Dominic Powell: Hello and welcome to It All ends up the podcast
Dominic Powell: where we chat about money, how to get it, how
Dominic Powell: to spend it and how to invest it. I'm money
Dominic Powell: editor Dom Powell .
Jessica Irvine: And I'm senior economics writer Jess Irvine. And this week,
Jessica Irvine: we're diving into the somewhat vexed topic of private health insurance.
Jessica Irvine: What is it? Who needs it and what type of
Jessica Irvine: coverage do you need?
Dominic Powell: Yeah, we're also going to talk about our sort of
Dominic Powell: top tips to save on on health insurance. If you
Dominic Powell: do decide that it's something for you and if you
Dominic Powell: have room for it in your budget.
Jessica Irvine: So we did discuss in a previous episode that you
Jessica Irvine: currently do not have private health insurance.
Dominic Powell: Why I don't. And I feel like this is sort
Dominic Powell: of like a you know, once you get to a
Dominic Powell: certain stage of adulthood, it's like when you should why
Dominic Powell: don't you have private health insurance? How strange of you
Dominic Powell: sort of thing that.
Jessica Irvine: It's sort of a rite of passage. Congratulations, You're an adult.
Jessica Irvine: You have to worry about this stuff.
Dominic Powell: You have to pay like however many thousands of dollars
Dominic Powell: a year of not that much, but, you know, to
Dominic Powell: have private health insurance. No, I don't have private health insurance.
Dominic Powell: I have just been relying on Medicare for my whole life.
Dominic Powell: And as of yet, I haven't found a spot where
Dominic Powell: I've actually needed it.
Jessica Irvine: We did discuss, as you do, progress throughout adulthood and
Jessica Irvine: you accumulate some pay rises, you will push yourself into
Jessica Irvine: income brackets where you get slugged with an extra surcharge
Jessica Irvine: if you don't have the cover. So I've got cover.
Jessica Irvine: I've gone through a period of sort of phasing right
Jessica Irvine: back what I used to have. I used to sort
Jessica Irvine: of think, oh, private health insurance, good, responsible people do that.
Jessica Irvine: I better have the top level of cover because you
Jessica Irvine: know what? I want to get sick. And so, like
Jessica Irvine: I had top level cover, but I've been gradually just
Jessica Irvine: scaling it back to now. I just have a really
Jessica Irvine: basic policy. It only costs me about 80 bucks a month.
Jessica Irvine: It's it's just shy of $1,000 a year that I pay.
Jessica Irvine: And it's basically a straight out tax dodge for me.
Jessica Irvine: I just do it so I don't have to pay
Jessica Irvine: the extra levy. As for what benefit I would actually
Jessica Irvine: get from my policy, I don't know. And to be honest,
Jessica Irvine: I'm a little bit annoyed that I have to get
Jessica Irvine: it because otherwise I will get tax slugged. But yeah,
Jessica Irvine: it is something for people to have to think about
Jessica Irvine: as you become an adult.
Dominic Powell: Yeah, and I like to say in my defense, I'm
Dominic Powell: not completely negligent about my health. I have things like
Dominic Powell: I have ambulance cover, like, you know, so I don't
Dominic Powell: have to pay the exorbitant fee. I do have a
Dominic Powell: need to get an ambulance.
Jessica Irvine: So that's interesting because I do not have ambulance cover.
Dominic Powell: I'm just not included in your you know, it's.
Jessica Irvine: Not it's not included in the time that I have.
Jessica Irvine: So I'm just taking it that big risk that if
Jessica Irvine: I do have to use an ambulance, I'm just going
Jessica Irvine: to have to pay the out-of-pocket cost, which can vary
Jessica Irvine: across states.
Dominic Powell: So who's to say whose approach is better.
Jessica Irvine: Whose to say.
Dominic Powell: Could possibly.
Jessica Irvine: We are.
Dominic Powell: But yeah, that's true.
Jessica Irvine: That's the whole point of this podcast. You're going to
Jessica Irvine: tell people what to do. But yeah, so just starting
Jessica Irvine: with some basics of like what is private health insurance?
Jessica Irvine: Obviously it's insurance and you pay premiums to the insurer
Jessica Irvine: if you want to access private health care. So that
Jessica Irvine: can be either in separate private hospitals or it can
Jessica Irvine: be the care delivered by like a private specialist which
Jessica Irvine: can actually be delivered in public hospitals. And you can,
Jessica Irvine: you know, get private wings or private rooms in public
Jessica Irvine: hospitals because you don't want as many people in there.
Jessica Irvine: So it's basically, if you choose that, you're not going
Jessica Irvine: to access the sort of basic Medicare, universal health care
Jessica Irvine: that's available for everyone. So why do you think, as
Jessica Irvine: you're thinking through potentially taking out a policy, what might
Jessica Irvine: be the benefits of private health insurance?
Dominic Powell: Well, yeah. I mean, this is the thing and I've
Dominic Powell: thought about this for a long time. I've just been like, well,
Dominic Powell: I get all the health care I need on the
Dominic Powell: public system. Why would I pay for more? But I
Dominic Powell: think there's definitely been situations where I have had something
Dominic Powell: that's gone wrong and I've gone to the hospital and said,
Dominic Powell: you know, to the doctor and said, I need this
Dominic Powell: to happen. And I go, Right, well, if you had
Dominic Powell: private health insurance, we'd get this done next week. But
Dominic Powell: because you don't, you're going to have to go on
Dominic Powell: the waiting list. And that could be anywhere up to
Dominic Powell: six months to a year. So, you know, that is
Dominic Powell: obviously one of the major benefits of having private health insurance.
Dominic Powell: You sort of skip all the waiting lists. You don't
Dominic Powell: have to, you know, wait around for the public system
Dominic Powell: to have time to fit you in. You just get
Dominic Powell: to go into the private system, which is much quicker
Dominic Powell: because you paying for it.
Jessica Irvine: I guess we should just note for everyone to know,
Jessica Irvine: it's not like America where, you know, you go to
Jessica Irvine: hospital for emergency, say, you know, if you break your leg,
Jessica Irvine: please do go to the E.R. departments and you will
Jessica Irvine: be you will be treated. And that's an advantage of
Jessica Irvine: being in Australia. I mean, another reason why people might
Jessica Irvine: not just use that system, though, is the government has
Jessica Irvine: been for several decades now forcing us with carrots and
Jessica Irvine: sticks in policy to take out private health insurance to
Jessica Irvine: take pressure off the public system. So it was the
Jessica Irvine: late 1990s to take you back there. John Howard was
Jessica Irvine: in power.
Dominic Powell: I was I was about three years old. Okay.
Jessica Irvine: I was I was born in 81. So, you know,
Jessica Irvine: I do remember this happening that, you know, there was
Jessica Irvine: public policy changes to push people into taking out private
Jessica Irvine: health insurance. There's the private health insurance rebate, which is
Jessica Irvine: sort of the carrot that there's a bit of a
Jessica Irvine: discount off your premiums, which depends on your income level,
Jessica Irvine: but also this stick of the Medicare levy. Surcharge. So
Jessica Irvine: slugging people with extra tax and particularly higher income earners,
Jessica Irvine: if they didn't take out the policies, you know, sort
Jessica Irvine: of had varying degrees of success. It's a it's about
Jessica Irvine: just less than half of Australians have private cover. So
Jessica Irvine: more than half Australians still relying on the public system
Jessica Irvine: in its entirety. And we've we've had a lot of
Jessica Irvine: problems with private health insurance. Premiums are spiralling higher, you know,
Jessica Irvine: because if you don't get that mass of people in
Jessica Irvine: the system, if younger people are opting out, that increases
Jessica Irvine: the premiums for whoever remains in. So we've had this
Jessica Irvine: what's been called a death spiral in premiums. So, you know,
Jessica Irvine: it's a tricky thing to navigate and it can be
Jessica Irvine: quite expensive these days to take out the private health
Jessica Irvine: insurance coverage.
Dominic Powell: And one thing this is this is me just sort
Dominic Powell: of expressing my disbelief is that private health doesn't cover
Dominic Powell: like GP visits. Right. If you're going to a non
Dominic Powell: bulk bulk billed clinic and you pay your man and
Dominic Powell: you get your Medicare rebate back, I was always under the impression
Dominic Powell: that that private health covered the the the cost that
Dominic Powell: the Medicare rebate didn't cover. But no, it there's nothing
Dominic Powell: that's just that's just nothing. Right. Like I had no idea.
Jessica Irvine: Yeah. And I've sort of had several situations in my
Jessica Irvine: life where I've got out the private health insurance card
Jessica Irvine: and go like, I swipe this baby. This is going
Jessica Irvine: to be cheaper. And it's just like, oh, no, that's
Jessica Irvine: not part of your coverage. And it depends what you
Jessica Irvine: have coverage for, and that can depend on your policy. So, Dom,
Jessica Irvine: I want to talk you through whether you need private
Jessica Irvine: health insurance. But I guess more broadly, who needs private
Jessica Irvine: health insurance?
Dominic Powell: Well, I think it's I think from a tax point
Dominic Powell: of view, especially anybody on sort of higher incomes is
Dominic Powell: probably the number one like from purely saving money. So
Dominic Powell: you don't have to pay the Medicare levy surcharge if
Dominic Powell: you're earning over the typical threshold is 90 K, But,
Dominic Powell: you know, it sort of gets more and more as
Dominic Powell: you earn more and more. So if you're in that
Dominic Powell: hundred K plus sort of bracket, I would say that
Dominic Powell: that definitely starts to become something that you should consider.
Dominic Powell: But obviously outside of that, entirely outside of that, anyone
Dominic Powell: with any sort of specific medical conditions that require private health,
Dominic Powell: things like regular surgeries or any sort of chronic illness
Dominic Powell: or anything like that, often private health is almost a
Dominic Powell: necessity for people to have those sort of conditions. So
Dominic Powell: that would be another sort of, you know, major bucket
Dominic Powell: of of people who would need private health.
Jessica Irvine: Yeah, In terms of the tax dodge, if you're over 90,000,
Jessica Irvine: it is for singles and over $180,000 of income for families,
Jessica Irvine: you're going to get hit with that Medicare levy surcharge
Jessica Irvine: and it does scale up as well. So just taking
Jessica Irvine: the case of a single if the Medicare levy surcharge
Jessica Irvine: kicks in at a rate of 1% of your income,
Jessica Irvine: if you're between 90,000 and 105,000, it's 1.25% for everyone
Jessica Irvine: earning between 105 and 140,000, and it tops out at 1.5%
Jessica Irvine: for everyone earning $140,000 and above. So if you do
Jessica Irvine: the numbers on that, say you're on 120 grand, you're
Jessica Irvine: going to get hit with the 1.25% rate. And it's
Jessica Irvine: not like taxes, income taxes where you only get charged
Jessica Irvine: the higher amount on that marginal income above the certain
Jessica Irvine: threshold that's on your whole income. So you would actually
Jessica Irvine: be paying about 1500 dollars if you're on that 120
Jessica Irvine: K income. So it starts to get a pretty hefty
Jessica Irvine: whack you're going to get, and particularly if you can
Jessica Irvine: get a policy like my policy is less than $1,000.
Jessica Irvine: You know, if I was on 120, I'd be saving
Jessica Irvine: myself $500 from, you know, I've had to pay for
Jessica Irvine: the thousand dollar premiums, but then I've avoided the $1,500
Jessica Irvine: in taxes.
Dominic Powell: See, I did the maths in terms of, you know, the,
Dominic Powell: the amount that I would save theoretically in term. But,
Dominic Powell: you know, if I did start a very, very basic
Dominic Powell: private health cover and it was really, really negligible, I
Dominic Powell: think it was like maybe a maybe $100 or maybe
Dominic Powell: a couple of hundred dollars for the whole year. And
Dominic Powell: in the end I was like, No, I'm not going
Dominic Powell: to do it.
Jessica Irvine: Do you know what? That's legit, because maybe you might
Jessica Irvine: just decide instead of paying $1,000 for an insurance policy,
Jessica Irvine: I don't really think I'm going to use. Maybe I'll
Jessica Irvine: just chip in the $1,000 to federal government coffers and
Jessica Irvine: that can pay for some nice stuff, you know?
Dominic Powell: Exactly. I like to view it as an altruistic sort of,
Dominic Powell: you know, giving back to the good of of the world.
Dominic Powell: I'm paying my taxes. I just think, like especially cause
Dominic Powell: that basic level of private health cover, the one that
Dominic Powell: is sort of the tax dodge in a sense. It
Dominic Powell: doesn't cover things like dental often and all that sort
Dominic Powell: of stuff, which is the sort of stuff that I
Dominic Powell: would actually use in a year. And I was sitting
Dominic Powell: there and thinking like, you know, how many times, you know,
Dominic Powell: as I'm going to cover my GP visits is not
Dominic Powell: going to cover my dental, it's not going to cover,
Dominic Powell: you know, I don't have glasses or anything like that,
Dominic Powell: so I don't need any of that sort of stuff.
Dominic Powell: So I was like, Well, I'm done. I don't think
Dominic Powell: I'm going to get a huge benefit out of this,
Dominic Powell: but obviously each to your own.
Jessica Irvine: Yeah, and you might just want to keep checking in
Jessica Irvine: with that as your income goes up as you get
Jessica Irvine: older because it does reach a point, you know, if
Jessica Irvine: you are scaling into the higher 100 thousands of dollars
Jessica Irvine: where there is, that gap does start to really open up.
Jessica Irvine: And that is essentially why I have it as as
Jessica Irvine: the tax dodge. Yeah. So that. Side. If people are
Jessica Irvine: looking at taking out private health insurance policies or indeed
Jessica Irvine: if you already have one. We thought we would give
Jessica Irvine: you five handy tips for ways to save, because I
Jessica Irvine: love a little listicle of ways to Save.
Dominic Powell: We love lists. Lists are great. So number one, which
Dominic Powell: is we've mentioned a couple of times, is just going
Dominic Powell: for the absolute basic level hospital cover. Like you can
Dominic Powell: look on the websites for various private health providers and
Dominic Powell: they will sort of often advertise these these basic ones.
Dominic Powell: Or you can just get on the phone and just
Dominic Powell: call them up and literally just say to them, Hey,
Dominic Powell: I just want to I just want to avoid paying
Dominic Powell: the levy. What can you give me? What's the absolute
Dominic Powell: most barebones package you can give me? And this will
Dominic Powell: mean you don't get any extras like as we mentioned earlier,
Dominic Powell: like dental and optical, which you call optical.
Jessica Irvine: Optical. Yeah, yeah, yeah.
Dominic Powell: Those sort of things. Those are the sort of stuff
Dominic Powell: that people typically talk about when they talk about extras, like,
Dominic Powell: you know, chiropractor's and all that sort of stuff. You
Dominic Powell: won't get that. You'll just get the sort of the
Dominic Powell: basic hospital cover. And that just means that you'll avoid
Dominic Powell: the surcharge. So that's that's what you should be looking for.
Dominic Powell: If your entire purpose of having health insurance is just
Dominic Powell: to stop paying extra tax.
Jessica Irvine: Yeah, that's me. I've literally rung up and had that
Jessica Irvine: conversation with just I don't know how it makes me
Jessica Irvine: seem as a person, but I'm just like, I just
Jessica Irvine: want to avoid paying tax. Please give me your cheapest
Jessica Irvine: hospital policy. And the hospital policies go from basic to bronze,
Jessica Irvine: silver and gold in terms of what they cover you for.
Jessica Irvine: So if you do choose to go up the scale,
Jessica Irvine: I always say, you know, do have a read through
Jessica Irvine: what is included. And if you're young, do you really
Jessica Irvine: need the hip replacements and the cataract coverage and, you know,
Jessica Irvine: the weight loss surgery and, you know, who knows what
Jessica Irvine: will happen? But that's where I got into a mess
Jessica Irvine: because they show you this long list of things that
Jessica Irvine: could possibly go wrong with you. And I go, Oh,
Jessica Irvine: my gosh, my health anxiety is at an all time high.
Jessica Irvine: I better have coverage for everything. Well, I.
Dominic Powell: Feel like that's that's how they get you right. Or
Dominic Powell: it's like, you know, all this could happen to you. Yeah,
Dominic Powell: you could. You could, you know, break your toe or
Dominic Powell: something like that. It's like, well, think about.
Jessica Irvine: That. Exactly. And so my number two tip, if you
Jessica Irvine: are looking at what level of coverage is appropriate for
Jessica Irvine: your hospital policy, is to be aware of something called
Jessica Irvine: the mental health waiver, because one of the things that
Jessica Irvine: goes missing in some of the cheaper policies is coverage
Jessica Irvine: for psychiatric admissions. So if you you know, maybe you've
Jessica Irvine: got some mental health issues in your family or you
Jessica Irvine: worried that you would develop them as you age and
Jessica Irvine: you need to be admitted to hospital for a psychiatric
Jessica Irvine: type assessment and admission, they actually change the legislation so that,
Jessica Irvine: you know, you can not have that in your coverage
Jessica Irvine: and pay for a cheaper policy. But every Australian is
Jessica Irvine: entitled to, once in their life, use this waiver to
Jessica Irvine: upgrade their existing coverage to cover psychiatric admissions. If you
Jessica Irvine: get to a state where that is necessary for you now,
Jessica Irvine: you have to already have had. You can't just sort
Jessica Irvine: of have had no policy coverage. But if you've served
Jessica Irvine: the waiting periods on your existing coverage, you can add
Jessica Irvine: that on as an optional if you need to use
Jessica Irvine: those services and if you want to have coverage for those.
Jessica Irvine: So that's something to keep in mind if you're sort
Jessica Irvine: of looking at that long list of things and going, Oh,
Jessica Irvine: I need you know, I feel like I need that
Jessica Irvine: everyone can have that if if you do end up
Jessica Irvine: in that situation.
Dominic Powell: Yeah. And if you are looking at this long list
Dominic Powell: of things and sort of thinking, oh, maybe I'll have
Dominic Powell: this and maybe I'll have this, maybe I do need dental,
Dominic Powell: maybe I do need optical, maybe I do need a,
Dominic Powell: you know, a chiropractor to come and track my back
Dominic Powell: every four months or whatever. This is where you should
Dominic Powell: be reviewing your extras coverage regularly. This is our third
Dominic Powell: tip every year. Look at what you did use or
Dominic Powell: didn't use during the year and think about what you're
Dominic Powell: going to keep and often like it's also a matter
Dominic Powell: of using them before they expire too. Like often, these
Dominic Powell: things will take over on the 31st of December and
Dominic Powell: you it'll sort of refresh.
Jessica Irvine: And some do tick over by financial year and some
Jessica Irvine: by calendar year. You check your one, but there should
Jessica Irvine: be an almighty rush at the end of the year
Jessica Irvine: for you to go scurrying around. If you have extra coverage.
Dominic Powell: You get.
Jessica Irvine: To go to the dentist.
Dominic Powell: Glasses or you know, go do whatever. And that is
Dominic Powell: also why it's quite hard to get an appointment with
Dominic Powell: a lot of small allied health professionals towards the end
Dominic Powell: of the year because everyone's doing exactly the same thing.
Jessica Irvine: It's trying to max out the the extras coverage, but
Jessica Irvine: just to know that, you know, the policies come as
Jessica Irvine: hospitals or extras cover or having them both together. You
Jessica Irvine: don't need the extras cover to avoid the Medicare levy surcharge.
Jessica Irvine: You only need an eligible hospital cover. So just to
Jessica Irvine: stress that the extras are completely optional for you and
Jessica Irvine: they do try to upsell you with all of that,
Jessica Irvine: really do the sums to make sure you're going to
Jessica Irvine: get more back in benefits than you were paying premiums
Jessica Irvine: on an extras policy. So the fourth tip and this
Jessica Irvine: is one of my favourite strategies for saving on insurance,
Jessica Irvine: but that I'm a bit of a dare devil is
Jessica Irvine: to choose a higher excess. So your excess is the
Jessica Irvine: amount that you agree to pay out of pocket in
Jessica Irvine: the event of a claim. So with private health insurance,
Jessica Irvine: it's set by the government. They determine what the maximum
Jessica Irvine: allowable excesses are on policies. Which is like because of
Jessica Irvine: my car insurance, I think my excess is set to
Jessica Irvine: like a thousand or $2,000, meaning that there's lots of
Jessica Irvine: claims that just wouldn't be worth making because my out-of-pocket
Jessica Irvine: cost of my excess is so large. So the government
Jessica Irvine: set it at $750 as the excess for private health
Jessica Irvine: insurance for singles and $1,500 for couples. And that has
Jessica Irvine: increased in recent years. So if you haven't reviewed your
Jessica Irvine: private health insurance for a while, there may now be
Jessica Irvine: an option for you to. Increase your access to those
Jessica Irvine: what might be higher amounts that what you've got them
Jessica Irvine: sit at. And when you have the higher access you
Jessica Irvine: pay lower premiums on ongoing. So it is a bit
Jessica Irvine: of a gamble because if you have to claim you're
Jessica Irvine: going to be out of pocket, but if you don't
Jessica Irvine: claim it, you can just reap those savings. And often
Jessica Irvine: you can not claim for long enough that the savings
Jessica Irvine: that you've made would sort of add up to what
Jessica Irvine: the out-of-pocket cost could be. So it's a bit of
Jessica Irvine: a a gamble. But, you know, if you if you're
Jessica Irvine: a young, healthy person and you're not being admitted to
Jessica Irvine: hospital for cataract surgery and all the rest of the
Jessica Irvine: things on your hospital policies, definitely playing with your excess
Jessica Irvine: is one way that you can look at. And particularly
Jessica Irvine: if you have someone who's looking at dropping coverage altogether,
Jessica Irvine: you know, with things are getting more expensive. You know,
Jessica Irvine: if you're just looking for ways to make it cheaper
Jessica Irvine: for you to have a call to your insurer and
Jessica Irvine: talk about the excess.
Dominic Powell: Yeah, I mean, I think if I was to get
Dominic Powell: private health, I would have my access set at the
Dominic Powell: absolute maximum because I don't get admitted to hospital particularly
Dominic Powell: frequently and I don't plan to be so. I mean,
Dominic Powell: obviously no one plans to be right. You know, you're
Dominic Powell: not sitting there to be like, Damn, I think I'm
Dominic Powell: going to get into a car accident tomorrow. But, you know,
Dominic Powell: like I you know, you're right. Younger, healthy people can
Dominic Powell: probably afford to have a higher excess. And just finally,
Dominic Powell: sort of the perennial tip when it comes to anything
Dominic Powell: like this is just shopping around, making sure that you
Dominic Powell: don't just go through the single whatever your mum's on
Dominic Powell: or whatever your friends are on. Make sure you you
Dominic Powell: go and look at various different things. The government website
Dominic Powell: is w w w dot private health look of that
Dominic Powell: are you, which is where you can go and have
Dominic Powell: a look a little bit, little bit of looking, compare
Dominic Powell: some of the different products that are out there.
Jessica Irvine: Yeah. I've actually used that one and found it not
Jessica Irvine: particularly great of the government comparison websites, but it is
Jessica Irvine: worth having a little look you know all those websites
Jessica Irvine: like canstar finder compare the market you know just put
Jessica Irvine: compare health insurance policies and some of them you have
Jessica Irvine: to give away your life details and they'll then seriously
Jessica Irvine: call you on your mobile phone and you have to
Jessica Irvine: ignore it for several weeks if you don't actually want
Jessica Irvine: if you're just trying to test the market and find
Jessica Irvine: out what the prices are, but just ringing up and
Jessica Irvine: ringing up and seeing what discounts are, just asking for
Jessica Irvine: a discount. They're now allowed to offer younger people discounts,
Jessica Irvine: which they weren't allowed to do before. Sometimes you can
Jessica Irvine: get 6 to 8 weeks, you know, free premiums, you know,
Jessica Irvine: for signing up. And another little tip is also to
Jessica Irvine: ask if your employer, if you have sort of one
Jessica Irvine: salaried job, has an a corporate discount. So I think
Jessica Irvine: for our employer, I'm getting about an extra 5% off
Jessica Irvine: just because they had some arrangements. So you just ask,
Jessica Irvine: are there any corporate discounts or sort of bulk discounts
Jessica Irvine: that you could apply and just have a little bit
Jessica Irvine: of a haggle?
Dominic Powell: That sounds pretty good. I didn't realise that we got
Dominic Powell: a discount through public event. So yeah, there's a bit
Dominic Powell: of some, some tips and ideas for you. If you're
Dominic Powell: like me and you're fairly uncertain about the world of
Dominic Powell: private health insurance, I still even now, even now, having
Dominic Powell: talked about it for a good 20 minutes, I still
Dominic Powell: think I'm not going to get private health insurance, but
Dominic Powell: that obviously my situation might change.
Jessica Irvine: I'll just see how you go with your pay rises
Jessica Irvine: in future years.
Dominic Powell: Well, sure. I mean, maybe if I maybe I start to,
Dominic Powell: you know, increase my pay and then it becomes much
Dominic Powell: more sensible to get private health. But we'll see. But look,
Dominic Powell: the listener question this week. We say it every week,
Dominic Powell: but we always enjoy getting them. So please keep sending
Dominic Powell: them through too. It all adds up at nine.com.au o'clock today.
Dominic Powell: You and this one is from Angela. She says, My
Dominic Powell: husband and I are in our thirties and we've started
Dominic Powell: considering moving our super into an SME F or a
Dominic Powell: self-managed super fund so that we can get into the
Dominic Powell: property market for investment purposes. However, she's looking at the
Dominic Powell: set up and ongoing costs of managing it and is
Dominic Powell: getting a bit unsure. I want to know what we
Dominic Powell: think and if it's still worth it for people like
Dominic Powell: Angela and her husband who want to get into the
Dominic Powell: property market but don't have enough of a deposit for
Dominic Powell: a place if they can do it through the MSF.
Dominic Powell: Just what do you think on this one?
Jessica Irvine: Yeah, so I have reached the level of expert adulting
Jessica Irvine: that I have now recently done the numbers for myself
Jessica Irvine: as to whether it would make sense for me to
Jessica Irvine: set up a self-managed super fund. And the exciting thing
Jessica Irvine: in that space is that there has been the proliferation
Jessica Irvine: of a lot of SMSF administrators and they sort of
Jessica Irvine: they have technological online platforms that look after your tax
Jessica Irvine: and auditing obligations. And so there's one called a super fund,
Jessica Irvine: which will do it for about $1,000.99 a year. And
Jessica Irvine: if you can start to compare that once you get
Jessica Irvine: on a bigger balance. So, I mean, I've been fairly
Jessica Irvine: open that my super balance is $350,000 now. And if
Jessica Irvine: I pay 1% fees on that, it's about sort of three.
Jessica Irvine: We're getting over $3,000 in fees, although I've just switched
Jessica Irvine: super fund and this is my weekend column and it's
Jessica Irvine: absolutely slashed that to about $300. So that is exciting
Jessica Irvine: because I was like, I don't want to be paying 3000.
Jessica Irvine: Would it just actually be cheaper to have an SMS?
Jessica Irvine: If so, you do that. You can also like Stake
Jessica Irvine: is a brokerage app and they also have an SMSF
Jessica Irvine: platform if you're just investing purely in shares and that's
Jessica Irvine: about $990, there's a few extra fees that go on anyway.
Jessica Irvine: So the point is that it's a mess if administration
Jessica Irvine: is getting cheaper, although. When you start to talk about
Jessica Irvine: investing in property, that makes your tax a little bit
Jessica Irvine: more complicated and you can incur some extra costs from
Jessica Irvine: accountants and sort of keeping all that above board because
Jessica Irvine: there's very strict rules about what you can and cannot
Jessica Irvine: hold in an estimate. If and if the purpose of
Jessica Irvine: it has to be to fund your retirement. So, you know,
Jessica Irvine: I would just say to Angela, because something that she's
Jessica Irvine: mentioned in the you know, thinking about an estimate off
Jessica Irvine: because they want to get into a property because they
Jessica Irvine: don't have a big enough deposit to buy their own,
Jessica Irvine: you know, principal residence. I sort of just go, oh,
Jessica Irvine: if you're setting up an estimate, if you sort of
Jessica Irvine: want to be at the level where you've got assets
Jessica Irvine: that they're high enough, that it makes it worthwhile to
Jessica Irvine: have those administration costs. So, you know, if maybe this
Jessica Irvine: is not the direction to go in, I mean, I
Jessica Irvine: have a personal bias towards getting a house to live
Jessica Irvine: in because the great tax advantages there. So, I mean,
Jessica Irvine: my feedback, Angela, if I could be in the room
Jessica Irvine: with you is to sort of talk to you a
Jessica Irvine: little bit more about why you think you don't have
Jessica Irvine: the deposit to get into property ownership of your principal residence,
Jessica Irvine: because there's a lot of schemes to get people in
Jessica Irvine: with low deposits. House prices are coming down. So that's
Jessica Irvine: where I would be putting my attention before, during and
Jessica Irvine: a semester off. But, you know, you can you can
Jessica Irvine: look at it, but just also be aware there are
Jessica Irvine: ultra low super fund fees out there as well by
Jessica Irvine: some of this industry. Super funds have got really low
Jessica Irvine: fees and I've just switched to one where I think
Jessica Irvine: I'm going to be paying about 2.1% from 1% to
Jessica Irvine: about 2.1%. So stay tuned.
Dominic Powell: Just to sort of tie that off. Angela, I would
Dominic Powell: sort of be in agreeance with Jessica that, you know,
Dominic Powell: there are schemes, there are schemes that literally allow you
Dominic Powell: to save your super for a house deposit, you know,
Dominic Powell: like you can. There are many, many, many ways which
Dominic Powell: I think would be probably better to look into a
Dominic Powell: better use of time and money than possibly setting up
Dominic Powell: an SMSF in your thirties. So that's, that's sort of
Dominic Powell: that's how I would, would approach it.
Jessica Irvine: Yeah, they're a bit trendy at the moment, you know
Jessica Irvine: some assets and everyone wants control. And part of that
Jessica Irvine: is because the super industry's fleeced us for fees for
Jessica Irvine: so long that we're all now like, wouldn't it just
Jessica Irvine: be cheaper to do it ourselves? But that's not the
Jessica Irvine: direction I've ended up in. But of course, everyone's personal
Jessica Irvine: circumstances are different and there may be things we don't
Jessica Irvine: know about Angela's set up anyway, but that's just some
Jessica Irvine: thoughts there.
Dominic Powell: Indeed. And just lastly, your budget tip of the week.
Dominic Powell: What is it?
Jessica Irvine: Yes. So this is a a summer holidays themed tip.
Jessica Irvine: This is for people who are going away on holidays
Jessica Irvine: and maybe going away on group holidays with family, Friends
Jessica Irvine: with family is often you can sort of end up
Jessica Irvine: incurring a lot of expenses. You know, you go out
Jessica Irvine: for lunch, you go out for dinner, you're buying things,
Jessica Irvine: and it's hard to remember who's paid for what. And
Jessica Irvine: if there tends to be a serial offender in the
Jessica Irvine: group who sort of just puts it on the group
Jessica Irvine: tab and never ends up buying the particular round. There
Jessica Irvine: are apps and my favourite one to use is called
Jessica Irvine: Kitty Split, so I've used that on the girls weekends
Jessica Irvine: when we go away and just if you have an expense,
Jessica Irvine: you lodge it into the group. It's just a website actually.
Jessica Irvine: It's not an app that we used, it's just a browser.
Jessica Irvine: You lodge all the money that you've spent and you
Jessica Irvine: can apportion it to who participated in that particular event.
Jessica Irvine: And then at the end it spits out, you know,
Jessica Irvine: you owe this person this amount and you can, you know,
Jessica Irvine: reconcile it all. And so it's just a little way
Jessica Irvine: to sort of avoid if you're the person who ends
Jessica Irvine: up sort of picking up the tab because you're a
Jessica Irvine: generous hearted person, this might be one to suggest for
Jessica Irvine: the group.
Dominic Powell: Yes, it's funny because we do that in my friendship group.
Dominic Powell: We do that for any weekends away that we do.
Dominic Powell: But instead of using an app like this, which would
Dominic Powell: make a lot of sense and be really easy, we
Dominic Powell: have one person who knows how to use Excel and
Dominic Powell: we all give our expenses to that person. And that
Dominic Powell: person makes a very complex spreadsheet which works out exactly
Dominic Powell: who everyone is owed and how much they paid for things.
Jessica Irvine: Is that is.
Dominic Powell: That a goal? Okay.
Jessica Irvine: And can I meet this person? Because I think we
Jessica Irvine: would get along.
Dominic Powell: Yeah, I'm. I'm sure you would. He's an Excel wizard.
Dominic Powell: And this is just the way that we we've done
Dominic Powell: expenses for like, I think like the last like four
Dominic Powell: years for any like group trip or anything. And it's,
Dominic Powell: it's notoriously inefficient, it's a terrible way and I, I
Dominic Powell: still don't trust the guy. I don't know how to
Dominic Powell: excel work. So I think something like this would be
Dominic Powell: much better. Yeah.
Jessica Irvine: Kitty split was the No. There are other ones too,
Jessica Irvine: so you just google some alternatives. But yeah. Happy holidays everyone.
Dominic Powell: Thanks again for listening this week. We will be back
Dominic Powell: next week with another episode. See you.
Jessica Irvine: Next week. This episode of It All Adds Up was
Jessica Irvine: produced by Chee Wong. The information discussed is general in
Jessica Irvine: nature and does not take into account your personal financial situation,
Jessica Irvine: goals or objectives. You should always do your own research
Jessica Irvine: or get professional advice before making any major financial decisions.
Jessica Irvine: If you'd like today's episode, hit follow in your podcast app.
Jessica Irvine: Leave a review and recommend it to all your friends.
Jessica Irvine: You can submit your listener questions in text or audio
Jessica Irvine: format at. It all adds up at nine dot com. You.