Latest / Money Grows on Trees / #315 - Your Super Won't Make You Rich. This Will.

Transcript

#315 - Your Super Won't Make You Rich. This Will. · Money Grows on Trees

• 0:00
  Your super won't make you rich. And if you're counting on
• 0:03
  it to fund your retirement, you're setting yourself up for a massive disappointment.
• 0:08
  I know that's not what you've been told. The government tells you to contribute
• 0:11
  more. The banks tell you it's your safety net. The financial advisors tell
• 0:15
  you it's the smartest thing you can do. They're wrong. The truth is
• 0:18
  your super is locked away for decades. It's taxed. It's restricted.
• 0:22
  And even if you max out your contributions, the average Australian retires
• 0:26
  with less than $400,000. It's not wealth that's
• 0:30
  barely enough to survive. So the question becomes, what
• 0:33
  are some other options that can increase your income by 50%, 100%, 300% on
• 0:39
  top of your super? Something you control, something that compounds faster
• 0:42
  than any super fund. ever will. And in this video, I'm
• 0:46
  going to show you exactly what it is, why your super won't make you
• 0:49
  rich, and what you should be doing instead of to build real wealth
• 0:53
  that you can actually use. So firstly, what is
• 0:56
  super designed to do? What is it? Most people have no
• 0:59
  flippin idea what superannuation is. Most people
• 1:03
  think it's a big bowl of soup money that
• 1:06
  they send away over 40 years, and then when they turn 65, boom,
• 1:11
  Where's my money you're going to send me? They don't understand that it's actually cash
• 1:15
  that their employee contributes to a fund and
• 1:18
  the fund invests in assets. Assets including stocks,
• 1:22
  mainly stocks. It's in property. It's in infrastructure.
• 1:26
  It's in private equity. It can be in bonds, of course, a lot of bonds. It
• 1:30
  can be in cash sometimes. So it's the value of
• 1:33
  the assets that the super fund buys. and
• 1:36
  their ability to compound, that actually can build wealth. The challenge
• 1:40
  with it is you don't know where it is. You don't know who's managing it,
• 1:43
  how much it costs per year, what the performance is, and whether it's locked away in
• 1:47
  low-risk bonds and it's not going to compound for you. So it's very
• 1:50
  uncertain to know how well it's going to compound. And the challenge is,
• 1:54
  too, that the contributions probably aren't enough for it
• 1:57
  to be life-changing wealth creation. but
• 2:01
  it's not bad, it's a forced savings vehicle. I actually think
• 2:05
  superannuation is great for people who need to put away
• 2:09
  because Australians can't be trusted with money management from what
• 2:12
  I've seen, right? So it's a forced savings vehicle and employers
• 2:15
  contribute like 11.5%. So it's a whole pay yourself first mentality
• 2:19
  put away into a tax effective vehicle, all right? It's legislated, it's
• 2:22
  structured, it's consistent. So over decades in
• 2:26
  a nice portfolio, it can compound, it will compound. And
• 2:29
  historically, you know, super funds have returned somewhere in the middle digits,
• 2:33
  right? Depending on what it owns. It's solid. And it's
• 2:37
  designed to provide some buffer in retirement to
• 2:40
  replace some of your, well, a few years
• 2:43
  of your wage. And it's to alleviate the
• 2:47
  reliance on the age pension. It was never designed
• 2:51
  to make you wealthy. It was designed to make sure that
• 2:54
  you have something at the end and to alleviate the exposure
• 2:58
  of the age pension. And by all accounts on those reasons, it's
• 3:02
  effective. So I'm for it for those reasons. Okay. However,
• 3:07
  it's designed more for preservation than wealth creation. Okay.
• 3:11
  So can it also create acceleration? Right.
• 3:14
  So let's look at some of the logic around it. If someone earns 80,000 a year, for
• 3:18
  example, and superannuation contributions to say, you know,
• 3:21
  for arbitrary sakes, 11%, that's roughly about 9,000 annually
• 3:25
  before tax. So $9,000 before it's taxed, it
• 3:29
  goes in there, but it's also taxed at still a lower rate, but it's still taxed, okay?
• 3:32
  Then over 30 to 35 years, it compounds at a tax-free rate,
• 3:36
  right? So it will grow tax-free. That's where the benefit is. It's actually a
• 3:39
  tax shield. Superannuation is not a big bowl of super money. It's a tax legislation,
• 3:43
  okay? However, By the time you access it
• 3:47
  at 60 plus and 65 plus, you don't have any active working,
• 3:50
  you have less active working years left. So you've actually traded decades of
• 3:54
  time, right? And it more aims
• 3:57
  at you being comfortable than wealthy. And you've missed the
• 4:00
  ability to take the 11% that you would have had in your own pocket and
• 4:04
  do things like build businesses, buy
• 4:07
  growth oriented assets. and skill
• 4:11
  up, investing in yourself, et cetera. And all that, it
• 4:14
  disappears over that timeframe, right? And so you get
• 4:17
  to that age and you've lost the chance to build freedom for
• 4:20
  yourself, all right? So if your goal is to
• 4:23
  retire comfortably, fine, you'll be able to do some
• 4:27
  stuff, but to live freely, it ain't going to happen, right?
• 4:31
  And so here's the real limitation. It's more of a structural issue. Look,
• 4:34
  it locks your capital away. That's the challenge. And
• 4:38
  you can't access it easily or at all, depending
• 4:42
  on what policy you have before the
• 4:45
  age of 60 or 65. So whilst it grows, it doesn't give you any
• 4:48
  options. Optionality is a huge asset. It's not
• 4:52
  just about net worth, it's about optionality. It's being able to walk away
• 4:55
  from a job that you hate, toxic environment. It's about taking a risk, starting
• 4:58
  a business, taking time off, traveling, investing in opportunities that
• 5:02
  arise over time that super doesn't fund. It's
• 5:06
  income and accessible, it's cashflow. And all that
• 5:09
  optionality disappears. So what good
• 5:12
  is a large balance at 65 if you were financially stressed for 35 years?
• 5:16
  Does that make sense? What
• 5:20
  does create wealth? Let's shift it. If super and
• 5:24
  you know it won't make you rich, what will? And there are three things. One,
• 5:28
  increasing your income. So for example, if I
• 5:31
  focus less on my super and more on my skills
• 5:35
  to increase my income and I double my income from $80,000 to $160,000, that is going to
• 5:38
  do a lot more for you. Okay.
• 5:44
  Second thing, owning productive assets outside super. For
• 5:48
  example, if you bought a laundromat, I'm just saying it as an example, I
• 5:51
  own one, but it's a 40% return on
• 5:54
  money and it will compound and grow in value and give you a lot of
• 5:58
  freedom and choice long before super. In fact, you'll probably find it to
• 6:01
  give it to you in about five or six years. Okay. And so there's
• 6:04
  those opportunities outside super that you may
• 6:07
  not be able to get because you have no cash left. And they don't take a
• 6:10
  lot of cash down either. But if you have had that superannuation, that
• 6:15
  $9,000, perhaps you could have bought something like that, right? Now, I'm not saying all are the same. I
• 6:18
  had a student of mine did the same when he bought a gym. And I think to myself, that
• 6:22
  was a great decision. He bought a gym. It's basically giving him a level of
• 6:25
  freedom outside his job. and it wasn't super
• 6:28
  that did that. Just quickly, if you're ready to take control of your finances but feel
• 6:31
  stuck on where to start, I have a solution. My book, Money
• 6:35
  Buys Happiness, simplifies investing and wealth building with
• 6:38
  practical steps to help you achieve financial peace. Get
• 6:42
  your copy via the link in the show notes and let's get your money working for
• 6:45
  you. Now back to the episode. So owning productive assets outside
• 6:49
  super is how you do it. And third thing, building scalable
• 6:53
  cash flow. So that means that you would want to
• 6:56
  be able to invest in assets like that, as well as certain stocks that
• 6:59
  provide, even in Australia here, tax-free dividends through imputation credits.
• 7:03
  You can do that so you can actually build assets outside super that also
• 7:07
  retire you long before 65. And that's the position that I'm
• 7:10
  in. So I've done all three of those things. And I sit here
• 7:14
  today to tell you that just on our assets alone, my
• 7:17
  wife, Alicia, and I, we don't have to work, but I enjoy working.
• 7:21
  I like to work on things that I like to work on, whether it be writing books, creative
• 7:25
  content, teaching, helping events. building
• 7:28
  businesses. I love doing that. It's great fun, right? And it's
• 7:31
  great for other people too. But I'm in a position where I
• 7:36
  don't have to depend on any super. Just why don't worry about it. And
• 7:39
  I'm 42. And I'm really glad that I didn't just
• 7:44
  go through life with the notion that, oh, it's OK, I'm just going to fall back on my
• 7:47
  super at 65. I don't give a rat about super.
• 7:50
  I just don't care. Because I've built freedom already at 42 instead
• 7:54
  of banking on someone else managing my money until 65 and then coming out
• 7:57
  with 400K. That just, to me, was not a way to live life. I
• 8:01
  wanted to live life better earlier. I wanted to go skiing
• 8:04
  in Japan when I wanted. I wanted to work in areas I wanted to work in. I
• 8:08
  wanted to work with people I enjoy working with. I wanted to have optionality. And
• 8:11
  so I decided that I wasn't going to bank on super. I was going to bank on my own
• 8:15
  skills, my own ambition and buy productive assets outside
• 8:18
  super and build scalable cashflow. And now we have it. And
• 8:21
  so without too much more effort, that'll scale far beyond what a super fund
• 8:25
  can scale to. You are your best asset. You are your best
• 8:28
  investment. there are far superior ways to building wealth than just superannuation, right?
• 8:32
  So increasing income is effective. It's the biggest wealth lever that
• 8:36
  you can pull. It's got earnings power, you can double your income, you
• 8:39
  can quadruple your income, right? I've got friends of mine that have 10 extra income, right?
• 8:43
  It allows you better capacity to invest more, to acquire assets,
• 8:47
  to build better buffers. Right. It will just do so
• 8:50
  much for you then banking on super. So I think that's
• 8:53
  the biggest lever you can pull. Right. If you can then take
• 8:57
  that and own productive assets outside super
• 9:00
  long before the age of 65, there'll be shares, businesses, property, equity,
• 9:04
  and private ventures. It'll amplify your income again and again and
• 9:08
  again, but give you superior assets that compound far beyond 10% as
• 9:11
  well. Right. They're more, they are still liquid. They're strategic. They're
• 9:15
  accessible. You can touch them. You can sell them. You can do all sorts of things. Right.
• 9:19
  And of course, being able to develop those smaller incomes,
• 9:23
  it just will create so much more for you. Like when I first created a network marketing
• 9:26
  side hustle, that's brought into my wife and I over
• 9:30
  $2 million in profits. And that's far better than superannuation,
• 9:34
  right? In fact, it as an asset is superior to superannuation, period.
• 9:38
  Okay? You've got to look at where people
• 9:42
  have built wealth. It's entrepreneurs, it's business owners, it's equity
• 9:45
  holders. They didn't get rich through retirement funds. They
• 9:49
  got rich through ownership of businesses, equity, scalable systems,
• 9:52
  investing in themselves, skills, and assets that grow way beyond
• 9:56
  their labor and time. and they become super passive. So ownership
• 10:00
  is superior and active ownership is where you get outsized
• 10:03
  returns. So if the wealthiest people built businesses and
• 10:07
  assets and got equity and became owners, why would you solely rely
• 10:10
  on a retirement vehicle? Now, I'm not saying ignore it
• 10:14
  completely like I do, but I'm saying if you're
• 10:18
  going to have it, of Of course, if you're in a job, in a wage job, you
• 10:22
  still wanna maximize your pull-in contributions, you still wanna optimize your fees, you still
• 10:25
  wanna choose appropriate allocations to make sure it compounds effectively, right?
• 10:29
  But understand its role. It's a safety net. It's not
• 10:32
  a trampoline, all right? If you wanna build real wealth, income. Invest
• 10:36
  outside super, develop skills, take calculated risks, and own equity. That
• 10:40
  is the path. That's the part. And it seems riskier,
• 10:44
  but I actually contend to say that the other path of comfort that
• 10:47
  everyone else is doing is far riskier, right? Who's to say people will
• 10:51
  even have jobs in the next 10 years to contribute to
• 10:54
  their super because AI might take it because they didn't invest in their own skills.
• 10:58
  They didn't buy it and build a business. The best thing to do is control your
• 11:01
  own income. You can't do it if you're working for someone. I think that's the biggest risk. But
• 11:05
  for some reason, maybe it's because of all the fees they generate, superannuation funds
• 11:08
  and banks have seduced you into thinking that you're going to be okay with
• 11:12
  super. And the fact is with 400k, you ain't, right? You're
• 11:15
  just not, especially if inflation is running at 10%. So your super will
• 11:18
  probably take care a little bit of your retirement, but it'll
• 11:22
  definitely keep you comfortable. And that's where you will go to die, right? It
• 11:25
  will not make you rich. So please focus
• 11:29
  on ownership, income growth, scalable assets, outside super,
• 11:33
  strategic investing, long-term discipline, and business building,
• 11:36
  right? That's where it's gonna come from, amplifying your income, right? Because
• 11:40
  if you want freedom before 60, you need a different strategy, you need
• 11:43
  something else. So comment below, do you think that
• 11:46
  super is enough or are you building wealth outside of it, right?
• 11:50
  If you want frameworks that focus on ownership, income, and real financial freedom, hit
• 11:54
  the subscribe button, Stay smart. See you in the next episode. Thanks
• 11:58
  for listening to Money Grows on Trees. If you enjoyed the episode, leave a
• 12:01
  five-star review on Apple Podcasts and Spotify and subscribe
• 12:05
  to us on YouTube so you never miss an episode. And if you're serious about
• 12:08
  building wealth, make sure to check out the links in the show notes and follow me
• 12:12
  on all social media platforms at LloydJamesRoss for