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Speaker 1: She's on the Money. She's on the Money. Hello, and

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Speaker 1: welcome to She's on the Money, the podcast for millennials

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Speaker 1: who want financial freedom. On today's show, we are going

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Speaker 1: to be deep diving into all things cash, which was

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Speaker 1: one of our four investment methods that we spoke about

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Speaker 1: briefly last week, and by the end of today's show,

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Speaker 1: we promise you'll know who cash is an appropriate investment

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Speaker 1: for who it certainly is not appropriate for, plus what

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Speaker 1: its benefits and limitations are, and just for a little

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Speaker 1: added source to top it all off, you like that I.

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Speaker 2: Don't like the name Vicki D, but I do like sauce.

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Speaker 1: Well, you will be answering questions about cash from the

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Speaker 1: community members Carlie and Kate, which should be a bit

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Speaker 1: of wholesome, informative fun, which we all could agree is

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Speaker 1: the best kind of fun. Now, if you don't already

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Speaker 1: know who I am, my name is Georgia Ki. I

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Speaker 1: am a journalism student and a copywriter. Oh wow, fancy,

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Speaker 1: and as always I'm joined by millennial money wizard Vicki D.

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Speaker 1: Victoria Devine.

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Speaker 2: How Hello, I'm well, it'd be better if you stop

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Speaker 2: calling me VIPD. But that is all good. How about

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Speaker 2: in our deep Dive episode we literally just deep dive

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Speaker 2: straight in.

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Speaker 1: Should we? Well?

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Speaker 2: Absolutely? What is your first question?

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Speaker 1: Okay, so v, what does cash mean? When we're talking

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Speaker 1: about investment.

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Speaker 2: Cash cash money? So cash investments, they actually include all

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Speaker 2: of the money that's currently sitting in your bank account,

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Speaker 2: in everyday savings accounts, in your term deposits if you've

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Speaker 2: got them, which, honestly this type of investment, and we

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Speaker 2: call it an investment because it is one. I know

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Speaker 2: people are like, oh, I'm not investing. It's kind of like, well,

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Speaker 2: you kind of are if you're saving and putting money

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Speaker 2: away for a future purpose. Right, It's incredibly low risk

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Speaker 2: and they actually have the benefit of potentially providing a

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Speaker 2: pretty stable yet very minimal income in interest in the future.

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Speaker 2: And I know last year we're really talking talking about,

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Speaker 2: especially at the start of the year, about which savings

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Speaker 2: accounts to go with. I know, a lot of savings

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Speaker 2: accounts had like two and a half percent. You guys

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Speaker 2: are really excited about it. And then there was all

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Speaker 2: of this talk in our community about how the interest

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Speaker 2: rate was going down and how disappointing it was, but

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Speaker 2: it was actually just a sign of the times and

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Speaker 2: what was going on, and that's actually what happens. And

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Speaker 2: these things are actually cyclical, which means they go round

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Speaker 2: and you know, things go up and things go down

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Speaker 2: and things change. And I think that that's really important

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Speaker 2: to take into consideration. A lot of people probably don't

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Speaker 2: even think about money that they have in their bank

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Speaker 2: accounts though as an investment or term deposits as an investment,

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Speaker 2: but they absolutely are, and even compared to other investment

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Speaker 2: types like the share market and the property market, cash

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Speaker 2: whilst it does offer a pretty low return, with low

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Speaker 2: return comes low levels of risk. Friends, and we'll actually

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Speaker 2: do an episode on risk profiling because one thing it's

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Speaker 2: really perfy. Like, if you guys like to know what

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Speaker 2: your minus brig's personality type is, let me introduce to

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Speaker 2: you your financial type. Yeah yeah, yeah, maybe I can

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Speaker 2: find a really fun way of like freeze resenting it.

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Speaker 2: Yeah yeah, and work on that. I'm going to work

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Speaker 2: on that. I'm going to make us a survey and

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Speaker 2: then at the end of the survey you'll tell you

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Speaker 2: who you.

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Speaker 1: Are brilliant, genius. Love it? Okay, So, b are these

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Speaker 1: things investments because you potentially earn a return from the interest.

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Speaker 1: Is that how that's why?

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Speaker 2: Yes, absolutely, And at the end of the day, why

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Speaker 2: are you shopping around for a different interest rate on

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Speaker 2: your high interest savings account if you're not trying to

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Speaker 2: make your money make money, and these things really change.

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Speaker 2: Like I remember, way back when I was in high

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Speaker 2: school having a savings account that had like nine and

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Speaker 2: a half percent, like it was a term deposit. Like

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Speaker 2: what can you imagine if someone guaranteed that if you

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Speaker 2: put your money into a super safe environment in a

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Speaker 2: term deposit, just didn't touch it, you get nearly ten

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Speaker 2: percent return? Like that is wild.

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Speaker 1: That is wild. But that brings me to my next

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Speaker 1: question here, what is a term deposit? Because people are

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Speaker 1: probably listening and thinking, I don't know what they're talking about,

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Speaker 1: so talk to us.

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Speaker 2: A term to osit is going to see your money

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Speaker 2: locked away for a fixed period of time. So different

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Speaker 2: term deposits have different periods of time. It could be

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Speaker 2: three months, it could be six months, it could be

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Speaker 2: twelve months. Some even have twenty four month periods, And

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Speaker 2: in return, you'll receive a fixed interest rate that is

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Speaker 2: generally at a much higher rate than you get from

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Speaker 2: just a regular savings account. So this is generally for

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Speaker 2: a longer term, and the longer the term usually the

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Speaker 2: higher the interest rate. There are a few negatives. The

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Speaker 2: main benefits are obviously high interest. Yeah, that's much better.

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Speaker 2: Guaranteed income again, fantastic. It won't ever change even if

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Speaker 2: official interest rates change, which I think is really great.

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Speaker 2: I know a couple of my clients have got term

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Speaker 2: deposits because at the end of the day, like I

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Speaker 2: might talk about investment all the time, and you guys,

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Speaker 2: no way adore the share market, like it is something

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Speaker 2: I am so crazy about. But if a client has

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Speaker 2: a really low risk risk profile, I'm not going to

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Speaker 2: go put all their money in the share market. Like

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Speaker 2: I do have clients that invest this way because it

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Speaker 2: makes sense for them, and I think that's really important

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Speaker 2: to put out there because I don't actually want you

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Speaker 2: guys to think that the only way is the share market. Yeah,

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Speaker 2: yes it is. You get higher returns, but with higher

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Speaker 2: returns higher risk in some people are just not willing

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Speaker 2: to take that risk. So it's really worth remembering too

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Speaker 2: that with term deposits, if you need to access those

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Speaker 2: funds and you have a term deposit, you actually will

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Speaker 2: lose any of the accumulated interest you earn on it

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Speaker 2: if you access it early, and you might actually even

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Speaker 2: have to pay fees, so there could be a sting

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Speaker 2: if you need to get it back for any reason.

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Speaker 1: And just to clarify as well, term deposits are within

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Speaker 1: your bank account. They're not on the ASX.

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Speaker 2: Oh absolutely not. So a term deposit is usually with

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Speaker 2: a bank, so you might have a term deposit with

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Speaker 2: a different bank than what you usually bank with. All

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Speaker 2: of the big four banks have term deposits at the moment.

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Speaker 2: I mean, they're not that flash or crash hot, but

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Speaker 2: that is the current state of the world, my friends.

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Speaker 1: And okay, this is a fun little tidbit. I realized

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Speaker 1: that I actually have a term deposit. Georgia, k you,

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Speaker 1: I know, I'm actually savvy.

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Speaker 2: Oh, you actually have an accidental term deposit, so.

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Speaker 1: Rout of you. I've had it for like three years

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Speaker 1: and it has earned me quite a decent little return.

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Speaker 1: But I didn't realize that you get taxed on it.

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Speaker 1: That's yeah, you do, you do, and that is money.

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Speaker 2: So important to take into consideration. And I had this

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Speaker 2: rant yesterday actually, when we're putting together this script, was

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Speaker 2: talking to Ryan about it. And I said, what people

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Speaker 2: don't take into consideration is interest on a savings account,

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Speaker 2: whether that is a term deposit or your regular high

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Speaker 2: interest savings account. Interest is income. Yeah, and income is

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Speaker 2: taxed at your marginal tax rate. So what you actually

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Speaker 2: need to work out is your real rate of return.

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Speaker 2: So that would be what is the interest rate after

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Speaker 2: my tax is deducted. And the quick mass in my

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Speaker 2: head is not working right now, so I do apologize.

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Speaker 2: But let's say that you had an interest rate of

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Speaker 2: like two and a half percent. Doesn't exist right now,

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Speaker 2: I'm good luck, friends, but you had an interest rate

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Speaker 2: of two and a half percent, but you're at the

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Speaker 2: highest marginal tax bracket and you're paying nearly forty cents

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Speaker 2: in the dollar four tax, Like, you need to take

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Speaker 2: that into consideration when you're actually going oh great, two

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Speaker 2: and a half percent, it's fantastic. It's higher than inflation.

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Speaker 2: Once you take out that forty cents, you're actually only

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Speaker 2: making sixty percent of that two point five percent return.

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Speaker 2: And yeah, friend, you actually drop low inflation.

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Speaker 1: Right, So that's the same with like every kind of investment.

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Speaker 2: Yeah, absolutely, Like if you make a profit, you need

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Speaker 2: to pay tax on it. When it comes to things

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Speaker 2: like shares, and we obviously have a whole episode coming

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Speaker 2: up on this. You don't have to pay a tax

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Speaker 2: on your you know, you'll have to pay tax on

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Speaker 2: your earnings, but on capital growth. So the growth in

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Speaker 2: value of the asset unless you sell it all dispose.

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Speaker 1: Okay, so many questions there. We'll move along though, We'll

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Speaker 1: save that for our share episode. So, crew, would you

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Speaker 1: say this form of investing is appropriate for.

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Speaker 2: So, as I said on the overview episode of this,

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Speaker 2: like little mini series, we probably could have come up

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Speaker 2: with a sassier name, like we could have come up

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Speaker 2: with like the GM Investment Series or something like I'm

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Speaker 2: not cool, Like I'm just doing a few podcasts on

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Speaker 2: the shares, Just just a gal talking about money. What

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Speaker 2: a surprise in twenty twenty one, given I did it

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Speaker 2: all last year anyway. So cash is a really defensive

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Speaker 2: form of investing, and we spoke about on the episode

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Speaker 2: it being defensive and it's best for people who have

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Speaker 2: goals in place for their money that are really hoping

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Speaker 2: to achieve those goals over the next couple of years.

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Speaker 2: So we're not talking like ten years in the future.

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Speaker 2: We're talking about maybe you've already saved fifty thousand dollars

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Speaker 2: towards your house deposit and you're planning on buying in

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Speaker 2: the next two years. Like, I would not be putting

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Speaker 2: that money into the share market. It's just too risky,

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Speaker 2: Like what if the share market crashes and then you

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Speaker 2: can't achieve your goal? Like that's that's silly talk. We

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Speaker 2: don't do that, shese on the money. We invest wisely,

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Speaker 2: and we actually understand all our asset classes so we

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Speaker 2: know when to use them. So if you're thinking of

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Speaker 2: buying property, probably unwise, but it's also a really good

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Speaker 2: temporary option for your money while you're making bigger plans.

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Speaker 2: So at the same time, it would be very naive

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Speaker 2: of me to assume that everybody's ready to put money

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Speaker 2: into the share market or different types of assets, or

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Speaker 2: you know, they actually have the capacity to do that.

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Speaker 2: So it's a really great place for your money to live,

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Speaker 2: earn a little bit of interest, hopefully, try and keep

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Speaker 2: up with inflation, and make sure that you're not losing anything.

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Speaker 2: So what yields a greater return. It's also a form

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Speaker 2: of investing that once you actually like let's talk about

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Speaker 2: retirement for a second, once you get really far down

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Speaker 2: the track and you know we have invested over the

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Speaker 2: long term, and you know you've got this Like, let's

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Speaker 2: say you've got a two million dollar portfolio, Like you

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Speaker 2: might want to transfer a lot of your share portfolio

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Speaker 2: into a more defensive asset because there's gonna be less fluctuation. Yes,

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Speaker 2: you're going to get a lower return, but like I

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Speaker 2: would much prefer a lower guaranteed not guaranteed, but close

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Speaker 2: to guaranteed return on a very large sum of money

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Speaker 2: than risking being in the share market during retirement and

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Speaker 2: maybe not having income one year. So I think it's

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Speaker 2: really important to understand that there are different phases of

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Speaker 2: your life where these assets are going to feature more

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Speaker 2: heavily or less heavily, depending on what you're up to.

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Speaker 1: And you don't want it locked away either somewhere else

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Speaker 1: if you are going to need.

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Speaker 2: It absolutely a couple of years.

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Speaker 1: Okay, So many people I know can get trapped into

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Speaker 1: thinking that having your money safely tucked away into a

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Speaker 1: savings account is it's good, it's safe. There's load risk,

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Speaker 1: like you'll get a little bit of interest over the journey,

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Speaker 1: But can you please explain the flaws in this line

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Speaker 1: of thinking, because I can't be the only one.

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Speaker 2: No, you can't be, and I know you're not. So

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Speaker 2: it was like a really great place to question for

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Speaker 2: you to ask, because it's half our community, exactly more

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Speaker 2: than half our comdanuity.

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Speaker 1: I would argue, what we don't think about when we

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Speaker 1: do go off on that tangent of thinking is about inflation.

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Speaker 1: So I wanted to ask you a little bit about

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Speaker 1: how that plays into the decisions we should be making

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Speaker 1: when it comes to our money.

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Speaker 2: So let's just quickly backtrack and talk about what inflation

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Speaker 2: actually is Georgia, because I think it gets spoken about

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Speaker 2: in passing a lot and people just go, yeah, inflation

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Speaker 2: happens to stuff over time, But like, what does that

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Speaker 2: really mean? So at the end of the day, like

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Speaker 2: let's say it was to the year two thousand and

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Speaker 2: the movie ticket, Like I remember going to the movies

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Speaker 2: when I was young, and it was like maybe like

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Speaker 2: six dollars fifty for a movie ticket. And now by

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Speaker 2: like twenty twenty, I go to the cinema and the

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Speaker 2: movie ticket's like twenty two dollars or something. Ridonculous. I

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Speaker 2: understand that, but you know, I'm still paying because I'm

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Speaker 2: going to do this. But that's that's the work of inflation.

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Speaker 2: That is a price increase over time to match demand

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Speaker 2: and salaries and you know the expectations of the world

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Speaker 2: at this time. It is not you know, the cinema's

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Speaker 2: taking advantage of us. It's them going, oh my gosh,

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Speaker 2: for us to actually provide this service to people, we

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Speaker 2: are going to have to increase our expenses because the

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Speaker 2: costs on is yeah, exactly, like maybe they're sourcing it

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Speaker 2: in Australia finally, or like whatever they're doing, everything is

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Speaker 2: more expensive and salaries have slightly increased, so they need

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Speaker 2: to make up for it. So like whether it's the

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Speaker 2: price of a movie ticket, a house, or like a

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Speaker 2: semester at UNI or whatever it is, these costs rise

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Speaker 2: over time. And sometimes these costs rise really quickly, so

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Speaker 2: like that example is quite dramatic, but like sometimes they're

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Speaker 2: really slow. Like it might be something that you know,

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Speaker 2: it might be a couple of cents every year, and

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Speaker 2: it's not as dramatic as the movie ticket example. For example,

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Speaker 2: like why are McDonald's cones not twenty cents anymore?

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Speaker 1: Are they still fifty cents?

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Speaker 2: No? Mate, I think they're like two dollars.

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Speaker 1: Ah, mac Is, I don't know.

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Speaker 2: They've let me down, Georgia. I can't eat soft serve,

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Speaker 2: but I also can't eat waffle cone. But it's not

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Speaker 2: that point. I just feel like I should have access

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Speaker 2: to a twenty cent cone for sure. I should be

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Speaker 2: able to ask my dad for twenty cents to get

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Speaker 2: a cone.

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Speaker 1: So you're putting that down to inflation.

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Speaker 2: Yeah, I'm putting that down to inflation, absolutely, But I

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Speaker 2: think you get my point. Price increases over time.

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Speaker 1: Now it's sorry to jump in their va. Does that

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Speaker 1: increase over time always? Or like if we're in a recession,

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Speaker 1: does that go down? Like what is the path?

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Speaker 2: It can increase and decrease, But at the end of

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Speaker 2: the day, it's always increasing. At the end of the day.

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Speaker 2: Inflation happens over time, and each year, depending on what

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Speaker 2: has happened in that year, the rate of inflation might change.

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Speaker 2: So last year, I know that the rate of inflation

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Speaker 2: was one point a and previous years it was really similar.

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Speaker 2: It wouldn't be surprised if it, you know, changed in

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Speaker 2: the next twelve months based on the fact that we've

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Speaker 2: had a global pandemic. But at the end of the day,

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Speaker 2: these things work in really weird ways. You can only

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Speaker 2: ever calculate at retrospectively, so you can't calculate it into

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Speaker 2: the future because we can't predict the future, but we

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Speaker 2: can look at what has happened and like, how much

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Speaker 2: has the cost of goods and services increased over the

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Speaker 2: last twelve months, And that's how we kind of put

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Speaker 2: a number on it. So like, at the end of

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Speaker 2: the day, you're not here for an inflation lecture? Are

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Speaker 2: we going to be sick lecturer at a UNI or something.

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Speaker 2: I'd have so much fun. But can you imagine me

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Speaker 2: being given a captive audience and a white board for.

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Speaker 1: Two whole hours?

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Speaker 2: Oh, you guys would be sucked in.

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Speaker 1: Oh I think so. I think they'd be partying in

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Speaker 1: your hands with the wholetle savings at the end of

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Speaker 1: the day. You wait now reports later.

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Speaker 2: Oh my no, wait until I'm in my late seventies

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Speaker 2: and I'm like that little old grammar who's teaching finance

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Speaker 2: at the local r MIT. Like that'll be me. That's

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Speaker 2: my life goal. Anyway, How does this actually shrink your savings?

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Speaker 2: Like that's all you guys care about. So let's say

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Speaker 2: you have one hundred dollars in your savings account that

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Speaker 2: pays like let's call it one percent interest rate because

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Speaker 2: it's twenty twenty one, and after a year you then

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Speaker 2: have one hundred and one dollars in your account. But

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Speaker 2: if the rate of inflation is actually running a two percent,

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Speaker 2: for example, you'd actually need one hundred and two dollars

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Speaker 2: in your bank account to have the same buying power

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Speaker 2: you started with. So buying power is your ability to

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Speaker 2: purchase the same item with the same amount of money.

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Speaker 2: So like, obviously, if inflation has increased and the cost

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Speaker 2: of goods have increased, you are now in a position

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Speaker 2: where you can buy less. Does that make sense? So

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Speaker 2: you've gained a dollar, but you've lost some buying power.

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Speaker 2: So anytime your savings don't grow at the same rate

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Speaker 2: as inflation, you're effectively losing money. And that's the summary

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Speaker 2: of my.

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Speaker 1: Story, Okay, And so how does that play into the

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Speaker 1: cash side of things? So you're saying that we shouldn't

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Speaker 1: just leave our money in our bank accounts earning little

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Speaker 1: interest because it won't be able to keep up with

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Speaker 1: the rates of inflation.

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Speaker 2: Well, if we want to pull out another Victoria Devine

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Speaker 2: saying from little things, big things grow, and the same

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Speaker 2: happens with inflation. So like you might go victoria, like,

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Speaker 2: my money's still safe in that savings account. It's fine.

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Speaker 2: I might need one hundred and two two dollars, but

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Speaker 2: like that's not that much difference from one hundred and

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Speaker 2: one dollars. But over time, if that's your retirement plan,

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Speaker 2: you're literally going to be retiring with less money than

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Speaker 2: what you've saved. And that is a really bad plan.

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Speaker 2: And it is not, in this day and age sustainable,

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Speaker 2: and I think that there is and I'm very opinionated

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Speaker 2: about this because we as millennials and Gen X and

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Speaker 2: y's and whatever we are now, I don't know what

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Speaker 2: the next generation after that is. We are at a

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Speaker 2: deficit because historically people were able to save and that

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Speaker 2: would have been enough. It is now no longer enough,

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Speaker 2: and our futures are going to suffer because we think

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Speaker 2: that saving is going to get us to the place

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Speaker 2: that we need to get at. And you look at

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Speaker 2: it and you go, okay, cool. And I've used this

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Speaker 2: example a million times, and I use it so that

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Speaker 2: it is drummed into you guys. That's why I don't

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Speaker 2: give fresh new content on this you save five hundred

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Speaker 2: dollars each and every single month as a twenty year old.

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Speaker 2: By the time that you retire, you will have a

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Speaker 2: one point two million dollar investment portfolio, but you would

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Speaker 2: have only saved two hundred and forty thousand dollars. That's

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Speaker 2: what it would happen to different. That's like you're getting

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Speaker 2: nearly a million dollars for free for investing. I mean,

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Speaker 2: that's summarizing it really simply, but I think it's the

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Speaker 2: most impactful way to do it. Like you're choosing to

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Speaker 2: not put your future self first by not investing in

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Speaker 2: an asset that actually gives you good returns. Whereas if

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Speaker 2: we go back to that example, if you're losing a

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Speaker 2: dollar each year off your two hundred and forty thousand dollars,

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Speaker 2: and then the cost of goods in forty years when

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Speaker 2: we retire is so much more like you aren't going

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Speaker 2: to be able to afford to live. I'm sorry, that's

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Speaker 2: just the way.

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Speaker 1: Yes, Wow, Okay, well, I think you've sold shares there

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Speaker 1: and you will continue.

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Speaker 2: No not shares other investment.

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Speaker 1: Other investment assets, okay, and we will get to those

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Speaker 1: in our future episodes. And before we do move on

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Speaker 1: to more cash related questions, because I do have a.

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Speaker 2: Few more, or you've eat you're coming at them.

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Speaker 1: It is time for a quick word from the sponsors

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Speaker 1: of today's show. Okay, now, if you are new to

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Speaker 1: the podcast, please remember to check out our incredible Facebook group.

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Speaker 1: If I do say so.

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Speaker 2: I mean Georgia FI group. And we do think that

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Speaker 2: everybody in that Facebook group is my friends, and.

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Speaker 1: Of amazing there are a simple one hundred and twenty

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Speaker 1: six zerous ish people.

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Speaker 2: How many friends I have, guys?

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Speaker 1: Anyway, the point is that we continue these conversations in

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Speaker 1: the group. We've also got TikTok. We've got YouTube, We've

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Speaker 1: got Instagram. It's not just the I've gotten.

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Speaker 2: Back on TikTok in twenty twenty one, and I'm starting

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Speaker 2: to create some new fresh content for you guys. Big plans,

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Speaker 2: I mean, not great plans, they are just TikTok. But

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Speaker 2: I feel savvy.

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Speaker 1: So we are running out of time here, v but

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Speaker 1: I wanted to quickly squeeze in our questions from the

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Speaker 1: Facebook group. So the first one is from Kate, who asked,

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Speaker 1: is it better to have cash sitting in an offset

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Speaker 1: account or a high interest savings account. I don't know

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Speaker 1: what an offset account is, so maybe start by explaining that.

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Speaker 2: Okay, so great question, and I actually get this a lot.

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Speaker 2: To me. Summary of this question is use your offset

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Speaker 2: It's a no brainer because right now your offset account

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Speaker 2: is usually going to have a better return than your

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Speaker 2: you know, high interest savings account. And I will tell

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Speaker 2: you why, Georgia King. An offset account is a transaction

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Speaker 2: account that is actually linked to your home loan. So

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Speaker 2: this is only going to work if you actually own

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Speaker 2: properly already, if you don't just tune out for the

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Speaker 2: next couple of seconds, I do stretch. I don't know,

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Speaker 2: but essentially you can use this account in exactly the

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Speaker 2: same way you would a bank account. But any money

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Speaker 2: that is sitting in your offset account right now is

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Speaker 2: going to offset the amount of interest that you're paying

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Speaker 2: on your mortgage. So if your high interest savings account

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Speaker 2: right now is paying one point twenty five but your

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Speaker 2: mortgage is sitting at you know, three percent, you're arguably

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Speaker 2: getting a better return having the money offset that three

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Speaker 2: percent you would have paid on cash into your mortgage.

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Speaker 2: Does that make sense? So to give you a little

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Speaker 2: bit more insight, because I love examples. Let's say you

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Speaker 2: take out four hundred thousand dollars home loan Georgia, and

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Speaker 2: then you deposit ten grand into your officet accoun So

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Speaker 2: instead of having ten thousand dollars in savings, you've now

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Speaker 2: got it in an offset account, still savings. You still

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Speaker 2: got the same level of accessibility to it. It is

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Speaker 2: still just as safe. So now what's going to happen

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Speaker 2: is you're going to be charged interest on three hundred

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Speaker 2: and ninety thousand dollars instead of the four hundred thousand dollars.

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Speaker 2: This happens for as long as you've got that ten

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Speaker 2: grand just sitting in there. But what does that actually

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Speaker 2: mean for you? So with that four hundred thousand dollars, like,

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Speaker 2: let's just make it a bigger number so it seems

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Speaker 2: more impactful because that's the way we work around here.

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Speaker 2: The interest rates sitting at five percent, and like that

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Speaker 2: loan term is for thirty years, which is standard mortgage terms,

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Speaker 2: and you keep that ten grand in your offset for

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Speaker 2: that entire period of time. I mean, I hope you'd

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Speaker 2: save more. You actually end up saving more than thirty

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Speaker 2: thousand dollars in interest, and that's more than your one

436
00:19:43,800 --> 00:19:46,719
Speaker 2: point twenty five on your interest savings account, and because

437
00:19:46,720 --> 00:19:49,080
Speaker 2: it's on a loan, you don't have to pay marginal

438
00:19:49,200 --> 00:19:51,359
Speaker 2: tax on what you make from Oh my god, so

439
00:19:51,440 --> 00:19:54,240
Speaker 2: much to learn brand exactly. So if you've got an

440
00:19:54,280 --> 00:19:57,040
Speaker 2: offset account, use it. If you don't have an offset account,

441
00:19:57,359 --> 00:19:59,040
Speaker 2: why don't you have an offset account on your mortgage?

442
00:19:59,040 --> 00:19:59,359
Speaker 2: If you're a.

443
00:19:59,320 --> 00:20:01,000
Speaker 1: Homeowner, is there a cap on it?

444
00:20:01,359 --> 00:20:03,360
Speaker 2: Some do have caps on it. In what you can

445
00:20:03,720 --> 00:20:05,520
Speaker 2: use and do it, you need to actually read the

446
00:20:05,520 --> 00:20:07,640
Speaker 2: pds of your product, and you know what, there are

447
00:20:07,680 --> 00:20:11,479
Speaker 2: some mortgages that don't allow for offset accounts, So you

448
00:20:11,520 --> 00:20:13,600
Speaker 2: really have to if you're going to get an offset account,

449
00:20:13,680 --> 00:20:16,439
Speaker 2: or you're thinking, Victoria, this actually sounds great. Why am

450
00:20:16,480 --> 00:20:18,399
Speaker 2: I not using it? Talk to your mortgage broker and

451
00:20:18,400 --> 00:20:21,400
Speaker 2: say that I really want an offset facility on my mortgage.

452
00:20:21,600 --> 00:20:24,080
Speaker 2: Because some home loans, like I'm just gonna call one

453
00:20:24,119 --> 00:20:27,199
Speaker 2: out here, Athena home Loans. They're really popular right now.

454
00:20:27,240 --> 00:20:30,560
Speaker 2: I actually get so so so many messages about Athena

455
00:20:30,680 --> 00:20:32,560
Speaker 2: and how they work, and like, oh my gosh, Victoria,

456
00:20:32,600 --> 00:20:34,360
Speaker 2: they've got such a low interest rate, and I don't

457
00:20:34,400 --> 00:20:36,399
Speaker 2: have anything to do with them. I'm not sponsored by them, Like,

458
00:20:36,440 --> 00:20:38,400
Speaker 2: this is definitely not me promoting them. I'm just using

459
00:20:38,440 --> 00:20:42,360
Speaker 2: it as an example. They are a really low interest

460
00:20:42,560 --> 00:20:45,680
Speaker 2: mortgage product, but they have absolutely no bells and whistles

461
00:20:45,680 --> 00:20:47,600
Speaker 2: and no ability to have an offset, and there's like

462
00:20:47,960 --> 00:20:52,400
Speaker 2: a whole range of things that I didn't personally want

463
00:20:52,440 --> 00:20:54,080
Speaker 2: in my mortgage, so I didn't go with them. And

464
00:20:54,119 --> 00:20:55,920
Speaker 2: I'm not saying that they're bad by any stretch of

465
00:20:55,960 --> 00:20:59,080
Speaker 2: the imagination. Like if you're just after a mortgage.

466
00:20:58,680 --> 00:21:02,880
Speaker 1: That is no US, no fuss, no frills, no frills.

467
00:21:02,640 --> 00:21:06,199
Speaker 2: Then sure, but you need to understand that were super

468
00:21:06,240 --> 00:21:10,280
Speaker 2: super low interest rates often comes you know, less ability

469
00:21:10,320 --> 00:21:12,760
Speaker 2: to be flexible and actually less bells and whistles. And

470
00:21:12,800 --> 00:21:14,840
Speaker 2: I know that that term probably makes it sound like

471
00:21:14,880 --> 00:21:16,800
Speaker 2: shiny things you don't need, but like a bell and

472
00:21:16,840 --> 00:21:19,760
Speaker 2: whistle that I would argue is really helpful for you

473
00:21:20,080 --> 00:21:22,159
Speaker 2: is something like an offset account if it works for

474
00:21:22,200 --> 00:21:23,280
Speaker 2: your personal situation.

475
00:21:23,480 --> 00:21:25,760
Speaker 1: Okay, I think that is going to be very helpful

476
00:21:25,800 --> 00:21:28,640
Speaker 1: for our friend Kate. Offset account sounds like the way

477
00:21:28,720 --> 00:21:33,080
Speaker 1: to go. The next question, it's from the gorgeous Carly

478
00:21:33,200 --> 00:21:36,800
Speaker 1: Kate and Carly, which actually, so this is kind of

479
00:21:36,800 --> 00:21:39,480
Speaker 1: what we covered before. But let's let's go over it again.

480
00:21:39,800 --> 00:21:42,800
Speaker 1: What are the tax implications and things to be aware

481
00:21:42,840 --> 00:21:44,760
Speaker 1: of when it comes to cash as an investment.

482
00:21:44,920 --> 00:21:47,320
Speaker 2: To summarize cash as an investment, you're just gonna have

483
00:21:47,359 --> 00:21:50,119
Speaker 2: to pay tax on whatever interest you earn from that.

484
00:21:50,400 --> 00:21:52,600
Speaker 2: You shouldn't be paying any additional tax on just having

485
00:21:52,640 --> 00:21:54,920
Speaker 2: money in the bank though, Like just because it's sitting

486
00:21:54,960 --> 00:21:57,119
Speaker 2: there doesn't mean you pay tax. You already paid tax

487
00:21:57,119 --> 00:21:58,600
Speaker 2: on it when it went into your bank account. So

488
00:21:58,640 --> 00:22:00,320
Speaker 2: you're not going to be double tax or anything by

489
00:22:00,359 --> 00:22:02,679
Speaker 2: having a heap of money in your account, but you

490
00:22:02,720 --> 00:22:05,080
Speaker 2: will be paid tax on the interest that is earned.

491
00:22:05,160 --> 00:22:07,359
Speaker 2: So back to our example. If you have one hundred

492
00:22:07,400 --> 00:22:09,720
Speaker 2: dollars in your bank account and over one year, you

493
00:22:09,800 --> 00:22:13,040
Speaker 2: earn one dollar in interest. So therefore, at the start

494
00:22:13,040 --> 00:22:15,040
Speaker 2: of next year, you've got one oh one dollars in

495
00:22:15,080 --> 00:22:18,680
Speaker 2: that account, you would be charged tax on that one dollar.

496
00:22:18,760 --> 00:22:20,919
Speaker 2: So if you're sitting at the marginal tax rate instead

497
00:22:20,920 --> 00:22:22,760
Speaker 2: of a dollar you made, let's call it close to

498
00:22:22,800 --> 00:22:24,639
Speaker 2: sixty cents instead of the full dollar.

499
00:22:24,720 --> 00:22:27,679
Speaker 1: Okay, So last question to wrap here the if there

500
00:22:27,800 --> 00:22:30,480
Speaker 1: was one thing people could take away from today's episode,

501
00:22:30,480 --> 00:22:31,080
Speaker 1: what would.

502
00:22:30,880 --> 00:22:34,040
Speaker 2: It be That potentially cash is not a good long

503
00:22:34,200 --> 00:22:36,600
Speaker 2: term investment. It is great for short term. It is

504
00:22:36,640 --> 00:22:38,639
Speaker 2: great when you get to the point where you actually

505
00:22:38,680 --> 00:22:41,000
Speaker 2: have a whole heap of capital or cash that you

506
00:22:41,119 --> 00:22:43,760
Speaker 2: want to sustain and not have it grow. But you're

507
00:22:43,800 --> 00:22:47,320
Speaker 2: just looking for a really low return, then sure. But

508
00:22:47,480 --> 00:22:49,320
Speaker 2: I think that if we are trying to achieve the

509
00:22:49,359 --> 00:22:52,640
Speaker 2: same outcomes in terms of investment returns that our parents

510
00:22:52,640 --> 00:22:55,159
Speaker 2: had when they were able to have, you know, savings

511
00:22:55,200 --> 00:22:58,000
Speaker 2: accounts that return fifteen percent or nine and a half percent,

512
00:22:58,080 --> 00:22:59,639
Speaker 2: like I was talking about before, Like, it's just not

513
00:22:59,680 --> 00:23:02,280
Speaker 2: a to us, and it won't be for a very, very,

514
00:23:02,400 --> 00:23:04,920
Speaker 2: very long term. Like I know that banks are even

515
00:23:04,920 --> 00:23:08,159
Speaker 2: looking at reverse engineering mortgages at the moment, so they

516
00:23:08,200 --> 00:23:11,119
Speaker 2: will potentially in the future talk to you about paying

517
00:23:11,160 --> 00:23:13,040
Speaker 2: you to have the mortgage. Like that's a whole other

518
00:23:13,080 --> 00:23:16,200
Speaker 2: episode we'll get to. But literally, crazy talk. I don't

519
00:23:16,200 --> 00:23:21,000
Speaker 2: see us getting high interest savings accounts at that level already. Arguably, again, you.

520
00:23:21,040 --> 00:23:26,399
Speaker 1: Heard it here first, cash is not necessarily king But

521
00:23:27,880 --> 00:23:31,800
Speaker 1: Georgia king Well said, Okay, So to keep this conversation going, guys,

522
00:23:31,800 --> 00:23:34,359
Speaker 1: we will be posting a little episode thread in our

523
00:23:34,400 --> 00:23:37,200
Speaker 1: Facebook group. So if you do still have questions after

524
00:23:37,200 --> 00:23:40,320
Speaker 1: today's episode, simply slap them in there and we'll keep

525
00:23:40,359 --> 00:23:43,640
Speaker 1: this conversation flowing now. Also next week on the show,

526
00:23:43,640 --> 00:23:45,560
Speaker 1: we will be getting to the bottom of fixed interest

527
00:23:45,600 --> 00:23:48,760
Speaker 1: which we know you guys also have lots of questions about.

528
00:23:48,760 --> 00:23:49,960
Speaker 1: So we will see you then.

529
00:23:50,240 --> 00:23:52,560
Speaker 2: See you then. Friends. It doesn't sound that sexy, does it.

530
00:23:52,600 --> 00:23:56,159
Speaker 2: I'm not gonna lie like, let's talk about fixed interests, guys,

531
00:23:56,200 --> 00:23:58,840
Speaker 2: but like you're here, I appreciate you. Thank you first

532
00:23:59,280 --> 00:24:02,159
Speaker 2: holding out on me. But just before we wrap all

533
00:24:02,200 --> 00:24:04,840
Speaker 2: of this up, we'd love to acknowledge and pay respect

534
00:24:04,880 --> 00:24:08,440
Speaker 2: to Australian's Aboriginal and torrest Ray islander peoples, the traditional

535
00:24:08,440 --> 00:24:11,320
Speaker 2: Custordians of the lands, the waterways and the skies all

536
00:24:11,320 --> 00:24:13,879
Speaker 2: across Australia. We thank you for caring and for sharing

537
00:24:13,880 --> 00:24:15,800
Speaker 2: on the land on which we are able to learn.

538
00:24:16,080 --> 00:24:18,159
Speaker 2: We pay our respects to elders past and present, and

539
00:24:18,160 --> 00:24:20,200
Speaker 2: we share our friendship and our kindness.

540
00:24:20,480 --> 00:24:23,280
Speaker 1: And please remember everyone that the advice shared on she

541
00:24:23,400 --> 00:24:25,480
Speaker 1: is on the Money is general in nature and does

542
00:24:25,560 --> 00:24:28,960
Speaker 1: not consider your individual circumstances. She Is on the Money

543
00:24:29,080 --> 00:24:32,520
Speaker 1: exists purely for educational purposes and should not fear relied

544
00:24:32,600 --> 00:24:35,679
Speaker 1: upon to make an investment or a financial decision, and

545
00:24:35,800 --> 00:24:39,720
Speaker 1: we promise. Victoria Devine is an authorized representative of Australia

546
00:24:39,760 --> 00:24:43,400
Speaker 1: Pacific Funds Management Propriety Limited ABN three four one three

547
00:24:43,440 --> 00:24:46,440
Speaker 1: two four six three two five seven AFSL three three

548
00:24:46,560 --> 00:24:51,119
Speaker 1: nine one five one. How was the pause there? A

549
00:24:51,200 --> 00:24:54,640
Speaker 1: big thank you to Ryan John and beck what'spec's last name?

550
00:24:54,800 --> 00:24:56,439
Speaker 2: Beck Lewis bech Lewis?

551
00:24:56,440 --> 00:24:59,600
Speaker 1: Beautiful name, isn't it, little angel? Big thanks to those

552
00:24:59,640 --> 00:25:02,200
Speaker 1: two putting it together? And to the gorgeous chess Ricky,

553
00:25:02,880 --> 00:25:06,359
Speaker 1: our community manager and all around Jesse. She is what

554
00:25:06,400 --> 00:25:06,840
Speaker 1: I've been.

555
00:25:08,720 --> 00:25:09,520
Speaker 2: Be very Italian.

556
00:25:09,560 --> 00:25:11,840
Speaker 1: I loved it before you do.

557
00:25:11,960 --> 00:25:15,320
Speaker 2: Head on, friends, sorry for lagging, it's all our thanks

558
00:25:15,320 --> 00:25:17,520
Speaker 2: for sticking with us. We just so love it. If

559
00:25:17,560 --> 00:25:19,439
Speaker 2: you're not already in our Facebook group, join us. If

560
00:25:19,440 --> 00:25:21,879
Speaker 2: you're sick of hearing about the Facebook group, great, not

561
00:25:22,000 --> 00:25:25,280
Speaker 2: my problem. Our community shares money, tips and tricks literally

562
00:25:25,359 --> 00:25:28,040
Speaker 2: every single day, free of judgment. I'm so wildly proud

563
00:25:28,080 --> 00:25:29,960
Speaker 2: of you all. It is actually my favorite place on

564
00:25:30,000 --> 00:25:32,480
Speaker 2: the internet ever. So She's on the money and join

565
00:25:32,640 --> 00:25:34,919
Speaker 2: us facebooks any thing we're on Instagram, We're on TikTok,

566
00:25:34,920 --> 00:25:37,080
Speaker 2: We're everywhere. We're it. She's on the money a US.

567
00:25:37,160 --> 00:25:39,800
Speaker 2: Don't forget to rate, review, subscribe, leave nice feedback, talk

568
00:25:39,840 --> 00:25:40,600
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569
00:25:40,680 --> 00:25:41,639
Speaker 1: Five stars, love Y