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Setting up investments for kids · She's On The Money

0:00
Speaker 1: She's on the Money.
0:02
Speaker 2: She's on the Money. Hello and welcome. She's on the Money,
0:19
Speaker 2: the podcast for millennials who want financial freedom.
0:22
Speaker 1: We've never heard that.
0:24
Speaker 2: Yeah, I say it so often, don't I. Okay, So
0:28
Speaker 2: we've spoken about investing a lot over the last month,
0:31
Speaker 2: but one thing we are yet to have spoken about,
0:34
Speaker 2: perhaps ever on the show is how to invest for
0:37
Speaker 2: our children to give them a financial head start. My
0:40
Speaker 2: name is Georgia King, and joining me today to chat
0:43
Speaker 2: kids and investing is Melbourne based a financial advisor, Victoria
0:47
Speaker 2: Divine Georgia King. Hello, how are you? I'm good? How
0:51
Speaker 2: are you?
0:52
Speaker 3: It's very brash and very early. We've got more energy
0:55
Speaker 3: than we usually do.
0:56
Speaker 2: Like we do, let us know if it comes to
0:58
Speaker 2: on the airwaves.
0:59
Speaker 1: Yeah, good show, my friends, let's hope.
1:02
Speaker 2: So, before we do get into it V, I wanted
1:05
Speaker 2: to start a little bit differently, and I wanted to
1:09
Speaker 2: share a story from our community to give everyone an
1:12
Speaker 2: idea of why investing for our kids is potentially such
1:15
Speaker 2: a good option.
1:16
Speaker 1: Okay, okay, I'm ready for this.
1:17
Speaker 2: So Kylie posted this in our Facebook group. So she
1:21
Speaker 2: started out by saving two dollars a day from when
1:23
Speaker 2: her son was in the womb and when that two
1:26
Speaker 2: dollars is a.
1:27
Speaker 1: Very concerning way of saying it.
1:28
Speaker 3: But okay, I don't know, I don't know.
1:32
Speaker 1: I'm not gonna lie. Okay, that's also weird.
1:36
Speaker 3: I just get really uncomfortable with different terms about babies.
1:40
Speaker 2: Yeah, just well, girl, you better get used to it
1:43
Speaker 2: because everyone is having them, I know, the season for
1:46
Speaker 2: the babies.
1:47
Speaker 3: Is it a weird thing to say, like on the
1:49
Speaker 3: podcast publicly that there's been that there's been this shift
1:53
Speaker 3: in my life, right, so like when I was younger,
1:56
Speaker 3: if a friend was pregnant, if you're like, oh my gosh,
1:58
Speaker 3: you okay, And now it's like this mentalities Yeah, it's
2:02
Speaker 3: a congrats and I'm so excited, Like I adore kids,
2:05
Speaker 3: like I I'm such a baby person.
2:07
Speaker 1: Like if you oh, they're just the best.
2:09
Speaker 3: Yeah, literally, like my family can probably attest Yeah, Like
2:12
Speaker 3: the second I see their kids, I'm like, ha, give
2:14
Speaker 3: me your babies.
2:15
Speaker 1: Yeah.
2:16
Speaker 3: But I just haven't slipped out of the mentality that
2:19
Speaker 3: I'm no longer twenty years old. And like, don't get
2:22
Speaker 3: me wrong, there are people in our community who you know,
2:25
Speaker 3: decided to get pregnant at twenty and that's great. But
2:27
Speaker 3: when I was twenty, that was the furthest thing from
2:30
Speaker 3: my mind. And so now I'm like, oh, you did
2:34
Speaker 3: that on purpose?
2:34
Speaker 1: Yeah, like that's so exciting.
2:36
Speaker 3: But yeah, I think we're all going through that mentality
2:38
Speaker 3: of now our kids, now our friends are having babies
2:40
Speaker 3: on purpose.
2:41
Speaker 1: Like that's a different mindset.
2:42
Speaker 2: It's confusing, but it's beautiful.
2:44
Speaker 1: I'm so excited.
2:45
Speaker 3: I'm so excited. And our friend's circle like my friends.
2:48
Speaker 3: So you were starting to have babies.
2:50
Speaker 1: It's like the.
2:50
Speaker 3: Best thing ever because I get to hang out with
2:52
Speaker 3: them and then give no responsibility. That's it, the best
2:55
Speaker 3: kind of babies.
2:56
Speaker 2: I love this little detour. You're okay, but it is true.
2:59
Speaker 2: I was getting on. Okay, Yeah, I want to Kylie
3:02
Speaker 2: two dollars a day when her son was in the worm,
3:05
Speaker 2: and when that two dollars turned into one thousand dollars,
3:07
Speaker 2: that's over about five hundred days. Wisbeyg Mass. I did
3:11
Speaker 2: actually google that one thousand to five by two, and
3:13
Speaker 2: then I was like, hang on, you know this.
3:14
Speaker 1: Sheek ahh wow.
3:16
Speaker 2: So when that money turned into one thousand dollars, she
3:19
Speaker 2: put that money into shares, so they added any bonus
3:22
Speaker 2: money along the way from birthdays, Christmases into the shares,
3:25
Speaker 2: and Grandpa also generously through and ten grand when the
3:29
Speaker 2: baby was born in She Thank You g The Sun
3:34
Speaker 2: is now sixteen years old. He has a very healthy
3:36
Speaker 2: share portfolio. He paid cash for his car, and he's
3:39
Speaker 2: in a very good spot to afford a house one day. Plus.
3:42
Speaker 2: He has a plan to put three hundred dollars a
3:44
Speaker 2: week of his own earnings when he turns eighteen into shares,
3:47
Speaker 2: and he wants to do that until he is at
3:49
Speaker 2: least thirty five. From the advice Kylie and her son received,
3:54
Speaker 2: so they've seen a financial advisor, he is apparently looking
3:57
Speaker 2: at retiring with sixty million million dollars in the bank.
4:02
Speaker 2: Do those numbers sound right, because that sounds like he's
4:06
Speaker 2: going to be filthy rich, and it doesn't sound like
4:08
Speaker 2: it was that hard to do it.
4:09
Speaker 3: It's a little bit more compressed, right, like sixty million.
4:12
Speaker 3: It is possible because they've got a really long time frame,
4:15
Speaker 3: like if you are investing over sixty years, which is
4:19
Speaker 3: essentially what they're saying, like from that time that baby existed,
4:23
Speaker 3: you are investing for them. So they've got an eighteen
4:26
Speaker 3: year head start on most of us, because you're legally
4:29
Speaker 3: not allowed to start investing on your own until you
4:31
Speaker 3: reach the age of eighteen. If she had one thousand
4:34
Speaker 3: dollars ten grand from Grandpa the start, and then like,
4:37
Speaker 3: let's say they were investing three hundred dollars a week,
4:40
Speaker 3: because that's example you gave.
4:42
Speaker 2: Right, Yeah, yeah, well that's his plan, that's his plan.
4:45
Speaker 3: But I don't know how much was invested during that time.
4:48
Speaker 3: Because even if you started with eleven thousand dollars at
4:51
Speaker 3: the start and then invested three hundred dollars a week
4:55
Speaker 3: out a seven point five percent interest rate, after fifty years,
4:59
Speaker 3: you're sitting at a about eight point nine million dollars
5:03
Speaker 3: ish as an investment, which is obviously epic, but money
5:07
Speaker 3: would double about every ten years, So that kind of
5:11
Speaker 3: doesn't stack up to me.
5:13
Speaker 1: Sixty million seems wild.
5:14
Speaker 2: Okay.
5:15
Speaker 3: I don't know what he was getting for his birthday, Like,
5:17
Speaker 3: was he getting cash some payments of like twenty grands
5:20
Speaker 3: each time?
5:21
Speaker 1: Yeah, it just feels like a lot.
5:22
Speaker 3: So maybe I'm not saying this story isn't true, but
5:26
Speaker 3: I'm also going to make some assumptions that there might
5:28
Speaker 3: be some inheritance built into that and some other assets
5:31
Speaker 3: that we aren't aware of, because you can't tell everybody
5:34
Speaker 3: in a Facebook post exactly what things are made up of.
5:37
Speaker 3: But that doesn't make it not true because I have
5:39
Speaker 3: clients who are in exactly.
5:40
Speaker 1: That position too.
5:41
Speaker 3: But like, I like it, and I like working at backwards,
5:44
Speaker 3: being really realistic and not saying, Okay, well, if you
5:47
Speaker 3: turn eighteen and had eleven thousand dollars as a minimum
5:50
Speaker 3: and then invested three hundred dollars a.
5:53
Speaker 1: Week, like you're not actually going to get sixty million dollars.
5:55
Speaker 2: So but it'll still end up in a great position.
5:58
Speaker 3: Oh my gosh, why we want to talk about one
6:00
Speaker 3: hundred percent? And so that's the one thing that I
6:03
Speaker 3: want people to have in their heads. Right, so we're investing,
6:06
Speaker 3: not so at the end of the day we have
6:08
Speaker 3: a million dollars saved and we can start spending that
6:10
Speaker 3: million dollars. It's so that that money creates money for us,
6:14
Speaker 3: and that becomes our salary. So if we just said
6:17
Speaker 3: basic five percent return, because I'm wildly conservative, like I
6:22
Speaker 3: do not like to overestimate things, but if you have
6:25
Speaker 3: a five percent return on a one million dollar portfolio,
6:28
Speaker 3: which is totally possible for everyone to create at this age. Like,
6:32
Speaker 3: if we are young, we are millennials, and we put
6:34
Speaker 3: our heads down, we can create that that's a passive income.
6:38
Speaker 3: Passive income means income that we didn't have to lift
6:40
Speaker 3: a finger for. That's a passive income of fifty thousand
6:43
Speaker 3: dollars a year.
6:43
Speaker 1: At a minimum.
6:44
Speaker 2: That's nice.
6:45
Speaker 3: That's pretty that's pretty nice. That is lovely. And so
6:48
Speaker 3: if we could start creating this for our kids upfront,
6:51
Speaker 3: like we're giving them a massive head start. It's not
6:53
Speaker 3: giving them a head start for retirement, but the sooner
6:56
Speaker 3: they reach a point where they have a passive income,
6:59
Speaker 3: life is easier.
7:01
Speaker 1: So we're not talking.
7:02
Speaker 3: About, oh my gosh, start investing for your kids so
7:04
Speaker 3: that when they reach the age of sixty five they'll
7:06
Speaker 3: be comfortable. It's what if you started investing for your
7:10
Speaker 3: kids now, even for yourself now, so that when they're
7:12
Speaker 3: thirty and they're deciding to have their first kids, they've
7:15
Speaker 3: got an extra passive income of thirty grand Like how
7:17
Speaker 3: good would that be if you were on matt leave.
7:20
Speaker 3: Like we're not talking let's make ourselfs ballers. We're saying,
7:24
Speaker 3: let's make ourselves really comfortable and give absolutely everybody the
7:28
Speaker 3: best chance in life, because the end of the day,
7:30
Speaker 3: even if you invested and there was like a smaller
7:33
Speaker 3: passive income could pay school fees, that could pay something
7:36
Speaker 3: to create a more comfortable life for your child in
7:39
Speaker 3: the future. And for me, that's arguably the best way
7:43
Speaker 3: to give back, Like you could give them things, or
7:45
Speaker 3: you could give them the freedom of financial security into me.
7:48
Speaker 3: I think that's that's a sexier pressent, yeah.
7:50
Speaker 1: For sure.
7:51
Speaker 2: And I think the other thing is that it's the
7:54
Speaker 2: old kids saying like from the little things, big things grow.
7:57
Speaker 1: I'm so done.
7:58
Speaker 3: We have been thrown under the US without saying but
8:01
Speaker 3: I clearly didn't coin it.
8:02
Speaker 1: I just really like that saying.
8:05
Speaker 3: And now every Friday Drinks Ryan finds some way.
8:08
Speaker 1: To put it on the pod. But hey, it is true.
8:11
Speaker 2: Do you think that that is a part of the
8:14
Speaker 2: reason that so many people in our community are starting
8:17
Speaker 2: to have this conversation because it's not just you, myself
8:20
Speaker 2: and Kylie chatting about investing.
8:22
Speaker 1: For our kids.
8:22
Speaker 2: It's a really popular topic that we're seeing it.
8:24
Speaker 3: Is, and it's one that I've had so so many
8:27
Speaker 3: messages about. But I think this is one of those
8:29
Speaker 3: topics that I just want you to be educated on.
8:32
Speaker 1: So if you don't have kids, great, that is a
8:35
Speaker 1: non issue at all. But all of.
8:37
Speaker 3: These tips and tricks are applicable to you when you're
8:40
Speaker 3: investing for yourself. Like, once you understand investing, it doesn't
8:44
Speaker 3: matter who you're doing it for. It actually just matters
8:46
Speaker 3: what we're working towards in the end. And obviously we
8:49
Speaker 3: need to talk about structures and their different ways to
8:51
Speaker 3: hold things because I think that's where a lot of
8:53
Speaker 3: complexity comes from. And that's where we get a lot
8:55
Speaker 3: of questions from people in our community who are saying, oh,
8:58
Speaker 3: should I have a trust, Should I know be investing
9:01
Speaker 3: in a bond? Should I be doing something different for
9:04
Speaker 3: my kids? Like how do I do that? And I
9:05
Speaker 3: think that's what this podcast is about. But it will
9:08
Speaker 3: also give you the knowledge so in the future when
9:11
Speaker 3: stuff does start to happen in your life and you
9:13
Speaker 3: do find yourself in a position where you're like, oh,
9:15
Speaker 3: I love kids, like this can be part of the story,
9:18
Speaker 3: and this can be part of your future kids' money stories.
9:20
Speaker 3: And how cool is that to think that there are
9:22
Speaker 3: gonna be future Bambinies out there Georgia.
9:25
Speaker 1: Who have little trust set up.
9:26
Speaker 3: For them or like little investment portfolios or Mum and
9:30
Speaker 3: dad are killing it because when you.
9:32
Speaker 1: Set them up, right, Yeah, how cool? So cute?
9:35
Speaker 2: It is cool.
9:36
Speaker 1: It is very cool.
9:38
Speaker 2: H Okay, I'm gonna skip us ahead a little bit heavy.
9:41
Speaker 2: How do we actually get started on this journey?
9:44
Speaker 3: So gee, they are actually a fair few different ways
9:47
Speaker 3: we can start to approach this and set this up.
9:49
Speaker 3: It is not a one size fits or approach. It
9:51
Speaker 3: is actually a lot more complicated than that. But at
9:54
Speaker 3: the same time, we can distill it down and make
9:56
Speaker 3: it super easy. So we need to start by assessing
10:00
Speaker 3: the length of time that you're actually planning on committing
10:02
Speaker 3: to this investment for is this going to be because
10:04
Speaker 3: Grandpa gave you ten grand when the baby was born
10:07
Speaker 3: or one thousand dollars like that's obviously wildly generous, But
10:11
Speaker 3: is that why you're investing or is it because you
10:13
Speaker 3: actually have a lump sum every single month that you
10:15
Speaker 3: want to invest. If so, what is that amount? This
10:18
Speaker 3: is such a pressury conversation for a lot of people.
10:21
Speaker 3: If you're on a low or a minimum wage and
10:23
Speaker 3: you've got two kids, like, don't feel like you need
10:26
Speaker 3: to set them up with an investment portfolio.
10:27
Speaker 1: That is absolutely not an expectation. But you are smart.
10:32
Speaker 3: It doesn't matter how much you earn. You can teach
10:35
Speaker 3: your children financial literacy. You can teach them how much
10:39
Speaker 3: things cost. You can teach them that investing should be
10:42
Speaker 3: a priority, and you can teach them all the basics
10:45
Speaker 3: that they need to know without even having to invest. Really,
10:49
Speaker 3: it's not about how much you have. It's actually about
10:52
Speaker 3: what you're going to teach them, and that, to me
10:53
Speaker 3: is the legacy we want to leave behind. So I
10:56
Speaker 3: think before we even talk about okay, well this is bond,
10:58
Speaker 3: this trust and just say we're here to educate our
11:02
Speaker 3: children because the more educated they are, the better choices
11:04
Speaker 3: they're going to make for their financial futures. And that's
11:07
Speaker 3: how we change a money story. That's how we change
11:09
Speaker 3: a financial future. That is what we do to actually
11:12
Speaker 3: have generational impact. It's not about setting kids up so
11:15
Speaker 3: that they're entitled and have trust funds. Yes, albeit I
11:18
Speaker 3: know they probably appreciate it, yeah, because I.
11:20
Speaker 2: Would sorry, definitely back to timelines V. So I'm assuming
11:26
Speaker 2: our approach to how we're going to invest for our
11:28
Speaker 2: kids is going to be different if we have fresh
11:32
Speaker 2: in the womb, or a seventeen year old that we're.
11:34
Speaker 3: Wanting freshy in the I don't I can't wait.
11:37
Speaker 1: Tell you have kids and see just how you refer
11:39
Speaker 1: to them. It's given a big delight.
11:41
Speaker 2: Yeah, oh well it's a good twenty years away, so
11:43
Speaker 2: don't you worry about that?
11:45
Speaker 1: Yeah?
11:45
Speaker 3: Sure, sure they all say that and then everybody gets preger.
11:49
Speaker 2: No, but yeah, so what is the difference there.
11:52
Speaker 3: It's really important for you to understand your timelines here.
11:55
Speaker 3: So that goes back to why and we always say
11:59
Speaker 3: when investing, way to do it is it to set
12:00
Speaker 3: them up for a successful financial future. If so, what
12:04
Speaker 3: does that mean? Does that mean you are setting them
12:05
Speaker 3: up to pay for their future car or their future
12:07
Speaker 3: school fees? Are you paying for their future wedding? Are
12:09
Speaker 3: you buying them their first home?
12:11
Speaker 2: Like?
12:11
Speaker 3: What does that investment actually look like? And for the
12:14
Speaker 3: average Australian, can we just actually preface that buying your
12:19
Speaker 3: kid at their first home is not going to be
12:21
Speaker 3: an achievable thing to set a goal for, but you
12:24
Speaker 3: definitely could help them to, you know, save some money
12:27
Speaker 3: or invest some money towards a deposit for a home
12:29
Speaker 3: because home prices are crazy so that might be a
12:32
Speaker 3: bit crazy to think that we could do that. But
12:35
Speaker 3: each to their own, everyone has a different money story.
12:37
Speaker 3: But if we have a long time to invest, like
12:40
Speaker 3: ten years or more, which arguably if you're having a baby,
12:42
Speaker 3: they're not going to be able to invest on their
12:44
Speaker 3: own or even have anything important to buy when they're ten.
12:47
Speaker 1: When I was standing, I was buying.
12:48
Speaker 3: Bradstoles, so all same, that was pretty important.
12:51
Speaker 2: That was pretty inveortment.
12:52
Speaker 3: Chloe josh ask Alex my sister obsessed.
12:58
Speaker 2: Really yeah, it was always did how the whole feat
13:01
Speaker 2: could just be removed? Can you remember that?
13:04
Speaker 1: That was weird?
13:05
Speaker 2: It was strange, all right.
13:07
Speaker 3: A really cool thing to potentially consider is an investment bond.
13:11
Speaker 3: So this is not like the bonds that we talked
13:13
Speaker 3: about on our bonds episode, where you know, the government
13:17
Speaker 3: issues a bond and you purchase one a bond. It's
13:19
Speaker 3: a bit bigger than that, and we'll do an entire
13:21
Speaker 3: episode on what this is and how it works, but
13:24
Speaker 3: essentially it allows you to invest in a more tax
13:27
Speaker 3: savvy way. To put it simply, bonds are designed to
13:30
Speaker 3: be a ten minimum ten year investment commitment, and generally
13:34
Speaker 3: you don't make any withdrawals along that time, and any
13:38
Speaker 3: earnings that you make from that bond end up being
13:40
Speaker 3: tax free because it's in a different vehicle, so it
13:42
Speaker 3: sits there and it is a little bit sexier, a
13:44
Speaker 3: little bit nicer. It's actually easier for you personally to
13:47
Speaker 3: do your tax return because you don't have to do
13:49
Speaker 3: anything for it, Whereas if you go and buy a
13:52
Speaker 3: whole heap of shares individually and you own them, you
13:55
Speaker 3: need to add that to your tax return each year.
13:58
Speaker 1: It's not that complicated.
13:59
Speaker 3: I'm drama tizing how hard it is, but at the
14:01
Speaker 3: end of the day, it's important to know that your
14:02
Speaker 3: tax return would be easier. And you could also invest
14:05
Speaker 3: in shares in a more traditional way, which obviously has
14:09
Speaker 3: some benefits but also has the highs and lows. If
14:13
Speaker 3: you have a moderate amount of time, which arguably might
14:17
Speaker 3: be you have a ten year old now and you
14:19
Speaker 3: want to start investing for their future car when they
14:22
Speaker 3: turn eighteen, or you know, setting them up for UNI
14:24
Speaker 3: or whatever that looks like. So like five to eight
14:27
Speaker 3: years or around that mark's still definitely worth investing. Like
14:31
Speaker 3: we have impact over the long term, our money is
14:34
Speaker 3: meant to double on average every ten years, so like
14:38
Speaker 3: that's pretty close to that. You're going to get some
14:40
Speaker 3: pretty sweet returns in that time. But maybe an option
14:43
Speaker 3: like an ETF might be a little bit better because
14:45
Speaker 3: an investment bond might not be the right fit for
14:48
Speaker 3: you because of the longevity of it, and we prefer
14:50
Speaker 3: to put you into an asset like an investment bond
14:53
Speaker 3: for a longer period of time. And then if you're
14:56
Speaker 3: investing for the short term, so between two and three years,
14:59
Speaker 3: that's aally a lot riskier because we don't know what
15:02
Speaker 3: the markets are going to do in two to three years,
15:04
Speaker 3: and I think that for me, it's not not worth it.
15:07
Speaker 3: But you need to understand that you might not be
15:10
Speaker 3: able to pull your money out and have made a
15:12
Speaker 3: profit in that time. So my advice he would probably
15:15
Speaker 3: be to incrementally add money to a high interest savings
15:18
Speaker 3: account if they still exist.
15:20
Speaker 1: To sure, I don't think they do. Can we just
15:22
Speaker 1: touch on that for a hot set?
15:23
Speaker 3: It's touch because everybody know she's on the money. Community
15:26
Speaker 3: This week has been like, oh my gosh, I can't
15:28
Speaker 3: believe it. Our bank has dropped their interest rate again,
15:31
Speaker 3: as if our banks personally victimizing them.
15:33
Speaker 1: But it's not.
15:34
Speaker 3: It's not what's happening. Like the RBA sets the interest rates.
15:39
Speaker 3: That's why we have such great home loan rates at
15:41
Speaker 3: the moment. The banks aren't choosing to give you less
15:44
Speaker 3: because they just want to. It's just not a profitable
15:46
Speaker 3: business model for them to give you any less. They
15:49
Speaker 3: genuinely can't afford it, so they are passing on the
15:51
Speaker 3: cuts that have occurred to them to you.
15:54
Speaker 1: It is how it works, and.
15:55
Speaker 3: That's why a high interest savings account is just that
16:00
Speaker 3: sometimes it is going to fluctuate. You're not going to
16:02
Speaker 3: lose money in the same way you would if you
16:04
Speaker 3: had an investment portfolio, but you're going to get a
16:06
Speaker 3: lesser return.
16:08
Speaker 1: It's why it's lower.
16:09
Speaker 3: That's why in times like these, people do start turning
16:12
Speaker 3: to investments. A couple of years ago, like fifteen years ago,
16:15
Speaker 3: that's more than a couple whatever high interest savings accounts.
16:18
Speaker 3: Some of them had eight percent returns.
16:21
Speaker 1: Genius.
16:22
Speaker 3: That's why we all sew for, oh, get a high
16:25
Speaker 3: interest savings account. Like that term's kind of going in
16:28
Speaker 3: the bin because I know that a lot of them
16:29
Speaker 3: are down to like zero point seven percent. You're like, oh,
16:32
Speaker 3: that's not sexy, Like that's not keeping up with inflation
16:35
Speaker 3: like Victoria says it should, and we look for alternative assets.
16:40
Speaker 3: So I think it's really important to understand that just
16:43
Speaker 3: because your bank has decreased the amount of interest they're paying,
16:45
Speaker 3: it doesn't make them a bad bank. Like you've also
16:47
Speaker 3: got to take into consideration the fact that you're there
16:50
Speaker 3: because they are easy to access, or you really like
16:52
Speaker 3: their app or you really like their customer service, like
16:55
Speaker 3: these are the other things that come into play if
16:57
Speaker 3: you're just there for the high interest safe things component
17:01
Speaker 3: Like let's have a thing, have you got a million
17:03
Speaker 3: dollars in your savings account to make.
17:04
Speaker 1: It worth moving that?
17:06
Speaker 3: Or are you just chasing Oh well they're at one percent,
17:09
Speaker 3: mind dropped two point seven, like you're chasing two or
17:12
Speaker 3: three dollars. And what you don't remember there is you're
17:15
Speaker 3: going to pay tax on that as well, so it's
17:17
Speaker 3: even less so at the end of the day, I
17:19
Speaker 3: think it's really important to understand that savings rates are
17:22
Speaker 3: just that they are savings rates, Like we're investing for
17:25
Speaker 3: the future, not saving for our futures, because otherwise you
17:29
Speaker 3: just won't have the same amount to invest.
17:32
Speaker 2: Do you think it would be Okay, though, if you
17:33
Speaker 2: did just have two or three years, if your kid's
17:36
Speaker 2: fifteen and you want to help them out with the car, Like,
17:39
Speaker 2: could you put away ten dollars a week into savings?
17:42
Speaker 3: Oh, yeah, I would put I would put it into
17:44
Speaker 3: savings and a yeah, a term deposit is a really
17:47
Speaker 3: good option. Again, because the interest rate has decreased, term
17:52
Speaker 3: deposits have also decreased. But it's not a bad idea.
17:55
Speaker 3: If you're putting money aside, that is fantastic. Just make
17:58
Speaker 3: sure it's in the best possible vehicle. And for me,
18:01
Speaker 3: if you're going to use the savings account, yes, obviously
18:04
Speaker 3: get the best interest rate possible if possible. It's not
18:07
Speaker 3: the end of the world if it's like a couple
18:09
Speaker 3: of points difference. But make sure you don't have any fees,
18:13
Speaker 3: because I don't care if it's returning two and a
18:14
Speaker 3: half percent, but then it's charging you two dollars fifty
18:16
Speaker 3: a month, like put that in the bin. You're probably
18:19
Speaker 3: not making that amount on interest each month anyway, So
18:22
Speaker 3: I think no fees is the best way forward for me.
18:25
Speaker 3: And then just put it somewhere safe that it can
18:28
Speaker 3: slowly compound over time.
18:30
Speaker 1: My friends lovely.
18:31
Speaker 2: So there are options.
18:32
Speaker 1: I guess who call them?
18:34
Speaker 2: You know the timeframes that we're working with. When it
18:37
Speaker 2: comes to how we actually get it done. Do we
18:41
Speaker 2: invest in the kid's name in our name, in our
18:44
Speaker 2: partner's name. What does that look like?
18:46
Speaker 1: Are you ready?
18:48
Speaker 2: Yes?
18:48
Speaker 1: Okay?
18:49
Speaker 3: So you could do a couple of things. The first
18:51
Speaker 3: thing you could do is open an online trading account
18:54
Speaker 3: for your child and you would then act as the trustee.
18:58
Speaker 3: So trustee is kind of like the rest person. They're
19:00
Speaker 3: under eighteen, so they clearly can't have an account on
19:03
Speaker 3: their own and make their own decisions. As soon as
19:06
Speaker 3: the trial becomes eighteen, those shares in that account get
19:09
Speaker 3: transferred over to them.
19:10
Speaker 1: It's very exciting.
19:12
Speaker 3: You do need to keep in mind that when it
19:13
Speaker 3: comes to dividends, which is the money that your shares
19:16
Speaker 3: makes you and pays you for owning them money win.
19:19
Speaker 3: If you own the shares, then the dividends will need
19:21
Speaker 3: to be included in your tax return, so you will
19:23
Speaker 3: be paying tax on those, which could increase your income
19:26
Speaker 3: and it could result in you paying more tax. However,
19:29
Speaker 3: franking credits do mean that additional tax is probably not
19:32
Speaker 3: going to be a huge issue for you here. Regardless,
19:35
Speaker 3: if you are in a partnership for tax purposes, it's
19:37
Speaker 3: usually wiser to put the shares in the name of
19:39
Speaker 3: the parent who has the lesser income. Not tax advice,
19:43
Speaker 3: just a hot tip that I'm sure a lot of
19:45
Speaker 3: accountants would say. Here is the important part of this, though,
19:49
Speaker 3: because so many people want to set shares up in
19:53
Speaker 3: their child's name because they're like, no, I want.
19:55
Speaker 1: Them to be the owner.
19:55
Speaker 3: I want them to be empowered, and I want them
19:57
Speaker 3: to know it's for them.
19:58
Speaker 1: I get that.
19:59
Speaker 3: But if you choose to make your child the owner
20:02
Speaker 3: of the shares, then any dividends that are paid need
20:05
Speaker 3: to be declared in a tax return for your child,
20:08
Speaker 3: and they're going to need.
20:09
Speaker 1: A tax while number.
20:10
Speaker 3: So that all makes I think quite logical sense. But
20:13
Speaker 3: the qualm of this, of course, is that if any
20:15
Speaker 3: income the tild makes needs to be declared on a
20:17
Speaker 3: tax return, they are actually taxed in a very different
20:22
Speaker 3: way than us as adults are, because the government essentially
20:26
Speaker 3: wants to protect the government wants to protect themselves essentially
20:31
Speaker 3: by making sure that we as adults don't use our
20:34
Speaker 3: children as tax free vehicles, so they tax us incredibly highly,
20:40
Speaker 3: so kids are capped at four hundred and sixteen dollars
20:42
Speaker 3: in investment income, and then after that their income is
20:46
Speaker 3: taxed at a rate of sixty six percent Georgia, which
20:51
Speaker 3: is I would say defeats the purpose. That is incredibly high.
20:55
Speaker 3: Please keep in mind the highest marginal tax rate in
20:58
Speaker 3: Australia is thirty nine percent. Wow, so when you compare
21:02
Speaker 3: that to sixty six percent is a little bit more right.
21:06
Speaker 3: So that's wild and you need to take that into consideration.
21:09
Speaker 3: And that is why maybe it is really important to
21:13
Speaker 3: potentially just invest in your name and just say, hey, child,
21:16
Speaker 3: this is yours, and transfer it to them when they're eighteen.
21:18
Speaker 3: Keep in mind that if you do transfer it when
21:20
Speaker 3: they're eighteen, you might have to pay capital gains taxes
21:22
Speaker 3: because you're essentially transferring something yeah sor tax saying it
21:25
Speaker 3: yeah in saying that. It just depends on how you're
21:28
Speaker 3: going to do it, because essentially you can't just gift
21:31
Speaker 3: away shares. You actually have to transfer them, and there
21:33
Speaker 3: are fees to be paid when you transfer shares from
21:37
Speaker 3: one person to another.
21:39
Speaker 2: Okay, So would there be any benefit then V in
21:42
Speaker 2: this space looking at micro invest in invest in micro
21:46
Speaker 2: investing micro invest in platforms.
21:49
Speaker 3: Yeah, so I think that there are a number of
21:51
Speaker 3: different platforms. They all have different benefits, but we need
21:54
Speaker 3: to remember they are micro investing platforms. They do not
21:57
Speaker 3: exist for you to invest in for the long term.
22:01
Speaker 3: I do think that they're changing the way that they
22:03
Speaker 3: see themselves though they're going from oh around up a
22:06
Speaker 3: dollar or two to like invest lump sums, but I
22:09
Speaker 3: don't think that they are structured from the beginning to
22:11
Speaker 3: be like that. So when you compare it to something
22:14
Speaker 3: like Superhero, they're a little bit more comprehensive. They give
22:17
Speaker 3: you more options, they give you the ability to change
22:19
Speaker 3: what you're actually investing in and select your portfolios, and
22:23
Speaker 3: they have a really comprehensive platform that allows you to
22:26
Speaker 3: transact at a really low fee, which starts to make
22:29
Speaker 3: you think, well, why aren't I using something like that
22:31
Speaker 3: instead of the micro investing platform where I just pick
22:34
Speaker 3: my risk profile and go, oh, I want to be
22:37
Speaker 3: moderately aggressive, and that you get what you get, So
22:40
Speaker 3: you get more flexibility with something a little bit more comprehensive,
22:43
Speaker 3: which I would argue is a little bit more empowering.
22:47
Speaker 1: But as I've said, I.
22:48
Speaker 3: Adore micro investing platforms because I think it helps you
22:51
Speaker 3: dip your toes in the water with a few dollars
22:53
Speaker 3: to start seeing what the markets are doing. You see
22:56
Speaker 3: the ebbs and flows, you start to see how the
22:58
Speaker 3: market performs, which by way, it's starting to drop at
23:01
Speaker 3: the moment I'm looking at even my micro investing platforms
23:04
Speaker 3: and I'm like, welly, that's not nice to see. That
23:08
Speaker 3: is a couple of hundred dollars less than what I
23:10
Speaker 3: had the other day.
23:12
Speaker 1: Which is stressful.
23:13
Speaker 3: But at the end of the day, that's part of
23:14
Speaker 3: the journey, right, and we want to be part of
23:17
Speaker 3: the journey. So micro investing platform might be somewaey that
23:19
Speaker 3: you start to me, I would want something more comprehensive
23:23
Speaker 3: for the long term that has a bit more longevity
23:25
Speaker 3: than going, okay, cool, well I've got an app for
23:28
Speaker 3: my kid. I want to be able to log in
23:30
Speaker 3: and actually have an investment portal where things are actually
23:33
Speaker 3: being bought and sold in a bit more of it
23:36
Speaker 3: a comprehensive way.
23:37
Speaker 2: So that's what Superhero can offer.
23:39
Speaker 3: Yeah, Superhero can offer that, and obviously they're the partners
23:42
Speaker 3: of today's show. But I would never talk about a
23:44
Speaker 3: platform if I didn't genuinely believe in them, and when
23:47
Speaker 3: we started talking to them and I really liked it.
23:50
Speaker 3: They approached me and they're like, hey, I want to
23:51
Speaker 3: talk to you about this, and I was like, oh,
23:53
Speaker 3: people in our community have been asking about Superhero and
23:56
Speaker 3: it gave me the ability to do a whole heap
23:59
Speaker 3: of research and yeah, I really like them. At the
24:01
Speaker 3: end of the day, they are making investing a little
24:04
Speaker 3: bit more accessible, a little bit more understandable, and it's
24:08
Speaker 3: arguably a little bit more affordable as well.
24:12
Speaker 2: What do you mean by it more affordable?
24:14
Speaker 3: So when we say more affordable, it's all about brokerage.
24:18
Speaker 3: So when you talk about investing and I think I've
24:21
Speaker 3: covered this a heap of times, butaut I will sound
24:23
Speaker 3: like a broken record because that's how we do on
24:25
Speaker 3: this podcast. At the end of the day, you have
24:28
Speaker 3: to pay brokerage and that is when you buy and
24:31
Speaker 3: sell a share. So you would go and buy a
24:33
Speaker 3: share and say hey, mister broker, can you please purchase
24:36
Speaker 3: me in ten of X. They are brokering that deal
24:39
Speaker 3: for you and the platform has to transact and to
24:42
Speaker 3: buy and sell things on the AX. Here in Australia,
24:45
Speaker 3: you actually have to pay a broker, like there's always
24:48
Speaker 3: a middleman of some form. You can go direct shares,
24:51
Speaker 3: but like usually there's fees involved. So when I say
24:54
Speaker 3: it's cheaper, I'm comparing it to the likes of like
24:57
Speaker 3: comm Circle, like self Wealth, or these other platforms that
25:01
Speaker 3: people trade on, and I'm not saying they're bad, but
25:03
Speaker 3: they have higher brokereage fees. I think Comsec at the
25:06
Speaker 3: moment is nineteen ninety five to make a trade, and
25:09
Speaker 3: self Wealth starts from like nine dollars ninety from memory,
25:14
Speaker 3: which at the end of the day doesn't sound like
25:16
Speaker 3: that much money.
25:17
Speaker 1: Right.
25:17
Speaker 3: If we said, hey, gee, you've got one hundred bucks
25:20
Speaker 3: to invest, you're like nine dollars ninety I've got one
25:22
Speaker 3: hundred dollar ruse. Well, that's actually nearly ten percent of
25:26
Speaker 3: what your investment is. So if we look at it
25:29
Speaker 3: in terms of a return, you go, well, I've got
25:32
Speaker 3: one hundred dollars Victoria, and I go, okay, well nine
25:33
Speaker 3: dollars ninety, So nine point nine percent of your current
25:37
Speaker 3: investment is actually already going to be lost.
25:40
Speaker 1: When you put it into the market.
25:42
Speaker 3: You go, oh, so that means that you need to
25:44
Speaker 3: be making nine dollars ninety or nine point nine percent
25:47
Speaker 3: in return just to break even on your investment to
25:50
Speaker 3: make it back, and then you'd want to make more.
25:53
Speaker 3: And we keep saying things like, oh, the average return
25:55
Speaker 3: is eleven percent in Australia, and I use between five
25:59
Speaker 3: and seven and ah percent depending on how I'm feeling
26:02
Speaker 3: that day as an example. And the reason I do
26:06
Speaker 3: that is because that's just a bit more of a
26:08
Speaker 3: conservative option. But if you're saying to me, Victoria, I've
26:11
Speaker 3: lost my nine dollars ninety because I use self wealth
26:14
Speaker 3: or com second, I'm not saying these are bad things.
26:17
Speaker 3: We're just using it as an example. This is just brokerage.
26:19
Speaker 3: It is a thing that exists. You're then telling me
26:22
Speaker 3: you need to make nine point nine percent plus the
26:24
Speaker 3: five percent i'm assuming.
26:25
Speaker 1: So we're now at a really high risk profile.
26:28
Speaker 3: We are now shooting at returns that are not common
26:32
Speaker 3: if you are just investing normally. We are now expecting
26:35
Speaker 3: a fifteen percent return at a minimum.
26:38
Speaker 1: Wow, Like that's not normal.
26:39
Speaker 2: Well that's time three. What you usually say is a
26:42
Speaker 2: conservative return exactly.
26:44
Speaker 3: Hello, thank you. So that's my rant about brokerage and
26:48
Speaker 3: why I think it's really cool that a platform like
26:51
Speaker 3: Superhero exists one.
26:53
Speaker 1: They're a pretty platform.
26:54
Speaker 3: Obviously, aesthetics are really important, but they start trading at
26:57
Speaker 3: five dollars and that's kind of cool because.
26:59
Speaker 1: It makes it a little bit more accessible. Yeah, and
27:02
Speaker 1: I like that. I love that all right.
27:05
Speaker 3: To wrap this all up, you can head to www
27:08
Speaker 3: dot superhero dot com dot au to find out more
27:11
Speaker 3: about our new friends from Superhero, or you can just
27:13
Speaker 3: click the link in our show notes.
27:15
Speaker 2: Now, we will be back after a very short break
27:18
Speaker 2: to tackle tax and talk through the potential risks of
27:21
Speaker 2: putting money away for our kids. Don't go anywhere now, guys,
27:39
Speaker 2: you're probably across it. We've mentioned them a few times,
27:43
Speaker 2: but if you're not already, please join us on our
27:46
Speaker 2: Facebook page, which is even with financial even put me off, Why.
27:51
Speaker 1: Did I say? Hen?
27:53
Speaker 2: I'm sorry everyone.
27:54
Speaker 1: I kind of want to have that left in there.
27:56
Speaker 3: But yeah, we're on Instagram, We're on Facebook, we're on
27:58
Speaker 3: YouTube or on TikTok, and every single week g King
28:02
Speaker 3: writes you, guys a love letter in the form of
28:04
Speaker 3: a newsletter. It is a love letter. You always write
28:07
Speaker 3: so beautifully, honestly, really, yeah, don't be silly.
28:10
Speaker 1: Everybody loves your work.
28:12
Speaker 3: I cannot believe how many people actually read our newsletter,
28:16
Speaker 3: like your click great stretch, King, very high stop.
28:18
Speaker 1: You're a popular gown. So we'll pres through. Yeah, exactly.
28:23
Speaker 3: We will put the link to the newsletter in ourt
28:25
Speaker 3: show notes because with all of the circus going on
28:29
Speaker 3: at the moment, like with Facebook not having news and
28:31
Speaker 3: now having news back and all of that. Yeah, I
28:33
Speaker 3: actually think it's a priority for us. And she's on
28:35
Speaker 3: the money to make sure that we actually keep building
28:37
Speaker 3: our newsletter and keep building that contact system for us,
28:41
Speaker 3: because if we ever lose it, like what if we
28:43
Speaker 3: got categorized as news Like we're not, but what if
28:46
Speaker 3: we did, because so many people did lose their platforms
28:48
Speaker 3: during that little bit of a circus, Like that'll be
28:51
Speaker 3: where we communicate with you. Yeah, yeah, I don't want
28:53
Speaker 3: you to get lost. You don't want to get lost
28:55
Speaker 3: and join us.
28:56
Speaker 2: And it's got all of our updates in there as well,
28:58
Speaker 2: so it's a very good place to go.
28:59
Speaker 1: Exactly.
29:00
Speaker 2: Now, I did some digging in our Facebook group Good
29:03
Speaker 2: on You, George, and found a comment from Michelle, who
29:06
Speaker 2: from the age of five, puts money into a savings
29:09
Speaker 2: account each week for her kids based on how old
29:11
Speaker 2: they are. So Michelle isn't five, her kids are five
29:14
Speaker 2: when she starts this process. So five dollars per week
29:17
Speaker 2: when they're five, six dollars per week when they're six,
29:19
Speaker 2: and so on, and she's planning on doing this until
29:22
Speaker 2: the kids are eighteen, which I thought sounded like a
29:25
Speaker 2: pretty cool idea. But V is there anything wrong with
29:29
Speaker 2: investing this way?
29:31
Speaker 3: Okay, So this is where we are probably a little
29:35
Speaker 3: bit confused. This is saving for your kid's future, not investing,
29:39
Speaker 3: which is also very exciting. But given your time frames,
29:43
Speaker 3: I would really recommend having a look into investing, because
29:47
Speaker 3: at the end of the day, the savings rates are
29:50
Speaker 3: not keeping up with inflation, and you're actually going to
29:52
Speaker 3: be ending up with less money over time. And now
29:56
Speaker 3: that doesn't mean some magical fairy is going to come
29:58
Speaker 3: and take money from your account and you you thought
30:00
Speaker 3: you had eight thousand dollars, you now have six thousand, Like,
30:02
Speaker 3: that's not how it works. Like you'll still have the
30:05
Speaker 3: same amount of money, but in the future will purchase
30:08
Speaker 3: you less, which is why.
30:09
Speaker 1: We want investment return.
30:11
Speaker 3: So when we talk about inflation eating up your returns,
30:14
Speaker 3: what we mean is like a loaf of bread the
30:17
Speaker 3: other week cost Georgia king eight dollars.
30:19
Speaker 2: Rough.
30:20
Speaker 3: Yeah it was pretty rough, But that loaf of bread
30:22
Speaker 3: in ten years might cost ten. So therefore, the money
30:25
Speaker 3: in your savings account is now buying you less, which
30:28
Speaker 3: is why we want to invest so that we one
30:31
Speaker 3: keep up with the rate of inflation, which is on
30:33
Speaker 3: average about two two and a half percent, but also
30:36
Speaker 3: get some more money so that our money makes us
30:39
Speaker 3: money and we know, create wealth. But if they're six
30:42
Speaker 3: and you're investing from ten plus years, because they're not
30:45
Speaker 3: going to be accessing it until they're eighteen, like, it
30:48
Speaker 3: seems like a no brainer to really be interested in
30:51
Speaker 3: working out what type of investment vehicle you could have, because.
30:54
Speaker 1: You could still have a super.
30:56
Speaker 3: Super conservative investment vehicle and be making like four five percent,
31:01
Speaker 3: and that's for a five percent you didn't have before
31:03
Speaker 3: and you can still.
31:04
Speaker 1: Sleep well at night.
31:06
Speaker 2: Ah Okay, I want to pivot here to use the
31:10
Speaker 2: much overused phrase of twenty twenty and talk about family trusts.
31:15
Speaker 2: Oh yeah, okay, hear about these a lot, but you
31:18
Speaker 2: don't know what they are.
31:19
Speaker 1: That's because we're not born into wealth. Georgia, like, no.
31:23
Speaker 3: Trust funds for us, trust on baby, but that's not
31:26
Speaker 3: just what it is. So according to the ATO, a
31:28
Speaker 3: trust is an obligation imposed on a person or other
31:32
Speaker 3: entity told property for the benefit of its beneficiaries. So
31:36
Speaker 3: while in legal terms the trust is a relationship not
31:38
Speaker 3: a legal entity, trusts are treated as taxpayer entity, so
31:43
Speaker 3: they're treated as their own individual person, right not, but
31:46
Speaker 3: they're treated that way when it comes to tax admins.
31:49
Speaker 3: So they have their own tax return. So the trustee
31:52
Speaker 3: is then responsible for managing the trust tax affairs. So
31:55
Speaker 3: when we said trustee earlier, trustee is the person responsible.
31:58
Speaker 3: So you have to do the type return for that trust,
32:02
Speaker 3: including registering that trust in the tax system and lodging
32:05
Speaker 3: tax returns every year and paying some of the tax
32:07
Speaker 3: liabilities if they exist.
32:09
Speaker 1: Does that make sense?
32:11
Speaker 2: Is that just one person that's the trustee?
32:13
Speaker 3: Yes, okay, yes, it could be like you can do
32:16
Speaker 3: a lot inside a trust. But at the end of
32:19
Speaker 3: the day, yes, you would nominate one person who's responsible
32:21
Speaker 3: for that and then a beneficiary, which I just feel
32:24
Speaker 3: like there's so many fluffy words in finance that just
32:27
Speaker 3: makes sense.
32:28
Speaker 1: It just sipits.
32:29
Speaker 3: Yeah, it just means the people that are nominated to
32:31
Speaker 3: benefit from that trust. Right, So if you're the beneficiary,
32:35
Speaker 3: you are the individual who would benefit from it. And
32:38
Speaker 3: beneficiaries include their shares of the trusts net income as
32:42
Speaker 3: an income of their own tax return. So like if
32:45
Speaker 3: you are the beneficiary of that trust and you earned
32:47
Speaker 3: fifty percent of it, therefore you would have to declare
32:50
Speaker 3: fifty percent on your tax returns.
32:52
Speaker 2: And they become the same way.
32:54
Speaker 3: You become intertwined in a way, and you have to declare.
32:57
Speaker 3: It's like an independent relationship.
32:59
Speaker 1: Hang on.
33:00
Speaker 2: So, so you've got this trust, and you've got Janine
33:04
Speaker 2: who's twenty, she's on minimum wage and doesn't get tax
33:07
Speaker 2: that much, and so that's the daughter. And then you've
33:09
Speaker 2: got Papa Jene, Jeene and Jeanine. What is happening Papa
33:14
Speaker 2: Jane who's on like two hundred two k nice? Yeah, nice,
33:18
Speaker 2: and he gets taxed quite a bit. So then whatever
33:21
Speaker 2: they make from this trust, yeah, gets spewed to both
33:25
Speaker 2: of them, and then they'll get taxed differently, right because.
33:28
Speaker 3: Of the dividends. So dividends are income yep. And if
33:31
Speaker 3: you don't have an income, or you have a very
33:34
Speaker 3: low income, you'd obviously be taxed at a lower tax rate.
33:37
Speaker 3: Then Papa Gene is at the highest marginal tax. Right,
33:41
Speaker 3: she's earning more than one eighty a year.
33:43
Speaker 2: Sorry, Papa Gine.
33:44
Speaker 3: Yeah, I know.
33:45
Speaker 1: Also great example, Papa Gene.
33:48
Speaker 3: Like that's a guy, right, yeah, yeah, he called his
33:51
Speaker 3: daughter Jeanine.
33:52
Speaker 2: I know you can't do that. You can't rhyme your name.
33:56
Speaker 1: My name's Gene. I'm gonna call my kid Jeanine.
33:59
Speaker 2: No, lucky, he is not real.
34:01
Speaker 3: If your name's Jena and your dad's names Gen, I'm sorry,
34:04
Speaker 3: yeah no. But there are some special rules there, and
34:07
Speaker 3: it's really important to understand that lots of different trusts exist,
34:10
Speaker 3: and I might do in the future a very niche
34:13
Speaker 3: episode because I don't know how many people are interested
34:16
Speaker 3: in learning about it. But there are a number of
34:18
Speaker 3: different trusts, and the important thing to understand is you'll
34:22
Speaker 3: get taxed in a trust at your taxable income. But
34:26
Speaker 3: there is a thing called a testamentary trust versus a
34:29
Speaker 3: family trust, and things do start to get a little
34:32
Speaker 3: bit complicated. But a testamentary trust is a trust that's
34:36
Speaker 3: created by somebody's will. So it is you know, you
34:39
Speaker 3: might say, and you will, oh, I want to create
34:41
Speaker 3: a trust, and in the trust will be all of
34:44
Speaker 3: my money, and I want it to go to Georgia,
34:46
Speaker 3: but I want it to stay in the trust that
34:49
Speaker 3: does not take effect until after that person who created
34:52
Speaker 3: that will dies. So a testamentary trust can only be
34:56
Speaker 3: established on death, which is a bit crazy, but it's
34:59
Speaker 3: also way that a lot of people inherit money. Now
35:02
Speaker 3: there is a very very big benefit of a testamentary trust,
35:07
Speaker 3: which I've actually seen a lot of clients recently. I
35:11
Speaker 3: don't know where they're getting their advice from, but a
35:13
Speaker 3: testamentary trust, if you've got money special like it is
35:16
Speaker 3: so so special because it has different tax obligations and
35:20
Speaker 3: essentially it is not taxed in the same way, and
35:23
Speaker 3: you can distribute income from that trust to miners and
35:27
Speaker 3: to other people without paying that sixty six percent tax rush.
35:31
Speaker 3: So there are a lot of benefits. And I've actually
35:35
Speaker 3: spoken to clients more recently who have taken on who say,
35:38
Speaker 3: you know, they've been through some really terrible stuff like
35:40
Speaker 3: a parent might have passed away, your grandparent might have
35:42
Speaker 3: passed away, and they have a very significant inheritance and
35:46
Speaker 3: they'll be like, yeah, yeah, I just pulled it all
35:48
Speaker 3: out of the trust. It's sitting in my bank account
35:49
Speaker 3: and you know I got rid of the trust. Oh
35:52
Speaker 3: my gosh, Like that's such a powerful tool because that
35:55
Speaker 3: can then benefit your babies in the future. So if
35:57
Speaker 3: we're investing for our children and you somehow end up
36:00
Speaker 3: with a testamentary trust, you hold that close because you
36:02
Speaker 3: can't just get one. Someone literally needs to die to
36:06
Speaker 3: establish one. So if you have one, that is very helpful.
36:10
Speaker 2: Now I have my final question for you here, Victorian.
36:14
Speaker 1: No more trust questions.
36:15
Speaker 2: No more trust questions unless you've got anything else you
36:18
Speaker 2: want to say.
36:18
Speaker 1: Trust can hold anything.
36:20
Speaker 3: Actually, that's a very exciting thing to put in there,
36:23
Speaker 3: Like what so you can hold obviously, shares, money, cash,
36:28
Speaker 3: You could put properties inside a trust. You could have boats,
36:31
Speaker 3: you could have business homes, you can have businesses. But
36:34
Speaker 3: I also have a client who has a vintage wine
36:37
Speaker 3: collection in his trust.
36:40
Speaker 1: That's fun. He also has like a vintage car. You
36:44
Speaker 1: can put anything in your trust.
36:45
Speaker 2: Okay, exciting and if you do want to look at
36:49
Speaker 2: setting that up, that's a trip to the financial advice No.
36:53
Speaker 3: So, I as a financial advisor, can't establish one, but
36:56
Speaker 3: I can recommend that you have one, and then we
36:59
Speaker 3: need an accountant to facilitate that, which is why if
37:02
Speaker 3: you've got a financial advisor, having an accountant that you
37:05
Speaker 3: can talk to that gets along with your financial advisor
37:09
Speaker 3: is really important because they work together.
37:10
Speaker 1: Yeah, in a little bit of a partnership.
37:12
Speaker 2: Okay, well that brings me to my final question for today,
37:16
Speaker 2: what is it king? So? I feel like some people
37:18
Speaker 2: listening may think that there could be a risk in
37:22
Speaker 2: setting our kids up so well, so young. Is there
37:25
Speaker 2: a risk that they could become slightly entitled or not
37:28
Speaker 2: really understand the worth of money. Is that something that
37:31
Speaker 2: you see ever? Or do you think this is just
37:34
Speaker 2: a really good idea.
37:35
Speaker 3: Well, we're millennials, aren't we already all entitled?
37:38
Speaker 2: Yeah?
37:39
Speaker 1: I like no problems, we know.
37:42
Speaker 3: I think that that's a really important thing, and that's
37:44
Speaker 3: where we need to teach kids the value of money.
37:46
Speaker 3: I also think there are probably a heap of people
37:48
Speaker 3: listening who go, Victoria, I can't afford to do that
37:51
Speaker 3: for my kid, Like that sounds so nice. Am I
37:53
Speaker 3: letting them down by not doing this?
37:55
Speaker 1: No? Absolutely not.
37:56
Speaker 3: But you are letting them down if you don't teach
37:58
Speaker 3: them about money. So you don't need to have money
38:01
Speaker 3: to teach about money and you don't need to be
38:04
Speaker 3: investing for someone's future from your own pocket to teach
38:07
Speaker 3: them that investing is a priority. So I talk to
38:10
Speaker 3: people all the time. I have so many people who
38:13
Speaker 3: are under eighteen and the she's on the money community,
38:15
Speaker 3: which is crazy, you d I mean, like, oh my gosh, Victoria,
38:17
Speaker 3: can't wait till I turn eighteen and I can start investing,
38:20
Speaker 3: Like that's what we want to hear.
38:21
Speaker 1: We're not expecting.
38:22
Speaker 3: Somebody to set us up, but if you do, I
38:25
Speaker 3: think getting your child interested in finance and showing them
38:29
Speaker 3: the ropes is a really really great way instead of
38:31
Speaker 3: just gifting them twenty grand, but teaching them about shares
38:34
Speaker 3: and the reason we invest in, the reason we donate
38:36
Speaker 3: to charity, and the reason we do things is really
38:39
Speaker 3: really important. And if they're part of that process when
38:41
Speaker 3: they get to eighteen, maybe they'll say no, no, no, mum,
38:43
Speaker 3: I don't really want to sell that down. I want
38:45
Speaker 3: it to invest and you know, have the opportunity of
38:48
Speaker 3: growth in the future. Instead of them getting to eighteen
38:50
Speaker 3: and be like, stick, I've got that lump, someone pull
38:52
Speaker 3: it out and spend it on a car, what you
38:54
Speaker 3: actually want them to do is make a decision about
38:56
Speaker 3: their investment portfolio.
38:58
Speaker 2: Okay, so I guess the moral of today's.
39:00
Speaker 1: Talk about money with your kids.
39:01
Speaker 2: Talk about money with your kids, and it's a really
39:03
Speaker 2: awesome opportunity not only to foster that wealth for them
39:07
Speaker 2: for when they do come about asage, but to teach
39:10
Speaker 2: them about money.
39:10
Speaker 3: Absolutely, And if you are going to invest with kids,
39:12
Speaker 3: have a look into an investment bond. That could be
39:15
Speaker 3: a really great way to invest for their future. Also,
39:18
Speaker 3: investing under your name might be a better way to
39:21
Speaker 3: make sure that they're not paying ridiculous amounts of tax.
39:24
Speaker 3: But I think it's all really important. At the end
39:26
Speaker 3: of the day, something that is so simple can be
39:29
Speaker 3: quite complicated. But learn the different options and then pick
39:33
Speaker 3: one that's right for you and just stick to it.
39:35
Speaker 2: I think that is all we have time for today.
39:38
Speaker 1: V Yes, absolutely it is.
39:40
Speaker 3: But just before we head off, we'd really like to
39:42
Speaker 3: acknowledge and pay respect to Australia's Aboriginal and Torres Strait
39:45
Speaker 3: islander peoples. They're the traditional custodians of the lands, the
39:48
Speaker 3: waterways and the skies all across Australia. We thank you
39:52
Speaker 3: for sharing and for caring on the land which we
39:54
Speaker 3: are able to learn. We pay our respects to elders
39:57
Speaker 3: past and present, and we share our friendship and.
39:59
Speaker 2: Our kind And don't forget, guys, that the advice sheared
40:03
Speaker 2: on She's on the Money is general in nature and
40:05
Speaker 2: does not consider your individual circumstances. She's on the Money
40:09
Speaker 2: exists purely for educational purposes and should not be relied
40:12
Speaker 2: upon to make an investment or a financial decision. And
40:15
Speaker 2: we promise Victoria to find is an authorized representative of
40:19
Speaker 2: Australia Pacific Funds Management prior Toary Limited ABN three four
40:23
Speaker 2: one three two four six three two five seven AFSL
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Speaker 2: three three nine one five one.
40:28
Speaker 1: Oh, she legit, She legit.
40:30
Speaker 2: And a big thank you to our dream team of
40:32
Speaker 2: Brian Beck and Jess for putting today's show Togetherum.
40:36
Speaker 3: Howluck here we to have actual legends on our team.
40:38
Speaker 2: It's a group of angels.
40:40
Speaker 1: It is a group of angels.
40:41
Speaker 3: We're always so dramatic about them, but we literally love
40:43
Speaker 3: our teams't.
40:44
Speaker 1: Do about them. Literally, they're the best.
40:46
Speaker 3: We would also you know who else is also the
40:48
Speaker 3: best for our community and we would love it if
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40:54
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41:05
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41:09
Speaker 2: We can see you next week, guys.