Latest / Money Grows on Trees / #329- The System Is Designed To Keep Australian’s Poor

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#329- The System Is Designed To Keep Australian’s Poor · Money Grows on Trees

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  The Australian financial system is mathematically engineered to
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  keep you in debt. Most people think the system is just poorly designed,
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  but the government has actually figured it out. That's the reality. The
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  system's working exactly as it's designed. Taxing your labor at 45 cents
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  in the dollar, engineering 30-year, 40-year mortgages so you pay
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  for your house twice, and that's the nature of it. So, my
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  name is Lloyd J. Ross, seven-figure entrepreneur and investor, and I help thousands of everyday Aussies
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  and Americans and Canadians and New Zealanders get out of debt and build real
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  wealth. And in this video, I'm going to expose exactly how the system profits
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  from your financial ignorance and the steps you need to opt
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  out of it. What is the system, how
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  is it engineered against you? Well obviously the first part
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  of it is they don't teach you any of this stuff in school and that obviously
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  wasn't by accident because there's a
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  reason why Australia's financial literacy rate is like 45% which
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  is just so low compared to say for example say
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  Denmark is 71% and actually one of
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  the highest in the world globally, right? They
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  mandate in their curriculum financial education.
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  We don't do that here. Culturally, we
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  don't. It's a bit of a trap and it's a system that works
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  against us because then we're thrust into the workforce, into
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  the world that any understanding of it, which is why channels like this become
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  so popular and important, because you've got to find the
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  answers yourself, right? So 45% of Aussies aged
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  between 18 and 24, when they're in the
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  work, they don't feel prepared at all. They can't manage their finances, they
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  don't understand the tax system, they don't understand your
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  basic fundamentals. I think when we were at school, we read
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  The Lion, the Witch and the Wardrobe, Shakespeare. I'm not suggesting they
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  aren't important, it's just that the practical side of them
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  is so not even remotely close to what it would be if we were to read
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  Rich Dad Poor Dad or Money Buys Happiness as an example. So,
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  the curriculum doesn't include any financial literacy, not even as a standalone subject, not
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  even in any like after school stuff. Now, there are some schools
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  around that have specifically teach this but it's not part of the mainstream curriculum,
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  right? So, the onus is on the individuals and
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  the parents and the teachers to weave it in where they can. For me personally, what's
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  fascinating is in grade 11, I had an English teacher, Mr. Barber, And
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  one of the greatest things I learned at school, he said, ìGentlemen, when you leave this school,î and Mr.
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  Barber at the time, he was our basketball coach as well, but he had
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  this beat up car, he wasnít earning a lot of money and he obviously came
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  across some financial education himself and he wanted to impart that to us. So
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  I must have been about 15 and he said, ìGentlemen, when you leave this class, I
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  want you to do two things. Read The Richest Man in Babylon by George
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  Clayson and I want you to read Rich Dad Poor Dad by Robert Kiyosaki and Sharon Lector.î
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  And I don't know how many boys showed agency in that class that went out
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  there, but I went straight to the bookstore and bought those books and read
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  them at 15 or 16. And I might have read one when I was 16 and
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  the other one when I was maybe a bit older, but I read them both. And
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  so you think about that. What if that hadn't happened? What if I didn't get hold of those
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  books that early? So imagine if we just could find
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  a way to put that type of literacy into
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  schools. It would just benefit our whole society.
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  But there's certain industries that make
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  money from ignorance. So to educate them means
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  we can't make money out of them anymore, okay? That's the first thing. Huge
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  problem. Second thing, the tax system is progressive,
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  meaning it punishes work and in some respects can reward
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  a lot of wealth. But the harder you work, the more you're punished, okay?
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  We have this ruling in Australia, tax ruling, that
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  if you work, as you create through the brackets of income, you
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  pay more tax, right? So it's actually disincentivizing. Then on the other side
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  of things, if we've got assets that we hold, there's this thing called the 50% CGT discount. where
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  if you hold an asset for longer than 12 months, you get a discount
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  on your capital gains tax by 50%, right? So if you borrow to
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  buy an asset and then it grows over time and you can get a
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  50% reduction in your capital gains, that is
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  a very powerful incentive to reward those folks
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  that can do that. But what we really need for productivity in our
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  country is we need to reward work, not just those
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  who already have wealth, truthfully. It needs to be a nice sweet spot. And
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  so I'm all for, in President
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  Meli of Argentina. He took
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  the country from massive inflation, I forget what the numbers were, maybe 22% inflation,
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  right down to three or four or five, you know, very low inflation rate.
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  And he increased unemployment by a tremendous amount.
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  And he also generated businesses. And I think he's got GDP growth
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  now to 7%. Just fact check. Jamie, can
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  you fact check that? I'm
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  sure it's 7% GDP growth, which is incredible. He turned it around and this
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  is how he did it. This is one of the things he did.
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  He slashed a lot of government, which is great, all
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  the bureaucracy, but also he said, business owners, you're not
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  going to pay tax on your first $75,000. What a cool incentive to
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  get into business. Of course, the whole business environment thrived. Now,
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  if they did that in Australia, you'd see production go up. That's
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  all they need to do, but they're so greedy in Canberra. They just want more, more, more to
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  put on more. It's this bureaucracy that's fattening. They're just
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  lying around pockets. So that system is geared towards those who
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  want to work for the government to get paid more. So everyone gets on the gravy train. And I read
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  a statistic the other day that 55% of people in Australia are on that gravy
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  chain, which is why they keep voting Labor back in. If you're on the gravy train, why
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  would you want to let the gravy train go, right? So that's
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  why it's engineered to work against us. It's not really engineered for business owners. This is
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  not. But other countries that do that thrive. Third,
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  the banking system is engineered to keep you in debt. Average
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  Aussie has got a mortgage of
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  over 30 years which means they pay double the amount of the price in terms of they
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  pay interest and then the actual house off. It's
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  geared towards getting more loans to buy more real estate. It's
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  almost like a culture and that's geared to
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  keep people Now, some people can handle
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  that, some people can't. Can you grow wealth doing that? You can, using leverage.
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  But the banks are very profitable enterprises because
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  you're the customer and they make profit from you. It
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  can be an insidious, long-term, lifelong trap. But
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  they are designed to keep you in debt because debt enables
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  the economy to flourish and grow and so forth. So it's all built on this. leverage.
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  Just quickly, if you're ready to take control of your finances, but feel stuck on
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  where to start, I have a solution. My book Money Bias Happiness
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  simplifies investing and wealth building with practical steps to help
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  you achieve financial peace. Get your copy via the
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  link in the show notes and let's get your money working for you. Now back
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  to the episode. The fourth thing is superannuation, right? Yeah,
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  not superannuation itself. The actual idea of super is really intelligent. It's
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  like, hey, let's take away 10% of all you earn and yours to keep. Let's put it into assets and grow it.
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  But the super funds, man, a
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  lot of them don't outperform the regular market being the S&P 500. They
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  don't. And then they charge you 1% or 1.5%. That is just criminal. It
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  just is. It's just stealing. It's
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  just they're stealing because they're not providing any value beyond
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  what the benchmark can return for you to put the money in your own
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  index fund. The entire superannuation system is geared
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  to fleece Australians. Fact. The retail funds do
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  it and certain accountants do it within the SMSF space. It's just
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  that way. Accountants have been doing it for a long time. Superannuation funds
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  have been doing it since the beginning of they've existed and they're
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  just stealing. So it's geared towards just stealing your
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  money in fees, okay, because they don't add any value. Fifth thing,
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  the property industry is geared in such a way that
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  enables tax deductions to where
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  the private sector helps the government to develop housing. The
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  challenge with that is that it's exacerbating home ownership. and
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  it's flourishing just pure investment and speculation because
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  of these tax deductions. There has to be
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  a huge tax overhaul in this country. It's cumbersome, it
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  rewards the wrong behavior, and there ought to be a full tax
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  reframe in the entire country. Now, how you do that is you model
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  countries that do it well. So if you look at how business is done in
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  Singapore and how taxes are rolled
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  out in certain countries, it's very simple and effective and there's not
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  a lot of obstacles to it and that's what we have to do here. The whole
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  system is designed to those that have wealth to
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  continue to build wealth through tax savings and it doesn't really help those trying to build
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  wealth, if that makes sense. The other one is The
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  media is on the property gravy train in many respects.
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  They've got a lot of ads that are funded by regroup and domain and so forth
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  and so they are going to be aligned, not just the news channels but the actual
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  newspapers as well, whether it's news corporate or non-entertainment, they're on this gravy train.
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  The owner's own property, the people who work their own property and everyone's pro-property so
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  all the news just continues to filter
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  through properties going up and so everyone's in
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  this narrative and the reality is this is not going to
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  be the case but they need this Ponzi to keep going because they
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  all are in on it, if that makes sense. Seventh is financial advisors
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  and I'm not talking about all of them so if you're a financial advisor watching this, please don't like
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  hammer me and go, I get that there's some great advisors. I've got a good friend of
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  mine who lives in Sydney. He's a wonderful advisor. But the problem is
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  with that industry, they're actually incentivized to keep you in
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  invested products that cost you more money than they should. It's
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  just the nature of it because it's commissionable products.
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  So for example, human nature follows incentives. Charlie
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  Munger, Warren Buffett's business partner, used to say, show me the incentive and I'll show
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  you the outcome. So if you have a financial advisor who's incentivized to
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  sell you a specific insurance product, be income protection where
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  the premiums are higher, they're going to get a bigger rebate. Now, that's not to say they just
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  do it for that reason, but they definitely incentivize to. My
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  first experience with a financial advisor, he put me into this front-end loaded closed-end fund,
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  and it just incentivized him to earn more fees. It gave
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  me no optionality. It went down. He made more money because he
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  was incentivized. It wasn't a bad person. But it's just
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  the nature of how the industry works. And that's where
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  regulations just kind of strangled it too. So there's a big
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  conflict. It's a very tricky industry now. The Royal Commission did
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  bring a lot of things to light, but it's also not sustainable, which is why a lot of people
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  have moved away from the industry, because now it's just like there's no onus on the person
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  to do any research. And it's kind of gone
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  to the dogs a bit, the industry. One of the biggest
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  engineered issues with that is that you must see a financial advisor
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  for certain things but then their incentives are all wrong. Number eight is buy now,
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  pay later. That's turned a whole generation into debt addicts
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  without them even realizing it. It doesn't appear on their credit file
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  necessarily. It doesn't feel like debt because of the way that the penalties are
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  in fees but it's designed to feel like a
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  payment feature like a card rather than a financial product really. It's like credit
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  dressed up as not credit. Credit dressed up as debit and
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  it's specifically engineered to extract money
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  from people at every level, particularly youngsters. I saw once
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  that you could buy on BNPL, I forget where it was, peanut butter. Like
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  if you're buying peanut butter for like four bucks, like you're developing
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  habits of I use leverage for everything, I use debt for everything and that's just credit
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  junkiness. So you turn into a credit zombie, right? I
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  think the stats are like 90% of young Aussies up to the age
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  of 24, they are in some sort of trouble with like
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  serious trouble, like they're skipping meals to do this, to
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  pay their BNPL bills. It's not good, right? So
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  those platforms are engineered to get you into
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  the system. But we're all out, right? Ninth is
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  the government's own first home buyer schemes, like this 5% deposit thing, yes?
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  That's engineered to put you into more debt servitude so you stay in your worker job.
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  Now, I don't know how that's going to look once AI starts to take jobs. That
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  may have some serious consequences. We don't know what that looks like because most
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  people don't scale out what that looks like. When people did it only recently, probably about
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  a year ago where it came out, they started to go into these homes with 5% deposits
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  and all of a sudden now interest rates are 7%. Like, it
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  must be another thousand a month to probably pay for that. And that's a 12 grand
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  a year problem. And if you are already paycheck to paycheck, you've
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  got to earn 20K to pay 12 because of the tax legislation. It
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  must be hard, right? But this is engineering to keep people on the ponzi.
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  I really feel like in Australia and more so than
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  anywhere in the world, I think at the moment, there's this whole
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  system of like, one of us. And if you're like outside
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  like me, you're an outcast. But everyone's on the Ponzi, that's why when
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  they lower interest rates, people do little dances on TikTok, right?
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  And when they increase interest rate, like last time, you'll see them, they'll be like, the
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  RBA increased interest rates today, oh my, and it's a solemn,
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  the whole country almost goes into a solemn problem. Like, it's
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  just, it's fascinating. You'll see it on social media. And
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  finally, the entire system is designed around the assumption that you'll never
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  learn these rules, because the moment you do, You
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  can move every single one of them into your favor. There's
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  a lot of challenges that come with following this system
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  that's designed to work against you. The whole idea of this episode is
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  for you to understand what's happening to you. You've got to wake up and
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  get out of this matrix of, holy shivers. The system is built for
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  me not to pick up financial education and read it myself, to then do
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  things outside what the government is telling me to do, to not depend
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  on the government to save me all the time. to not be on the gravy train, to
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  figure out some skills that are going to fortify me and help me pivot when things change.
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  And that's the type of education that you can't get anywhere but.
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  here, for example. That's why we have this channel. Hopefully,
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  that makes sense. That is how the system is designed or engineered
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  against you. Now, you know you can start to leverage
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  it in your favor, which is what I'd love for you because that's what I've done. I'm
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  like, what? I don't want to do that. I don't want to do that. You really want to adopt a
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  life that someone else wants. A lot of people that follow that system
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  just don't have that life. If you want a different outcome, you
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  have to put in a different input. All right, different inputs, different
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  outcomes. Make sense? Pop in the comments below which one do you think is the
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  most outrageous that in terms of the system being
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  engineered against us. Pop in the comments below and also hit the subscribe button.
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  Send this episode to a friend who needs to hear it. Say, hey,
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  I think you're in the system. We need to engineer our way out of this. Listen to this episode. And I'll see
• 14:47
  you on the next one. Thanks for listening to Money Grows on Trees. If you enjoyed the
• 14:50
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• 14:54
  subscribe to us on YouTube so you never miss an episode. And
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  if you're serious about building wealth, make sure to check out the links in the show
• 15:01
  notes and follow me on all social media platforms at