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Die with zero: Why you should give it away sooner · The Money Puzzle

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Speaker 1: Hello and welcome to the Australians Money Puzzle podcast. I'm
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Speaker 1: James Kirby. What is the idea behind your investing? What's
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Speaker 1: your longtime idea? When you invest? We're going to assume
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Speaker 1: that sooner or later, perhaps already you own your house,
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Speaker 1: Perhaps already you have you actually have enough to retire.
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Speaker 1: Maybe you don't think you do, but maybe you do.
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Speaker 1: So then the thing is, if you have a family,
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Speaker 1: your family, how are on earth are they going to
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Speaker 1: buy a house? You know, they've just put lending limits
0:45
Speaker 1: on home mortgages at six times for the banks for
0:53
Speaker 1: twenty percent of their volume six times. No one's buying
0:56
Speaker 1: a house at six times in the major cities it's
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Speaker 1: eight times, nine times, ten times. Just gives you some
1:02
Speaker 1: idea of the cost the younger generation face. We've got
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Speaker 1: a lot of issues I want to talk about today,
1:09
Speaker 1: but the first thing I want to talk about with
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Speaker 1: my guest Will Hamilton, regular on the Show of Hamilton
1:14
Speaker 1: were the partners and long term member of the Baron's
1:18
Speaker 1: Top one fifty distant in there again of course of late.
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Speaker 1: I want to talk to him about a piece he
1:23
Speaker 1: did recently on The Australian which sparked a lot of comment.
1:27
Speaker 1: It was basically all about the notion of leaving nothing behind,
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Speaker 1: or as the Americans like to call it, die with zero.
1:35
Speaker 1: That's a book that's been a bestseller over there. How
1:38
Speaker 1: are you well?
1:39
Speaker 2: Very well, James, Thank you very much for having me.
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Speaker 1: I was intrigued with quite a personal piece you did.
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Speaker 1: Actually I thought on this, but it is something it's
1:46
Speaker 1: kind of a paradox that a lot of people face,
1:49
Speaker 1: particularly I think property investors. You know, they are stretching themselves,
1:52
Speaker 1: they are negatively gearing. They are they are taking lists,
1:55
Speaker 1: they are going through the relatively mundane issues of running
1:58
Speaker 1: investment properties, and they're doing it with mixed success, often
2:04
Speaker 1: so that they can help their kids buy a house.
2:06
Speaker 1: A kind of a circular kind of a provise circular situation.
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Speaker 1: So tell me about what this concept and your impressions
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Speaker 1: of it.
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Speaker 2: It's something we get into discussions with clients a lot,
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Speaker 2: and you know where wholesye license and our clients generally
2:23
Speaker 2: have their in a fortunate position when we get into
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Speaker 2: a state planning and also planning for how they assist children.
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Speaker 2: I often there's a bookshop up in the shopping center
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Speaker 2: above what we are dimicks. And I always say, on
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Speaker 2: the way out, go and buy Bill Perkins, die with zero,
2:40
Speaker 2: now is that right?
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Speaker 1: You don't really sell them. You didn't put a little
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Speaker 1: stack a reception and make a bit of marrid is.
2:48
Speaker 2: And it's all relative. It doesn't mean die with zero.
2:51
Speaker 2: It's to give away to your children what an amount
2:57
Speaker 2: that you can afford. So you know, I had to
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Speaker 2: get a little lot of emails people, and thank you
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Speaker 2: very much giving me some advice on the article. But
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Speaker 2: one is to the extent you can afford it, and
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Speaker 2: to help your children, because it's more important to help
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Speaker 2: your children while they're in their thirties and forties rather
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Speaker 2: than when you die and they're in their sixties, and
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Speaker 2: that's when they need it, especially with the housing differential
3:17
Speaker 2: when I am just a baby boomer. But when we
3:21
Speaker 2: went out there to buy houses and four to five
3:23
Speaker 2: times at your income level versus as you rightly said,
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Speaker 2: you ten times plus today. And these are issues that
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Speaker 2: our children therefore need our assistance to the extent that
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Speaker 2: we can provide it. Now, there's only so much you
3:38
Speaker 2: can say in nine hundred words. And you know again,
3:41
Speaker 2: some people wrote in and one person was a little
3:44
Speaker 2: bit emotional with respect to the fact that they'd done
3:47
Speaker 2: this and then their children got divorced. So you do
3:50
Speaker 2: need to get some advice. And what I'm saying is
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Speaker 2: general advice only, but you need to go and talk
3:55
Speaker 2: to your financial advisor about this, and then they're going
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Speaker 2: to put you in the direction of a family lawyer,
4:02
Speaker 2: be it loan agreements, be it financial agreements that you
4:07
Speaker 2: may want to consider. And I think that's very important,
4:11
Speaker 2: important so that you protect children with the assets that
4:14
Speaker 2: they bring into a relationship.
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Speaker 1: It's interesting, you know, just that issue of I suppose
4:20
Speaker 1: the how it's the house prices, the level of house
4:24
Speaker 1: prices that have sparked particular interest in this. It's always
4:29
Speaker 1: been around as a concept, but it's got an edge now,
4:32
Speaker 1: you know. I was wanted up the old joke about
4:34
Speaker 1: how do you buy a house for four hundred thousand
4:37
Speaker 1: in Sydney's North Shore? You buy it in nineteen seventy nine,
4:42
Speaker 1: you know that's what you're saying, right. I don't know
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Speaker 1: how much you paid for your house or I paid
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Speaker 1: for mine, but you know the figures are laughed at
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Speaker 1: by the people who are buying houses now, So let's
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Speaker 1: just keep it on that issue, and this is a
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Speaker 1: wider issue obviously, if this could be for any reason,
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Speaker 1: but I think obviously the core reason is very compelling.
5:02
Speaker 1: You know why, your son or daughter will probably be
5:07
Speaker 1: in their late sixties when they get your inheritance. Statistics
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Speaker 1: would suggest, and in their late sixties if they're the
5:15
Speaker 1: type of people who are active investors, strivers, and they
5:19
Speaker 1: listen to a show like this, chances are they've paid
5:22
Speaker 1: their house off by then, and there was years where
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Speaker 1: they had absolutely nothing, and maybe it wasn't necessary because
5:29
Speaker 1: you were accumulating at the same time. Now, the thing
5:32
Speaker 1: I'm skeptical about Will is this issue of financial agreements
5:39
Speaker 1: and loan agreements and sending people to the lawyers to
5:42
Speaker 1: do this, I'm assumed. Tell me why you think this
5:46
Speaker 1: is necessary and is it about keeping it literally within bloodlines?
5:53
Speaker 1: To be brutal about it.
5:55
Speaker 2: I think that depending on the age of a child,
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Speaker 2: line agreements something you should consider now whilst the house
6:02
Speaker 2: price goes up and as I said, you're protecting what
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Speaker 2: they bring in. I think financial agreements are a very
6:09
Speaker 2: personal thing, and we've got clients that insist on them,
6:13
Speaker 2: and we've got clients that there is no way I
6:15
Speaker 2: would ask my children to sign that, So I'm not
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Speaker 2: making it. It's a judgmental call, and I'm not making
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Speaker 2: a call either way. I think you need to discuss
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Speaker 2: it and make a decision based on something that's right
6:25
Speaker 2: for you and your family on a lone agreement. I
6:28
Speaker 2: think that's a very different matter. That they're not even
6:32
Speaker 2: a thousand dollars for a family lawyer to prepare, and
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Speaker 2: you can actually provide something which I think is a
6:41
Speaker 2: safe thing to.
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Speaker 1: Do, but if it's a lot of agreement, you're not
6:44
Speaker 1: giving it to them.
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Speaker 2: Correct, Well, that's on the depending of the structure that
6:48
Speaker 2: it's in and how it's done. That loan can then
6:50
Speaker 2: be forgone on your death.
6:54
Speaker 1: I see, I see all right, So what is the
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Speaker 1: overarching sort of logic of these greens. It's to protect
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Speaker 1: your children from unexpected events in the future, such as divorce.
7:10
Speaker 1: Am I close?
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Speaker 2: Correct? I think what the logic of these And if
7:13
Speaker 2: you speak to a family lawyer, they'll say, you can protect
7:16
Speaker 2: what you bring into a relationship. You can't protect what
7:20
Speaker 2: you create in a relationship. That's openslaver and so it
7:23
Speaker 2: should be not saying that's you should protect against that
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Speaker 2: you can't. You shouldn't.
7:30
Speaker 1: I wonder why people don't do it.
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Speaker 2: Well, I think a lot of people don't know about it.
7:34
Speaker 2: Thinking of an email that I got from one person.
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Speaker 2: It was, you know, as I said, quite emotional about
7:38
Speaker 2: that because this is what happened. They gave some money
7:40
Speaker 2: and then child got divorced. I was wondering, well, did
7:44
Speaker 2: you know about this? And that's why sometimes you should.
7:49
Speaker 2: You should go and get advice, and your financial advisor
7:52
Speaker 2: discusses that with you, and then push and then put
7:55
Speaker 2: will introduce you into a family lawyer that can have
7:58
Speaker 2: a further discussion and then not expend financial agreements. That's
8:02
Speaker 2: a different matter altogether.
8:04
Speaker 1: I mean, we see just this morning the usual here
8:07
Speaker 1: we go again, the annual sort of aspa. They all
8:10
Speaker 1: do it.
8:10
Speaker 2: Now.
8:10
Speaker 1: How much you should have to you know, be comfortable
8:13
Speaker 1: in a retirement, et cetera. And it should be seventy
8:15
Speaker 1: thousand dollars a year for a couple, and that means
8:18
Speaker 1: you need to have well, you certainly want to have
8:21
Speaker 1: a million, you know, officially it's something like one point
8:23
Speaker 1: six one point seven million, depending on the degree of
8:26
Speaker 1: risk of which you take. But the point I'm leading
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Speaker 1: to is that at a certain point we clear off
8:30
Speaker 1: are at a certain point we say, okay, the house
8:32
Speaker 1: is paid off. And many investors once they have a
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Speaker 1: certain number, a certain figure in super and maybe they
8:42
Speaker 1: keep working so this figure doesn't have to be anything
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Speaker 1: as high as these calculators say, and many it listens
8:50
Speaker 1: to the show, will have much more than that. But
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Speaker 1: I wonder is this concern about not having enough in
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Speaker 1: retirement an issue that stops people doing it even if
9:02
Speaker 1: they have plenty, because they say, look, if the world collapses,
9:06
Speaker 1: there's the markets collapse, If I'm stuck on cash rates,
9:10
Speaker 1: if the banks collapse, how am I going to survive?
9:12
Speaker 1: All my retirement money is at risk. Yes, you say
9:15
Speaker 1: I have a lot, but maybe I don't really have
9:17
Speaker 1: a lot because it's all at risk, and so I
9:20
Speaker 1: can't hand it over just yet, because I worry still
9:23
Speaker 1: that I don't know how much I'm going to cost
9:25
Speaker 1: in the fullness of time. And let's say the nightmare
9:28
Speaker 1: scenario where a couple are both in some sort of
9:31
Speaker 1: elaborate age care with multiple medical bills for years and years,
9:35
Speaker 1: whether they could rack up a hell of a lot
9:37
Speaker 1: of bills. The point I'm making is do you think
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Speaker 1: that's actually stopping people too.
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Speaker 2: Yes, I think that it is. As I said, everything's
9:45
Speaker 2: relative and it it's personal. So I'm not saying you
9:48
Speaker 2: must do this, that you do it to the extent
9:50
Speaker 2: you can afford to do it. That's the first thing.
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Speaker 2: And I also I think it's generational.
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Speaker 1: No tell me about that your concept of it being
9:57
Speaker 1: general intergenerational.
9:58
Speaker 2: So well, first of all, I write this because I
10:00
Speaker 2: I do believes in and there's intergenerational inequality. And you
10:04
Speaker 2: said that created discussion through the comment section. A lot
10:07
Speaker 2: of people didn't agree on that point.
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Speaker 1: Yes, the degree if they were perhaps under thirty.
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Speaker 2: Though, yeah, correct, So they didn't agree on intergenerational inequality,
10:17
Speaker 2: which I do believe there is. So that's where I'm
10:19
Speaker 2: coming from, and that's what I discussed with people. But
10:21
Speaker 2: I know my parents. There is no way my parents
10:24
Speaker 2: would consider this because of a lot of the points
10:26
Speaker 2: you brought up. My mother's in her nineties and she's worried,
10:31
Speaker 2: very worried about the cost of age care and her
10:33
Speaker 2: own health. And I think that you're at a point
10:36
Speaker 2: in time when you can look at this and you
10:38
Speaker 2: can look at it objectively. There's other things where there's
10:40
Speaker 2: other points in your life when you're focused on other things.
10:44
Speaker 2: And as I stress, to the extent that you can
10:47
Speaker 2: afford it, And I understand some people can afford to
10:51
Speaker 2: a far greater degree than others.
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Speaker 1: And I suppose the imperative that drives people to make
10:58
Speaker 1: money was in conflict with the different dynamic of giving
11:02
Speaker 1: it away in many cases. Whereas will that be relevant
11:06
Speaker 1: apart from homebuying?
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Speaker 2: Was I said in the article, and this again, I
11:11
Speaker 2: believe in it a lot of the things Bill Perkins said,
11:13
Speaker 2: But I just want to stress in the book I
11:15
Speaker 2: was zero, But I do want to stress in the
11:16
Speaker 2: book he's obviously a very wealthy man and that comes
11:20
Speaker 2: across so you have to adjust for that. And he's American,
11:23
Speaker 2: so we have to bring it into a cultural perspective.
11:25
Speaker 2: But I also think the thing on creating experiences to
11:29
Speaker 2: again the extent you can afford it. So if you
11:31
Speaker 2: can afford to create experiences with children and grandchildren and memories,
11:34
Speaker 2: as he says, memories really important. So those experiences lead
11:38
Speaker 2: to memories, you know, because the one reality is we're
11:41
Speaker 2: not going to be here one day. And I think
11:43
Speaker 2: that's I thought that was a really lovely thing, and
11:46
Speaker 2: I thought that was it really resonated with me. And
11:49
Speaker 2: the other thing is again and some people don't agree
11:51
Speaker 2: with private school education as well, and that came back
11:54
Speaker 2: in the feedback I got. But if it is important,
11:57
Speaker 2: you know, education is you know, there's nothing more in
12:00
Speaker 2: a chance life is education, be it secondary education or
12:04
Speaker 2: tertiary education. And I know one of our clients is
12:10
Speaker 2: very philanthropic in ensuring that those that wouldn't ordinarily be
12:13
Speaker 2: able to go to university can and he gives through
12:16
Speaker 2: Melbourne University on that and I think he's it's lovely
12:21
Speaker 2: what he does.
12:23
Speaker 1: So typically this would end up being not it's obviously
12:26
Speaker 1: two days anyway for some investors to pay for their
12:30
Speaker 1: own children. By the time they get to the position
12:33
Speaker 1: we're talking about, their children will have had their school experience,
12:38
Speaker 1: whatever that might have been, and however that much that
12:40
Speaker 1: might have cast. So we're talking about grandchildren often. And
12:43
Speaker 1: it's interesting. We've got a question coming up at the
12:45
Speaker 1: breakfromt Sandral exactly about this, but on that one, is
12:49
Speaker 1: there any guidance you can give on that you mentioned
12:52
Speaker 1: about long agreements with lawyers for buying homes or perhaps
12:59
Speaker 1: assisting with the Dan Holmes I am actually, which is
13:01
Speaker 1: typically that someone pays ten percent of what the house
13:04
Speaker 1: is going to be. How about on the schools on
13:06
Speaker 1: the ideas on that.
13:07
Speaker 2: One, someone once said to me, if you can find
13:08
Speaker 2: an investment that's linked to the CPI of school, phees,
13:11
Speaker 2: go for it.
13:12
Speaker 1: CPI of school is an illegal zone.
13:15
Speaker 2: Because exactly that. So, yeah, it's a friend of mine
13:17
Speaker 2: and Sydney and he once said that to me, and
13:19
Speaker 2: I always laughed, and I've quoted that often what he said.
13:21
Speaker 1: It's more relevant every year.
13:23
Speaker 2: So there are bonds or education bonds and things like
13:25
Speaker 2: that which you can buy or you can just put
13:27
Speaker 2: something away, depending on again, to the extent that you
13:32
Speaker 2: can afford it. And that's what these are, the sum
13:35
Speaker 2: of things which I think you can consider. I'm not
13:37
Speaker 2: saying you should, but you can.
13:39
Speaker 1: Just one last thing on this before the break. We've
13:41
Speaker 1: had a lot of people on the show skeptical of
13:44
Speaker 1: education bonds. I am too, You are too, okay, So
13:49
Speaker 1: your point is perhaps to have a saving sphere correct
13:54
Speaker 1: that is focused on this issue, but it does not
13:57
Speaker 1: necessarily have to be an education bond. And the fint
14:00
Speaker 1: I always make on the show folks. Is they called
14:01
Speaker 1: education bonds but they are nothing to do with education
14:04
Speaker 1: per sale. They are marketed as such, and it's a scheme,
14:08
Speaker 1: but it wasn't designed for paying school fees. It has
14:11
Speaker 1: been adopted as such, but that was not its core.
14:14
Speaker 1: All right, really interesting. I've got some really good questions
14:16
Speaker 1: I want to get to and I've kept them for Will,
14:19
Speaker 1: who is a regular on the show and a lot
14:20
Speaker 1: of our listeners are keen obviously to get items in
14:24
Speaker 1: front of him. So back in a moment, Hello, and
14:34
Speaker 1: welcome back to The Australian's Money Puzzle podcast. James Kirby
14:37
Speaker 1: talking to Will Hamilton as I'm going to do this
14:40
Speaker 1: question second into two parts, folks, because there's two different
14:43
Speaker 1: themes that i want to pick up on. But just quickly,
14:47
Speaker 1: I had a question which came in later actually, and
14:49
Speaker 1: it's from Lily who says I can't keep up with
14:53
Speaker 1: the number of grants for first home buyers. But I
14:56
Speaker 1: see now that the latest grant for shared equity has
15:02
Speaker 1: come out, but of course it has been surpassed by
15:05
Speaker 1: the first home buyers scheme. At the same time, we've
15:10
Speaker 1: seen lending limits imposed by the banks in the same
15:15
Speaker 1: area what gives. Yeah, thank you Lily.
15:18
Speaker 2: Yeah.
15:19
Speaker 1: So they're putting lending limits exactly on the same people
15:22
Speaker 1: who are trying to buy a house, because the ones
15:25
Speaker 1: who need to go over five or six times income
15:28
Speaker 1: will substantially be made up of first home buyers. And
15:31
Speaker 1: then they're rolling out grants a universal first home deposit scheme,
15:35
Speaker 1: which is going so hot, folks, it's going so hot
15:37
Speaker 1: that the banks are putting over they're doing overtime in
15:40
Speaker 1: the departments of the banks trying to fill this out.
15:43
Speaker 1: And we're getting a super hot segment of the market,
15:46
Speaker 1: which ironically is the exact same market they're throwing the
15:49
Speaker 1: grand set.
15:51
Speaker 2: What do you think will It's like, look got enough.
15:53
Speaker 2: It still exists, but I haven't looked at it. But
15:55
Speaker 2: a couple of years ago, the Victorian pite government gave
15:57
Speaker 2: stamp duty real life up to six hundred thousand dollars,
16:00
Speaker 2: and the minuteure went over six hundred thousand dollars, you
16:02
Speaker 2: had to pay the full stamp duty. So thing you
16:04
Speaker 2: give when you don't give, And yeah, this is I
16:09
Speaker 2: do believe the federal government's latest equity share scheme that's
16:13
Speaker 2: absolutely pushed housing prices up. It can't not have the
16:16
Speaker 2: way they've structured it up to a million dollars and
16:19
Speaker 2: you shared equity. That's with a five percent deposit down.
16:22
Speaker 2: That's simple as it was only going to do that.
16:25
Speaker 1: But the other thing I worry about too is that
16:27
Speaker 1: like it overheats that particular secret action. Not only that,
16:30
Speaker 1: but like the whole market gets skewed to that segment,
16:33
Speaker 1: to this economic theory of push to price.
16:35
Speaker 2: You know that they actually it's misthought. It was a
16:39
Speaker 2: thought bubble during the election that they've had to rolla
16:41
Speaker 2: leading into the election.
16:43
Speaker 1: Hm hm, okay, well, Lily, I hope that's useful to you.
16:47
Speaker 1: All those grants are there. And by the way, there's
16:50
Speaker 1: also the first Home super Service scheme, which I think
16:54
Speaker 1: this government are very keen to to not advertise because
16:57
Speaker 1: they don't like it. I don't think they like it all.
17:00
Speaker 1: Right now, listen, folks, we got to hear. I want
17:03
Speaker 1: you to listen to this very carefully, right because it's
17:06
Speaker 1: come up again and again from listeners, and it's about
17:11
Speaker 1: super annuation caps and how much you can have and
17:14
Speaker 1: at what point various taxes kick in, like the new
17:16
Speaker 1: super at the new super tax at fifteen percent above
17:20
Speaker 1: three million. But here's David. This is what he says.
17:23
Speaker 1: Someone on the show mentioned that, based on current legislation,
17:28
Speaker 1: the amount in the pension account can increase tax free
17:33
Speaker 1: without limit. I want to know, is he right? If
17:35
Speaker 1: I retire at sixty and I transfer two million into
17:39
Speaker 1: my pension account, and assuming this balance grows yearly, the
17:43
Speaker 1: full amount in the pension account will always be tax free.
17:48
Speaker 1: The fifteen percent tax coming in at division two nine
17:51
Speaker 1: six does not apply to this the pension amount. Okay,
17:55
Speaker 1: just to reiterate, the day you retire, if you have
17:59
Speaker 1: up to two million, that once it's in the box, basically,
18:03
Speaker 1: once it's in the can inside the supersystem the TBC.
18:09
Speaker 1: To be precise, it won't be taxed even if it
18:12
Speaker 1: grows to three million, four million, yep? Right or wrong?
18:15
Speaker 2: Right? In fact, Thomas asks a question where he answers.
18:20
Speaker 2: He answers it in his question itself and that that's interesting,
18:23
Speaker 2: And he says, Jim Chalmers, I only talked about division
18:26
Speaker 2: two nine six, which is fifteen percent on tesB more
18:29
Speaker 2: than three million. The situation of between two and three
18:31
Speaker 2: million appears been overinterpreted. So if I have two point
18:34
Speaker 2: four million in super phase I transfer two million into
18:37
Speaker 2: account based pension at the age of sixty five, I
18:40
Speaker 2: will have to leave four hundred into the accumulation phase. Correct,
18:44
Speaker 2: that's if you convinced on that. But my two million
18:46
Speaker 2: retirement phase can grow to organically, he says two point
18:50
Speaker 2: four million, and the earnings is tax free, not fifteen percent. Correct. Correct.
18:55
Speaker 1: Yeah, so that's just a final word on that, folks. Okay,
18:59
Speaker 1: that's how it works. The fifteen percent tax, the new
19:04
Speaker 1: one is on amounts above three million. And so for instance,
19:07
Speaker 1: how that might occur is, for instance, if you had
19:13
Speaker 1: three million this, if you had four million the day
19:15
Speaker 1: you retire, well that only two of that would go
19:20
Speaker 1: into that can grow forever and never be taxes. That's right.
19:23
Speaker 2: Yeah, you got to an accumulation phase and.
19:25
Speaker 1: The other two well, you can do what you like
19:26
Speaker 1: with it. You're probably going to let it fall into
19:28
Speaker 1: accumulation because it's it becomes fifteen and that's hard to beat. Okay,
19:32
Speaker 1: very interesting. Of course, there are people who also have
19:34
Speaker 1: more than two million, and they haven't even retired. They're
19:38
Speaker 1: relevant two. So we try to cover all angles here.
19:41
Speaker 1: This is easier sometimes, folks, to pin down in in
19:44
Speaker 1: print than it is when we're talking. Because it's a print.
19:47
Speaker 1: J Obvis is more precise. All right. I have very
19:51
Speaker 1: interesting question from Sandra which is on the theme that
19:54
Speaker 1: we'll started with, so we'll come back to that one second.
20:08
Speaker 1: Hello and welcome back to The Australian's Money Puzzle podcast.
20:12
Speaker 1: James Kirby talking to Will Hamilton. Okay, Will, question from
20:17
Speaker 1: Sandro which does kind of correspond or echo some of
20:20
Speaker 1: the issues we talked about at the start of the
20:22
Speaker 1: show about leaving the extreme version of dying with zero.
20:26
Speaker 1: But it's not, of course dying with zero. It's about
20:30
Speaker 1: thinking about whether you should help people in your life
20:34
Speaker 1: earlier rather than later. Sandro, I want to invest for
20:38
Speaker 1: my grandchildren. My initial thoughts are to add approximately two
20:41
Speaker 1: thousand per child annually on their birthday into the ASX
20:45
Speaker 1: two hundred and etf. I suppose that is or something
20:47
Speaker 1: similar and this should compound to something significant in twenty
20:51
Speaker 1: years when they go to buy a house. I'm interested
20:55
Speaker 1: in some ideas and strategies on how to set this
20:58
Speaker 1: up the most cost effective and today who was named
21:01
Speaker 1: should be in most tax effective way, et cetera. Any
21:06
Speaker 1: information would be much appreciated. Okay, sandral not you say
21:10
Speaker 1: you will.
21:11
Speaker 2: Yes, So first of all, Sandra, go and talk to
21:13
Speaker 2: an accountant. I presume they might to ask you to
21:15
Speaker 2: set this up in your name, in the parents' name,
21:19
Speaker 2: as in trust for the children. That's the first thing.
21:23
Speaker 2: So just otherwise that there is tax at the full
21:27
Speaker 2: marginal rate for children, so you might just want to
21:30
Speaker 2: get some tax advice on that. First of all. The
21:33
Speaker 2: second thing is I wouldn't put it into an Australian ETF.
21:36
Speaker 2: I would look as a global equity one. For instance,
21:40
Speaker 2: we're now one point six percent of the MSCI aqui
21:43
Speaker 2: that is Australia to invest in the other ninety eight
21:46
Speaker 2: point four percent not necessarily, just one point six percent
21:50
Speaker 2: of global equity markets. And yeah, this strange share market
21:52
Speaker 2: is going to close out effectively square this year as
21:55
Speaker 2: against global markets because it's the global markets. They've got
21:59
Speaker 2: growth in other parts. So that's the second thing I
22:02
Speaker 2: would do is just make sure you invest globally rather
22:05
Speaker 2: than just domestically.
22:07
Speaker 1: Yeah, very good, and of course not advice Candra, just
22:09
Speaker 1: to information only, but those global indusies they're easy to
22:13
Speaker 1: get to. Just remember, and when we talks about MSCI,
22:16
Speaker 1: that's the Morgan, Sandy, Capitol, International, Indicies and a lot
22:20
Speaker 1: of the global ets run off that as they should.
22:24
Speaker 1: But also keep in mind that what's the number now,
22:27
Speaker 1: sixty four percent or so? Oh yeah, it's actually US, yes, yeah, yeah.
22:33
Speaker 1: So you know the fact is you're the majority of
22:34
Speaker 1: your money will be on Wall Street, but that varies
22:37
Speaker 1: over the year central and there's times for that's been
22:39
Speaker 1: an undred and fifty percent, but in recent times it
22:42
Speaker 1: has absolutely just mushroomed inside the global markets to some
22:46
Speaker 1: extent that reflects a certain dullness in Japan, Australia, even
22:51
Speaker 1: that Europe over various years as the US and the
22:54
Speaker 1: big tech companies just went through the roof and still
22:57
Speaker 1: do with the AI boom. All right. Now, on question
23:00
Speaker 1: is from shown but the shau n I wonder could
23:04
Speaker 1: you consider doing a segment giving all the accounting maneuvers
23:09
Speaker 1: and profit shifting that companies use, why don't governments consider
23:13
Speaker 1: replacing corporate tax within universal revenue tax. That way, the
23:18
Speaker 1: economic activity that takes place within Australia It's borders will
23:22
Speaker 1: be taxed here, not when the company chooses to record
23:25
Speaker 1: its profits something I mean, obviously, the sentiment is a
23:31
Speaker 1: noble sentiment there shown, and in fact, a lot of
23:34
Speaker 1: economists wouldn't have a problem with your concept, And indeed,
23:37
Speaker 1: the Productivity Commission has recently put out something similar to that,
23:42
Speaker 1: which is a sort of is it a cashflow tax?
23:44
Speaker 1: Is that the idea will that they would.
23:46
Speaker 2: Yep, that's Look. I think what Sean said has some merit,
23:51
Speaker 2: but the reality is that unless you get both sides
23:54
Speaker 2: of politics together, we're not going to tackle the inequity
23:57
Speaker 2: that there is in a tax system. And one of
24:00
Speaker 2: the big things that we need to tackle in this
24:02
Speaker 2: tax system is the paya and the hYP percentage of
24:07
Speaker 2: total taxation rays through that which is not indexed, unlike
24:12
Speaker 2: in some countries, and therefore we have bracket creep as
24:16
Speaker 2: well as a major issue. So look, a whole tax system.
24:20
Speaker 2: The taxac was written in nineteen thirty six. I think
24:22
Speaker 2: that says it all, and both sides of politics should
24:25
Speaker 2: get together on a bipartisan basis and tackle this.
24:29
Speaker 1: And we're inordinately tax taxing people. Correct, individuals get taxed.
24:33
Speaker 1: They carry the whole system, which is of course working individuals.
24:37
Speaker 1: That is which brings us back to the very notion
24:41
Speaker 1: at the start of the show. About inequity and how
24:44
Speaker 1: even inside SUPER like people say, oh super is all
24:46
Speaker 1: about you know, it's unfair because of the tax breaks
24:50
Speaker 1: for older people. But it's unfair even inside the system
24:53
Speaker 1: because the concession of tax breaks for contributing to SUPER
24:57
Speaker 1: are they are low and they have moved for years. Meanwhile,
25:02
Speaker 1: the amount you can have gets in mixed all the time,
25:04
Speaker 1: not to mention the pension which gets index twice a year.
25:08
Speaker 1: So there is plenty of inequity even within SUPER and
25:11
Speaker 1: intergeneration in equity at that. But in your case, folks,
25:15
Speaker 1: I think if you've been listening to the show today,
25:17
Speaker 1: I think there was a really interesting notion there and
25:20
Speaker 1: something that's really worth considering. And honestly, even on a
25:24
Speaker 1: more pragmatic basi as well, what is the point in
25:27
Speaker 1: hanging on to your investment property for three more years
25:31
Speaker 1: if the money is supposed to go to your adult
25:33
Speaker 1: children who are trying to buy a house. That would
25:36
Speaker 1: be at that would be in sort of microcosm, wouldn't
25:39
Speaker 1: it really?
25:40
Speaker 2: And as I say to people, it's the pleasure of
25:41
Speaker 2: giving as well when you can, you know, and want
25:44
Speaker 2: to stress if you can afford it, that pleasure of
25:47
Speaker 2: helping and giving and saying that reaction and that the
25:51
Speaker 2: gratitude from giving, and you know, it was a very
25:55
Speaker 2: big discussion. I talked about the fact that intergenerationally, those
25:59
Speaker 2: that are of an older generation, this is far more difficult.
26:02
Speaker 2: And I actually talked to a woman in the late
26:04
Speaker 2: eighties to do this, and I said, look, you've got
26:06
Speaker 2: no gratitude personally from it when you're dead, why don't
26:10
Speaker 2: you do it now? And as I said in the article,
26:12
Speaker 2: some of the grandchildren were in tears and she got
26:17
Speaker 2: incredible satisfaction from that.
26:19
Speaker 1: Yes, it's interesting, isn't it. As you say, there's no
26:22
Speaker 1: point letting them know that you were really okay when
26:25
Speaker 1: you're gone. Okay, thank you very much. Well, great show,
26:30
Speaker 1: Thank you James, great discussion. As always, I'd like to
26:33
Speaker 1: know what you think of that, folks, I really would.
26:36
Speaker 1: So let's let's hear from you the money Puzzle at
26:39
Speaker 1: the Australian dot com dot au. Talk you soon.