speaker 1: asn't there Blake.
Speaker 3: Yes, certainly. So it's a forty five minute consultation. You
Speaker 3: come into the office, bring your your statements, whatever questions
Speaker 3: that you might have, any sort of dark secrets that
Speaker 3: you want to reveal, all that sort of good stuff,
Speaker 3: and we'll sit down, we'll unpack it, we'll go through it,
Speaker 3: and you know, hopefully we walk away a bit more informed.
Speaker 1: Indeed, we had the inflation data today CPI or what
Speaker 1: do they call it? Two point four percent? The headline
Speaker 1: figure that was up just a tick, I think anything
Speaker 1: to read into.
Speaker 3: That, nothing to write home about. Really trimmed. Main CPI
Speaker 3: data up a little bit as well, two point eight percent.
Speaker 3: So it's that's the one that the RBA will look
Speaker 3: at and say, well, is it getting out of control?
Speaker 3: That is not a figure which the RBA will be
Speaker 3: concerned about. They'd say, Okay, it's still within our band
Speaker 3: of two to three percent, so they'd be quite comfortable
Speaker 3: in that range. So it's not going to result in
Speaker 3: drastic rate cuts, but it's sort of where they want
Speaker 3: to be.
Speaker 1: One of the questions is what do they include in
Speaker 1: the basket of items as it were that they used
Speaker 1: to formulate these figures, Because I've just got a note
Speaker 1: from someone who says, well, look, CPI is two point
Speaker 1: four percent, but my insurance went up thirty seven percent,
Speaker 1: but Telster internet when I'm twenty percent makes no sense.
Speaker 2: Electricity going up nine percent in July, so it's.
Speaker 1: Higher if it went for the government rebates, right, So
Speaker 1: how do they land at this figure?
Speaker 3: Well, exactly, so they look at what the average person
Speaker 3: spends and effectively try to create this basket. Now, they
Speaker 3: strip out in some cases they strip out volatile items.
Speaker 3: So if there's a flood somewhere and that affects banana crops,
Speaker 3: well we'll take out bananas this reading, because they're obviously
Speaker 3: going to be impacted. So there's a basket of goods.
Speaker 3: The data comes out or comes across.
Speaker 2: To the ABS.
Speaker 3: They work out, well, what does this actually cost and
Speaker 3: what's the cost increase that's occurring, and that's our print.
Speaker 3: So the CPI is sort of a best guess at
Speaker 3: what prices are doing.
Speaker 2: But you're quite right.
Speaker 3: There are some items like insurances, as an example, which
Speaker 3: are going up far quicker than CPI, But because they
Speaker 3: don't make up a large component of the CPI, you
Speaker 3: don't see those big increases to the overall number.
Speaker 1: Okay, so they're looking largely petrol prices, energy prices, food
Speaker 1: and grocery prices, those sort of every day weekly staples
Speaker 1: as it were. Almost okay, that helps explain it. Well,
Speaker 1: do the other things you still got to have the
Speaker 1: money for, don't you? Well, exactly right, Yeah, they're not
Speaker 1: going anywhere. You know, you're not going to stop insuring
Speaker 1: your home. Well, some are well well exactly, and some
Speaker 1: of the flood affected areas that this insurance policies are
Speaker 1: going through the roof if they offer them, if they
Speaker 1: offer them at all, exactly, and some people are choosing
Speaker 1: not to, not to take it up, and so you know,
Speaker 1: then you're running the risk.
Speaker 3: Okay, if there's another flood, we're not insured. What's the
Speaker 3: impact on our financial positions. It's sad to see that
Speaker 3: that's occurring, but that's all part of how the insurers
Speaker 3: sort of reduce their risk or avoid the risk altogether,
Speaker 3: because they're in it to make money. They're not there
Speaker 3: for the love of it, unfortunately.
Speaker 1: Okay, this from Bert question on the text line before
Speaker 1: we get to the calls. He says, I'm seventy seven.
Speaker 1: Every year I have to withdraw a percentage of my
Speaker 1: fund this year at six percent. So my question is
Speaker 1: what affect is this horrible tax? I guess this is
Speaker 1: the super text we've been talking about unrealized capital games, etc.
Speaker 1: Going to have on my ow fund.
Speaker 3: Well, suppose if Bert's super funds over three million dollars,
Speaker 3: then he'll get caught up in this division two nine
Speaker 3: six tax. If it's less, then then no impact at all.
Speaker 3: But say your superbalance was above three million dollars and
Speaker 3: it was growing with investment returns and the like. What
Speaker 3: happens is as part of the calculation, when they work out,
Speaker 3: well what's the change in balance? To work out the tax,
Speaker 3: they will add back with drawals from the super fund
Speaker 3: or the pension account. But then they'll subtract contributions. So
Speaker 3: if there are with drawers a six percent withdrawal from
Speaker 3: super that gets added back on and it's effectively you
Speaker 3: know you've earned that money. And the logic behind that is, well, okay,
Speaker 3: we started with a smaller amount, we ended up with
Speaker 3: a lower amount, but we have to add back with
Speaker 3: drawals to sort of see, well what did you actually.
Speaker 2: Earn for that period. So it's a good question.
Speaker 3: But Bert, if your balance is below three million dollars,
Speaker 3: then you're going to be okay.
Speaker 1: Okay, Bert, there you go. Pasquali's called through with a question,
Speaker 1: Pasquale far away.
Speaker 4: Yes right, how are you good? I just I just
Speaker 4: wanted I just wanted to say, is I'm single, own
Speaker 4: my own home. And the three quick questions is how
Speaker 4: much is the maximum I can have in savings? And
Speaker 4: what is the maximum I can have in my super
Speaker 4: And is there a capital games text? I heard on
Speaker 4: your family on your your family home?
Speaker 2: I heard, Okay, so maximum savings.
Speaker 3: I would imagine that you're referring to the age pension
Speaker 3: with that respect, because there's no cap on I suppose
Speaker 3: how much you can have in the bank.
Speaker 2: You can have whatever you want.
Speaker 3: Superinnuation there are caps as well, so you know, roughly speaking,
Speaker 3: there is a two million dollar threshold. Once you get
Speaker 3: to two million dollars, you can't really add much more
Speaker 3: into super apart from concessional contributions. But just to come
Speaker 3: back to that first point about savings and superinnuation, if
Speaker 3: it's in respect to the age pension and you're a
Speaker 3: single homeowner, then to get the full age pension, you
Speaker 3: need to have assets less than about three hundred and
Speaker 3: fourteen thousand dollars. If you want to get some age pension,
Speaker 3: well that cuts off at six hundred and ninety seven
Speaker 3: thousand dollars. So that's for the age pension. Now the
Speaker 3: third question around is there going to be a capital
Speaker 3: gains tax on your family home. There's no such thing
Speaker 3: at this stage. At this stage, At this stage, I'll
Speaker 3: use that at this stage, who knows. So what can
Speaker 3: occur though, and what could trigger a capital gains is
Speaker 3: if you've ever had the family home as an investment
Speaker 3: property for some period of time. So speak to your
Speaker 3: accountant about the family home. Have you always lived in it,
Speaker 3: has it been rented out for a period of time.
Speaker 3: Perhaps there is some capital gains there, but only if
Speaker 3: it's been an investment property and not your main residence.
Speaker 1: All right, pasqually, good question. Thank you single and owns
Speaker 1: his own home. If it it's down of Double Bay,
Speaker 1: you won't be single for too long. Ago picks a
Speaker 1: few boxes. It's sixteen minutes to two. I shouldn't say
Speaker 1: that one, three, one, eight seven three. Interesting nat here
Speaker 1: from Graham, He says, could you ask Blake, will the
Speaker 1: rise in bond rates in the US? Heaven to fifth?
Speaker 3: Here it can on our superannuation funds. So superannuation funds
Speaker 3: invest in bonds or fixed interest assets. So how it
Speaker 3: impacts us is that if we're an investment investor and
Speaker 3: we've bought government bonds from the US or treasuries and
Speaker 3: their interest rates are rising, the capital value of those
Speaker 3: bonds declines. So you may see that there is a
Speaker 3: capital decrease to that asset, so it can have an
Speaker 3: impact here. Interest rates moving up over in the US
Speaker 3: does add or it can reduce the Australian dollar. Although
Speaker 3: if there's weakness in the United States then money will
Speaker 3: flow out of the United States into other currencies and
Speaker 3: therefore those currencies will appreciate. So yeah, it does have
Speaker 3: some impact. We're not sort of seeing it as being
Speaker 3: a doom and gloom scenario there. It's just something to
Speaker 3: be mindful of. You're not going to have huge exposure
Speaker 3: to US bonds in your portfolio. It's usually quite diversified
Speaker 3: that side of the equation. But interest rates rising in
Speaker 3: the US will have some impact on your portfolio. Expected
Speaker 3: to rise, well, what's happening at the moment with their downgrade,
Speaker 3: the recent downgrade that's happened over there, it means that
Speaker 3: investors are expecting more from the US or higher interest
Speaker 3: to take a chance or to invest in and buy
Speaker 3: those bonds cover the risk, to cover the risk exactly,
Speaker 3: so they're seen as higher risk. Now you know, there's
Speaker 3: naturally some revenue coming through from the tariffs in the
Speaker 3: US and that may help with the deficits that they're seeing.
Speaker 3: They're still expected to be in deficit by about two
Speaker 3: trillion dollars. So that's you know the fact that last
Speaker 3: month they got I think sixteen billion dollars US. You know,
Speaker 3: that's just a drop in the ocean as to what
Speaker 3: they're spending. So but it's it's sort of they're trying
Speaker 3: to get in get their act together the best way
Speaker 3: that they can. And so if they can prove to
Speaker 3: the markets that you know, their budget is coming back
Speaker 3: in line and everything's looking a okay, then maybe they
Speaker 3: get that triple A rating again.
Speaker 2: But it's up to the up to what they do.
Speaker 1: Wouldn't candle that anytime soon? Yes, Now back to this
Speaker 1: division two nine to six tech. A lot of people,
Speaker 1: even if they're not directly going to be impacted or
Speaker 1: worried about this.
Speaker 5: Now.
Speaker 1: Brendan's just sent me a note that many are asking,
Speaker 1: and that is Okay, Well, if your investment loses money,
Speaker 1: will the government pay you?
Speaker 2: Oh?
Speaker 3: Certainly not No, So what's what's happening there? Is so
Speaker 3: say one year your part you the tax, you're payable,
Speaker 3: and then the next year you lose money. Now what
Speaker 3: will happen is the hir Reill cord a higher benchmark
Speaker 3: or a watermark for what your balance has reached in
Speaker 3: one financial year, and you won't pay that tax or
Speaker 3: that tax calculation won't take effect until your balance exceeds
Speaker 3: that previous watermark or that threshold. So they're not going
Speaker 3: to pay you back. They're just saying, look, if you've
Speaker 3: lost money and your balance is down, if you get
Speaker 3: back up to these levels or the previous levels, then
Speaker 3: we'll start introducing the tax again. So you might have
Speaker 3: a period of time where the balance has come down,
Speaker 3: you've lost some money perhaps, and so through that period
Speaker 3: where you might be making money on Suva, you haven't
Speaker 3: hit that watermark just yet, then you're not going to
Speaker 3: pay the tax.
Speaker 1: Just quickly. On the capital gains tax and the family Homer,
Speaker 1: Jeff says, there is capital gains tax if your home
Speaker 1: is greater than five acres.
Speaker 3: Oh, certainly yes in that situations the spot on.
Speaker 1: Okay, well done, Jeff, Thank you for the ever popular
Speaker 1: Blake oint from Pretzel Oil seven three. Now, I just
Speaker 1: want to make the point before we go to calls
Speaker 1: and tex You've always been very popular, but ever since
Speaker 1: this proposal to bring in the division to nine six taxs,
Speaker 1: you've been extremely popular, and I'd imagine this is true
Speaker 1: across the financial advice community that people are now alert
Speaker 1: to this.
Speaker 3: Right Yeah, speaking with colleagues, you know, we're all getting
Speaker 3: asked the same question. You know, what does this mean
Speaker 3: for me? And you know what should we do to
Speaker 3: get ahead of it? And so the natural reaction from
Speaker 3: people is to jump and sell properties or sell assets
Speaker 3: and try to get money out of super that's their
Speaker 3: natural reaction a moment, which rightly so. But you can
Speaker 3: do this after it's come into effects. So if your
Speaker 3: plan is to reduce your balance below three million dollars,
Speaker 3: you have until the end of the financial year in
Speaker 3: which it comes into place. I say it comes into
Speaker 3: a play from one July this year and on the
Speaker 3: by thirtieth or June twenty twenty six, if you've gotten
Speaker 3: your balance down below three million dollars, you're okay. So
Speaker 3: there's plenty of time for people to work out what
Speaker 3: does that actually mean for them. We don't have to
Speaker 3: jump and react and have a bit of a flurry
Speaker 3: to try to exit. It's okay, get some advice first.
Speaker 3: But Jack colleagues are saying that they're being inundated with
Speaker 3: questions around what do we actually do here, because we
Speaker 3: don't really want to pay the tax, and you know,
Speaker 3: you can understand why, and so they're trying to come
Speaker 3: up with strategies to make sure the money is still working.
Speaker 1: I can't understand why they spend it so wisely charitable
Speaker 1: of us.
Speaker 2: It's a very charitable cab.
Speaker 3: So it's just one of these things that people don't
Speaker 3: like the idea of. And so how do we navigate
Speaker 3: around this? But we've got a bear in mind that
Speaker 3: you know, we're taking it out of a very tax
Speaker 3: effective environment. Perhaps investing that money personally isn't the greatest move.
Speaker 3: So we've just got to weigh up what the consequences
Speaker 3: look like. And everyone's portfolio is different, and so there's
Speaker 3: different types of portfolios that have been constructed, and so
Speaker 3: maybe it's better to just cop the tax because you're
Speaker 3: actually going to pay less in the long run.
Speaker 1: It's the principle that's upset people more than the practice.
Speaker 1: I think, Okay, let's go to more calls. How Steven's
Speaker 1: got one for you? Hi, Stephen Good you've got Blake.
Speaker 1: What's the question.
Speaker 6: I'm currently with one of the big industry super funds.
Speaker 6: I've been talking to a financial planner. I'm in my
Speaker 6: early fifties and they're recommending some of the retail funds
Speaker 6: or platforms like PUB twenty four and other things like that,
Speaker 6: and we's just after a bit of feedback on the difference.
Speaker 6: The difference of the two.
Speaker 3: Yeah, I suppose in a nutshell, and it really comes
Speaker 3: down to what you're after. So, you know, if the
Speaker 3: industry fund's ticking all the boxes for you, then there's
Speaker 3: nothing wrong with the industry fund. Some of the other
Speaker 3: platforms like a HUB twenty four or you know there's
Speaker 3: a BT Panorama or others. You know, what they do
Speaker 3: is they offer flexibility. And so when I say flexibility,
Speaker 3: I'm talking about you know, you've got the world of
Speaker 3: investment options to choose from. You can go into direct
Speaker 3: equities or exchange traded funds. You can buy term deposits
Speaker 3: through them. Although some industry funds do offer term deposits
Speaker 3: as an option, so that would be the reason for
Speaker 3: changing or going into a platform like that if you
Speaker 3: are wanting to actually see what you're invested in. Industry
Speaker 3: funds don't really provide this too well. They say you're
Speaker 3: in Australian shares and you say, well, what shares am
Speaker 3: I in? Well, Australian shares, good luck, and so the
Speaker 3: platforms offer you the ability to say, well, actually I
Speaker 3: want some BHP or I want some Commonwealth Bank. I
Speaker 3: want to actually know what's going on there. The platforms
Speaker 3: can be a little bit more expensive because you're getting
Speaker 3: you're getting access to many different investments. So just find
Speaker 3: out what the costs are, make sure you're comfortable with
Speaker 3: the decision that you're making, and really it comes down
Speaker 3: to what do you actually need and what do you
Speaker 3: feel is the right move moving forward?
Speaker 1: Okay, Stephen, good question. Mike's got an interesting one, high Mike.
Speaker 5: Yeah, Look, I'm just wondering in relation to the super
Speaker 5: I know the rules of a family home. What would
Speaker 5: we be up against in what we're both still alive
Speaker 5: converting our house into the boys' names?
Speaker 2: Okay? Have you always lived in the home?
Speaker 5: Mike? Have you? Yes?
Speaker 2: Had always been the home?
Speaker 3: Okay, So if you converted into the boys' name, capital
Speaker 3: gains is unlikely to be there.
Speaker 2: What you will be up for is stamp duty.
Speaker 3: Now, stamp duty gets calculated based on market rates, so
Speaker 3: you can't give it to the boys for a dollar
Speaker 3: and expect to not pay any stamp duty. It just
Speaker 3: won't won't happen. So you've just got to work out, well,
Speaker 3: what's the value of the property. Maybe speak to a
Speaker 3: real estate agent or get it valued, and then you
Speaker 3: can go online and look up how much stamp duty
Speaker 3: would be applicable for that transaction. You could speak to
Speaker 3: a conveyance, so I suppose it would help you do
Speaker 3: the title transfer, but just be aware that there would
Speaker 3: be some stamp duty on that. You're also giving away
Speaker 3: the family home, so if you're going to live somewhere else,
Speaker 3: that's fine. If you're planning on renting, there could be
Speaker 3: some Centerlink implications for doing so. Equally, you're gifting money
Speaker 3: is away, so maybe if there could be some granny
Speaker 3: flat right arrangements where you can get around that with Centerlink.
Speaker 3: I'd encourage you, Mike, just to get some advice first
Speaker 3: before you transfer it. Understand the costs UNDERSTAN and the
Speaker 3: complications on say age pension, and make sure you're making
Speaker 3: that informed decision because there's a few different aspects here
Speaker 3: that you might want.
Speaker 2: To look at.
Speaker 1: A couple of knock ons. Good question though, Thank you, Mike,
Speaker 1: Thank you Blake. A lot of questions still coming through.
Speaker 1: You'll here same time next week. We'll dealve into them.
Speaker 2: Then we'll see you there.
Speaker 1: All the best Blake went there from Pretzel. Don't forget
Speaker 1: that complimentary consultation. Book it with Blake today Pretzelwealth dot
Speaker 1: com dot au