Ask an Adviser: Investing, Property & Super - Community Mailbag with Glen Hare

0:00Everything you're about to hear is for education and entertainment purposes only. Whilst we are licensed we're not aware of your personal financial circumstances. Any advice is general advice. Equity mates operates under Australian Financial Services License 540-697. I just don't want that to be false hype, is that going to set them up for my financial frame? The media has done a very good job of telling young Australians it's not possible. We cannot forget that the market will crash. Welcome to another episode of Equity mates, a podcast where we explore what's possible in the world of investing. If you've just joined us for the very first time a huge welcome to our community, my name is Bryce. And I'm Ren and today we're back with another Ask an Advisor episode where we take your questions and put them to one of our favourite advisors and today we're joined by a returning favourite Glen Hare. Glen Hare. Very nice to be here. Thanks guys. Glen Hare, founder of Fox and Hare, financial advisor. Welcome back to the show. Great to be here. As Ren said in the intro, Glen, we have a mixed bag of questions that have come through

1:01the community. We're going to be covering investing, stocks, first property, some property specific ones. Budget is obviously still front of mind. Super. You name it. There's a bunch in here. So we're going to get into the nitty gritty. Before we do though, for those that have just joined the show for the first time, can you just give us a sense of the type of clients that you work with and the work that you do? Yeah, sure. So I found the business eight years ago after being at McCory Bank for 10 years and realised there's an opportunity, there's an opportunity to work with a very different demographic. So the average age, I'm an advised client in Australia still to this day is 58. So most people don't see a financial advisor until they get to a point of like, oh, I probably need to do something. I'd love to stop working at some point and they go see an advisor and say, hey, this is what I've got. Can I retire? And if I do, what's that going to look like? Businesses of our member base. So we work primarily with those age between 20 and 45. So we only work with accumulators.

2:02So if someone reached out to us and was looking to transition to retirement, we would actually refer them on to another advice firm that specialises in that space. So the youngest member is 21. He's a pretty, he's a pretty, go get a kind of guy. He earns good money. living at home. So he's either, I either make this money work for me now where I've got the opportunity or I don't. But the average age is 34. So it's probably when people get to that point they're progressed in their career. They've started their financial journey and they're kind of thinking, well, what's next? Now in that age cohort, which is broadly reflective of the equity mates core demographic as well, one topic has dominated the past few months, the budget. So I guess just a general question and we'll get into some specifics around probably in stuff later. But just generally, since the budget has your view changed on anything and have you changed your

3:03approach in any way? Great question. I have never spoken so much about a budget in my career. Usually budgets come, budgets go, we put on a webinar, no one shows up. We thought about putting on a fence and a guy who thought, well, who's going to come to that this year? We have had more questions than we have ever had before. In terms of the budget, it's interesting when logging on to a call with a Fox and a hand member, it can be quite polarising. If we're having a conversation with someone that is looking to buy their first property, they're like, yeah, this is great. Probably prices have dropped. This is a window of opportunity that I've been looking for. I then drop off that team's chart, log on to the next team's chart with a young investor that's got two investment properties and they're like, well, what does this mean for me now and moving forward? So it's very much polarising regardless of which side of politics you sit on. The key theme for me,

4:06above all else, and this hasn't changed pre or post budget, is tax should always be considered but is a byproduct of a good investment. I still believe that you can make money from investing in good properties. Like I do, obviously, investing in shares and ETFs as well, tax should be considered, but it shouldn't be the key driver as to why you do or don't make a clear investment decision. Taxes in a strategy? No, yeah. But a lot of people get caught up in it being the strategy. For sure. And it's a consideration. Like the number of people that have reached out to us and when we look under the hood of the property that they have and look at the actual numbers, they're like, oh, this doesn't actually work out financially smart. And that can be a little bit an emotional conversation that it is definitely a consideration. So I guess if the budget isn't what you're trying to talk to your clients about despite the amount they might be trying to talk to you about it, what are some of the things that you're really trying to talk to

5:06clients about at the moment? So there's three changes all the time, but the three themes that we're getting most questions about or where most conversations are headed is definitely first-home buyers off the back of the budget, purely based on the fact that there is a, you know, regardless again, which side of politics you sit on, the market has dropped. So this is an opportunity for those that have been working towards or are close to being in a position to, or feel closer, to being in a position to purchase their first home. The second is debt recycling. So a strategy that we may touch on today that still works really well for those in particular situations. The third one financially relevant, not necessarily from an investment perspective, but there is a sense across our member base around, I guess the uncertainty in the broader market at the moment. So job security is something that has raised its head recently. So it's those that are working for

6:12companies that have gone through the old corporate restructure. It's those that have seen some of their mates in similarly in the same industry or similar line of work being made redundant. So that sense of job security then does flow on to how we then advise our members to then manage their money and the decisions that they may. Well, Glenn, we've got a bunch of questions specifically on investing. So we'll move to those. And this first one has come in from Anthony. Hi guys, I have a bit of a question regarding sudden cash windfalls and how you guys would approach it. If you were lucky enough to run into let's say a million dollars tomorrow, how would you play it out and how would that change if you received that money at 20 years old or 30 years old at more any stage of life really. Would you be investing that into growth assets or would you be trying to generate some cash flow from it as well? It's a good question from Anthony. I'll let

7:16you answer it, but I'm also interested. It's a hypothetical. If you had a million dollars tomorrow, what would you do with it? But I imagine for some of your members, it's also a reality as this great, great wealth transfer is coming. It might not be a million dollars, but there is money sort of moving generation to generation. Definitely. So it's typically not a lot of wind that people reach out off the back. Although if you have one the lot of wind, what would like to chat with a lot of wind? No, we haven't had a lot of wind. Is it something like 70% of lot of winders go bankrupt within five years? So maybe more of them should. We do get a lot of, well, they're quite a number of professional athletes that get big sums of cash and big, big incomes, potentially going from nothing to half a million dollar income over overnight if they sign a good contract. But coming back to Anthony's question, if a million dollars did or a couple hundred or half a million, significant sum, the main path that we're seeing our members receive,

8:17that is as you noted, Ren is inheritance. Whether that be through a family member passing or also early inheritance. So aunties, uncles, grandparents, gifting their nephews, nieces, grandkids, funds before they pass. So it is something that we say. We're always very grateful when people reach out off the back of certainly an inheritance. It can be quite an emotional decision. And also it's one that they don't take lightly. So yes, we're going to make smart investment decisions, but they also, there's an element of wanting to do right by those that they inherited the funds from getting to the practical side of things though. So if that were to occur to me, and if I was in my 20s or 30s, I'd be focusing on growth. Why is that? I don't need the cash now. I don't want to be paying tax on that additional income now. What I'd be looking at

9:18are strategies that build wealth through growth growth investments. Whether that be shares, exchange rate of funds, property, or all the likes. So look focusing on growth. I potentially abhorring one, but one that I, and most advisors see value in is maxing so far. If you've just got a million bucks, you may as well look at what your unused, concessional cap is, load as much into soaps as you can in an incredibly tax effective environment. Again, whether you're in your 20s or 30s, million dollars is a significant sum. I'm not saying put it all in, but putting 10% in at that age, it's an extra hundred grand compounding over decades. Future you will genuinely thank you, and you're also going to be able to save potentially tens of thousands of dollars in in tax through that one strategy alone. The final piece is around structuring. So if I were in a

10:22position, potentially this is more than 30s than the 20s or could be 20s. But if you had purchased your own place and you had reasonable amount of non-deductible debt, I would genuinely be considering a debt recycling strategy. So paying down that debt that I've just taken out on my first home and then redrawing that or creating an investment loan to invest in those growth assets I referred to earlier. Good strategy. Well, I think there's a, that's why you're in the road. There is a natural follow-on from that. We got this from John. We don't have an audio recording for this one, but John simply asked, what's your favorite ATF? The one that I'm really liking at the moment is GHHF, which is a Betashez Gid fund. Why do I like that? Really well-diversified, emerging markets, international markets, Aussie markets. And leverage is one of those things that

11:25that it can be challenging to access when investing in shares or exchange traded funds. It's definitely not for the faint-hearted. So you've got to be really clear about the fact that when the market drops, this fund will drop more. And just picking up my language there when it drops. So I'm just really conscious that the markets have traded incredibly well. We cannot forget that the market will crash. And that's okay. That's just all part of investing, but you've just got to make sure that any exposure to do have to this, you've acknowledged that that will drop further. To continue drawing out on the strategy you spoke about there with the million dollars, would you debt recycle into a leveraged ATF like GHHF or is that it? No. I wouldn't. Too risky. I get to gear and then to gear again. Double gearing essentially. I just don't see that could it play out potentially, but the risk associated with that would be magnified.

12:27And you've got a lot of variables there. If interest rates continue to grow, like this thing needs to outperform in order to justify that. If interest rates grow over the market drops, you've got double hit there. In my view, we've had a number of members request that you ask if this is something they should not go down it. Well, we have definitely not advised on that, but certainly they'd want it to consider it. And then to be really transparent, I shut it down. Yeah. So even if they've got really strong cash flows to service the debt, they've got a buffer in case interest rates rise, you're still, and like a long time horizon. This is case by case, but like I think about our member base and their worlds are evolving. Like they've purchased that they potentially want to purchase their first property or they've just purchased their first property. They want to upgrade. They potentially had their first kid going to have second third. There's a lot of variables. And we don't want something like the, these GHHF funds, the investment horizon or the recommended investment horizon is 8, 9, 10 plus years.

13:34Which is a lot that happens over a decade for a 20 or a 30 year old. I'm just conscious of leverage on leverage when there are so many variables. Fair call. So we've got one that's coming from Kelly Glenn. What's the most common portfolio mistake that you see in clients under 40? How do you try and fix that? There's two that I see regularly. The first is ownership structure. Typically, and this is a broad generalization, the individual in a relationship that's more interested in investing, again, broad generalization is typically the higher income earner and they start investing in their name. Why is that an issue? Will any income that they generate is going to be taxed at a high marginal tax rate, capital gains, a high marginal tax rate, however, if they had that investment in their partners name, it would be taxed at a low marginal tax rate. Only ownership structure is certainly the first piece. I suppose the build on

14:40upon that is we get people reaching out to us and they might have a 50 or a $100,000 portfolio that they've built. They might have 300 grand in super sitting in a balanced fund. They've got really focused on their investment outside super, but half of their super money is sitting in cash or cash style investments. That structured piece is important. The second common mistake is just heaps of overlap. People buying a whole bunch of random ETFs or shares, and then you look under the hood and you're like, well, this one's invested in this one's invested in this one. There's just a lot of to be frank, unnecessary overlap, which is one comes with transactional cost, but also additional management phase. Jess, who now host their get started investing podcast, recently spoke to someone who had 27 ETFs in their portfolio. Yeah, probably

15:42don't need them any. I mean, some of the diversified ETFs have like 10 ETFs within the ETFs. So you can have one and then you're under, I look under hood and there's 10. So yes, I think 27 is probably a bit. Yeah, we should do a competition. Who in Australia has the most ETFs? And do you win or you lose it? Yeah, yeah. You win. Now, speaking of structures, you've mentioned super a couple of times and we do have questions on super. So we do want to get to them in a little bit. But before then, I'm going to ask you about a less common structure that I think has got a bit more interest post budget. This question came in from Mark. He asked, how do investment bonds work? What providers and investment options exist and do you like and what benefits do they offer in light of the budget changes? Have you been getting more questions about investment bonds recently? It's funny, you ask. So, budget came out on Tuesday, Wednesday, our email inboxes were inundated

16:44from all the investment bonds providers saying, hey, we haven't been impacted. We're still going. So literally, I don't know if they had their kind of finger on the go percent button, but yeah, literally the next day. So the budget changes haven't, appreciate the budget changes still being worked on and evolving, but today they haven't been impacted. So just to be clear, investments have not been impacted. What are they? So they are a structure, so they're not to be confused with a traditional kind of fixed interest. What we would class as a more conservative bond, which many of you listen is probably don't have a lot of exposure, so they are a structure whereby you can reduce your tax obligation. So when you invest in this structure and you can invest in British as funds, Vanguard funds, a whole range of different underlying dimensional, etc. funds, but when you generate income through these structures, it's taxed at 30%.

17:45You don't need to disclose that in your personal tax return. The bond issue will just pay that to the ATO on your behalf. So if you're on the highest marginal tax rate, that can be a clear, a clear benefit. So rather than paying 45, 47%, the income that you pay is taxed at 30%. After 10 years, you can withdraw those funds tax-free. So the tax has been paid. The key here though is you only see the benefit of this structure if you hold onto it for 10 years. Otherwise you'll need to pay top-up tax. So the tax that you would have otherwise paid. Two broader considerations is the amount that you can invest is capped at 125% of how much you invested the year before. So if you invest 10 grand this year, then in year two you can invest up to 12 and a half thousand dollars in year three. If you only invest say $4,000, then in year four,

18:48you can only invest $125,000 or $125,000 of that $4,000. So 5 grand. So there needs to be a degree of kind of consistency there, which can be challenging, particularly for accumulators because you're getting bonuses, ideally you're you know, pays increases. There's changing circumstances like the kids start at childcare and that's the reduces disposable income considerably. So there does need to be a degree of consistency. The second is phase. Just be mindful of phase on these things. So they are beneficial from a tax perspective, but conscious that the phase are higher than directly investing in the underlying investment option. So when clients ask about investment bonds, are you putting a lot of them in it? Like does it obviously we're talking generally here. Everyone circumstances are different in their goals and time horizons are different. But like have you seen an uptick in the amount of clients you're putting in that structure? I would typically only consider it. If

19:51you're on the highest marginal tax rate and envisaged stainless, otherwise the cost, the lack of flexibility can be hard to justify. Well, Glenn, we're going to move to stocks, verse property. And these are actually, we've speaking before the episode, there was a theme that sort of carried through the con from conversations that you're having with clients. So we took that theme and broken into a couple of questions. You said that you're seeing more young investors start to pile into ETFs because they're feeling locked out of property. Is that the right mindset to be investing? Is it sort of because they have no option with property? Let's just invest in the stock market. Is that the right mindset to be having? Good question. And this is something that I am a little concerned about. So if you look at the data, like the vast majority of trading accounts are being opened by those under the age of 35, more young Australians are investing in the stock

20:56market than they ever have before. That's not a bad thing. That's great. Absolutely. Why we exist. And I agree that that is a good thing. However, what I don't think is being discussed enough is is this strategy going to get people to where they want to be? So what I mean by that is, where we're getting young Australians reaching out to us and they've got 50 grand invested or they've got 100 grand or they've ticked up to 200. Even five of them, they've got considerable amount of money invested in the stock market. And they're like, no, I don't want property, not interest in property. My first comment there is what I've noticed is that tends to change when people do start a family. So people might come in as a lifetime renter in their 20s. They have a kid and then they realize, I want to be close to this particular school, this particular catchment. I don't want to move when I've got a couple of young kids that can be, I guess, an anchor point.

22:01But building upon that, my concern is that people are investing 500 or 1000 or 2000. And go, yep, this is my strategy. Don't need property. This is going to set me up for financial freedom without really understanding, is that going to set them up for no financial freedom? Is that enough? Are we going to get to 30 or are we going to get to 40 and we've built like a million dollar portfolio with ShiderWay from property and then we're at a point when we turn 40 like, oh, actually, I would love my own place. And you know, I challenge that individual and go, what about when you turn, if you don't want property, what about when you turn 50? Are you okay still renting? What about when you turn 60 and you want to retire? Are you still okay renting throughout retirement? And the answer might be yes, but what I'm really conscious of is property regardless of the return is forced savings. It's all forced investment. So for those that

23:08maybe aren't good savers or don't have that kind of regular rhythm, every month, you have your force to pay off that home loan. One of the advantages, but also disadvantages of investing in the stock market is the flexibility. Like you want to go to Europe so you just stop investing for a couple of months, circumstances change and whatever and you stop investing for a couple of months. You know, the you kid goes to childcare, you dispose of income, reduces significantly. So you stop investing for a couple of couple of years, had you had a mortgage, you're not going to stop doing that. So I'm not saying it's you can't do it, but we're spending a lot of our lot of time with our members making sure that they understand and doing forecast projections around what their position will look like when they're 30, what their position will look like when they're 40, what their position will look like when they're 50. So they understand what the decisions like how much they're investing now and what their future state will likely

24:08likely look like. Because it can feel and I'm just a bit nervous about the fact it can feel yeah, regular investing. I'm doing what I should be doing, but I'm still questioning is that going to get you to where you want to be? That's the big one for me. Yeah, it's tough. It's an interesting dilemma because you're right. Like Australians will do, will cut every expense before they stop paying their mortgage. Yeah, partly it's just because they need a roof over the head and partly it's this psychology of like property is like the thing that's front of mind for people whereas investing is like a nice to have. Yeah, maybe we need a new investment product, a mortgage style investment product where you're locked in for 30 years. Yeah, yeah, yeah. I mean, that would play out. The thing is though, it's like, you know, if you default on your mortgage, you lose your home. If you default on your property investment loan, you just give your portfolio back. Yeah, it's less existential. Yeah, but if you're to to your comment around like if you're renting, but your income drops for whatever reason, you'll still pay your rent if you're a position do so, but it is the investment that will be the first first to go. Yeah, yeah. And if you're not

25:13consistently investing in your 20s and 30s, you're losing out on that compound impact. And I just worry that, you know, I just don't want that to be false hope. I'm investing 500 bucks a month. Everything's going to be okay. Yeah, yeah, yeah. It's like calculate what you would be paying in your mortgage to duck to your rent and then everything else has to be going to investing. Can't go to anything else and make it and make it a non-negotiable. Yeah. What we're seeing is a lot of younger people now not voluntarily saying property is not for me. It's more just like I can't get in. This is a decision that has almost been taken away from me. And so the default option is I do have cash flow. So I'm going to put it into the stock market because I want to feel like I'm doing something with my money. Yeah. How do you help people through that process of like, okay, well, whilst you might not be able to now, like how do you sort of overcome that reality of you just can't afford a property? Create a plan. Like, and I say that for ceaselessly. But again,

26:18we get a lot of people reaching out. The do feel very disconnected from the property market because the media has done a very good job of telling young Australians it's not possible. I'm not going to shy away from the fact that it is really hard. But the number of people that we've spoken to that said, no, I can't do it. And they've started their investment journey in their investing, whatever it is a couple of months. But then to say, well, hang on, actually, you could do this. And this is what it would look like. And this is the time that it would take. And these are the trade-offs that you would need to, you know, decisions that you would need to make to then go, oh, I didn't actually realize it was that it was possible. I didn't realize I could buy that apartment in three years time. I thought it was 10 years time, which is why we pulled away from it. So, you know, creating clarity around what the way forward looks like in line with that goal also enables people to align to it more. So they can see that it's possible. They're like, okay, if I do this three and a half years, I'll commit. Whereas if it feels impossible,

27:20then it's almost put in the two-hardbasking. Then the default is ETFs. Yeah. Yeah. On the idea of creating a plan, like, obviously, a lot of people's plan, when they feel locked out of the market in, you know, a major capital city, is to rent vest? What's your view on rent-vesting now, particularly again, post budget? Yeah. I mean, it can still work if it's a good asset. Make sure you're really clear on the numbers just because you've got an investment property doesn't mean that that's a great investment. So, you know, be really clear in terms of what are all the costs going into this thing? Is it actually growing in value? How much does it need to grow in order to justify the amount of interest, strata, counterrate, stamp duty that you're paying on this thing? Touching on my comment earlier, it can be a bit of an emotional conversation. When we do run through the numbers and we tell a

28:25member, well, actually, this property is performed quite poorly. It's a bit like, that was my, I thought I did the right thing. It's not to say you didn't do the right thing. You still invest it. You still put money aside, but there could be other better investments or better ways to allocate that capital and let's not wait until this thing turns around when it hasn't for the last 10 years. Let's make a really conscious, proactive decision to go. Yep. Cool. It's not done exactly what we thought is a do still the right thing, but now's the time to redeploy capital. All right, Glenn. We're going to take a quick break. And on the other side, we're going to be back with plenty of questions around property and superannuation. We'll be right back. Welcome back to equity mates. We're here with Glenn Hare, founder of Fox and Hare, financial advisor extraordinaire. We've got a couple of questions on property, Glenn. This one is a little specific, but you've mentioned debt recycling a number of times. So we'll throw it in

29:26there. It's from Clinton. He said, my wife and I each reached that recycled 50,000 into ETFs from the home loan. They both made $25,000 gain over the last year. Great return. Can they both sell out those gains, put them back into the, I guess, the bad debt, the original loan and then redraw it again to continue debt recycling? No. So they would have to sell down the entire portfolio, pay off that loan and then reestablish a new investment loan with that full full amount in order to claim the tax deduction on that full. Right. So if you are looking to do that, the key here is around, yes, you're going to increase your ongoing deductible interest. Just be mindful of the capital gains tax that you're going to have to pay as a result of the re-structure. So depending on your marginal tax rate, we'll determine the potential tax liability.

30:27Timing is everything when it comes to restructuring. So if you're in a relationship and or you're going through a period where there's reduced income such as parental labor, something like that, because capital gains is tax, or the marginal tax rate, or is impacted by a marginal tax rate, that's a really good opportunity to re-structure that point. Nice. We're going specific with some of these questions, Glenn. We've got a voice memo from Courtney. So we'll play that now. So I have lots of questions, but actually my biggest question and the one that I haven't seen answered or really asked about is joint tenancy. So with joint tenancy, obviously, when you buy it with someone you have equal shares. So my other half and I, we have two properties that are existing properties. Like we've bought them before the cut-off date. One of them is an investment property that we do negatively gear. So my question is, West Coast scenario, one of us stars, and

31:35automatically it gets owned by the surviving person, but does that trigger anything now under these new rules? Does that mean that it can no longer negatively gear, or is it still an existing property? Because there's a name changing the sense that someone's name gets removed. So I'm just curious and looking forward to hearing the answer. Well, thank you for the question, Courtney. We should say if people want to ask their questions for a future episode of Ask an Advisor, head to equitymates.com slash contact. You can write your question or you can record it. We'd love it if you record it. But Glenn, this topic seemed to spring up maybe a couple of weeks after the budget and it was, you know, commentary about a widow's tax. I actually am not sure where it's up to. So that's why we get experts in. So I like everything. Well, like a lot of things with the budget, still an evolving conversation. The general guidance as to where we're at today is that the negative geared benefit

32:35will pass to the surviving partner. So you'll inherit the negative geared benefit. That seems to be the general consensus across all parties at this stage. So that's probably what we'll play out, which is good for Courtney. But nothing's legislated yet. So watch this space. Yeah. I guess like four clients in Courtney's situation, I assume you're advising just a wait and see approach. Are you changing anything? Yeah. Exactly right. Are you changing just more generally with like these proposed changes? Are you actually changing anything pre anything being legislated? Or are you just telling everyone to just wait and see if it's not being legislated? Wait. Yeah. Unless there's an unforeseen circumstance which I haven't come across. Yeah. So there's no reason to do anything before it gets changed. I wouldn't be. No, because you don't know what. Yeah. Yeah. Yeah. Yeah. So the trust one is a big one at the moment. You know, we recommended some of our members to open trusts just before the budget. But now we're like,

33:39hang on, let's hold off before we actually do anything with it. Yeah. And we'll only make a decision once we're clear in terms of what's actually legislated, not just chat. Post budget, are you recommending to open trust? Or it's also wait and say. Wait and say. Yeah. Yeah. Yeah. Wait and say. Yeah. All right. Well, that's probably as specific as we want to go on property. We've got some questions on super. So maybe let's turn to super and start with a general one. This came in from Tom. He's in an underperforming fund at the moment. We won't name and shame. But he wanted to know how. Fortunately, he didn't name and shame. But he wanted to know how long he should wait in an underperforming super fund before moving. What are we waiting for? Well, you know, sometimes, you know, not everyone outperforms every year. No. Yeah. But when I'm looking at server, I'm looking at long term. Why? I mean, again, reflecting on a member base, that money is invested for decades. If you're looking at long term historical data, past performance is an

34:41clear indication of future forms. But if you are looking at, you know, five, ten year data, and it's consistently underperformed other funds that I'm not sure what we're waiting for. What about it for one year of underperformance? So say last one out of your year. So the long term average over the longest period they have data for, insane that though, some of the funds that we're recommending, the the fund has been around for a long time. But the actually investment option has only been around for a very short period. But if we believe in that, and if it's done very well, and we believe in that underlying investment philosophy, even if we don't have ten years of data, we'll still recommend that fund. So this one's come in from poor me, 123. Again, if you want to ask a question on our Facebook discussion group, you can do so. And this member struggling to pick a new super fund,

35:42they're in an underperforming fund with high fees. They need to keep a portion of it in there for insurance reasons. They're stuck in two mindsets. Move to a fund that's something like a 60% international, 30% year, 10% emerging as high growth. Or do they keep a small amount in the existing fund and move the rest to like a high growth Australian retirement fund, vanguard, and pay two lots of fees? Very insightful from this particular listener in that they've considered the insurance. Yes. So they've actually gone and said, hey, I have insurance. I don't think I'm going to be able to get insurance elsewhere. I need to keep that insurance. The number of young Australians that don't look at that and then just transfer and then potentially cannot get insurance is huge. But that's just a side comment. With regards to this particular scenario, what I'd be looking at doing is keeping a small balance in the fund to keep the insurances active and alive and investing the remaining balance is something that's going to

36:45align to my risk profile and generate far better returns over the long term. In terms about the risk regards to the two sets of fees, most super funds do charge a percentage fee. Some will have a nominal kind of dollar flat fee. But what you'll find is it might actually be cheaper to have the two funds as opposed to just having the one expensive fund that has the insurance. We've seen that a lot. So we'll just have the existing fund, small balance, percentage-based fees. So it's lower the money in an alternative, high growth, low cost, better performance. And even having two super funds, the fee could still pay less. When we went through our life insurance process, it was obviously recommended to us to have it sit in a separate super fund to give you the flexibility to move around and not have to start, start, restart, restart. First of all, use it. So definitely something to consider. And then I hadn't even

37:48thought about when we first started putting money into super. So yeah. And my insurance is structured the same. So I've got a retail policy, which means that if I want to change super funds, I can just get that insurance just paid by the new super fund. So it's not a linked in or linked to my super. Yeah. I guess just a general question on super. Like both of those questions were about people in underperforming funds that we're looking at moving. A lot of members that come to Fox and here, I imagine adjusting like bang average mega, some of the mega super funds. Like for people who are in them, you know, just like a post plus ART or super whatever, do you just leave it? Like, do you find with that? No. Like I guess, you know, like for the standard member, how much, like should they be thinking about moving super? Yeah. So definitely should be thinking firstly, thinking definitely thinking about moving super. A lot of people that reach out to us have far more investment in their super than they do outside super. But they come talk to us about their

38:51stock portfolio and the 27 ETFs that they invested in, but they got 300 grand again sitting in something pretty average in super. And the other commenter that is, you know, if you're earning a hundred grand a year, like there's a thousand bucks every single month going to the super fun that you tell your employer to invest in. It's your decision, bit of a side comment, but insurance is something we talk about with all of our members. It's certainly not the most exciting conversation, but it is very relevant. The number one insurance that we really do focus on or albeit we do focus on or for kind of policies is easy income protection. Like if you don't have your income regardless of whether you have debt or dependence, like how you're going to pay the rent, like how you're going to pay the phone bill, like et cetera, et cetera. And income protection is a very broad policy. So often when people think about personal insurance, it's like something really bad happens and they're not able to work every again. While they pass income protection, like if you are unable to work for a couple of months, you could start getting a

39:54portion of your income to then enable you to pay the rent, pay the mortgage, pay childcare, whatever the case may be. So and the other element to this is premiums on income protection if paid personally. So not through super are tax deductible in your personal name. So also relevant when thinking about this super slash insurance relationship. So you're saying that like if people just have a default, the default insurance in a big fund most of the time everyone's circumstance is different. They should look at personalizing their insurance. I actually just meant from an investment's point of view. Like are you fine with the big funds? Like you find for to keep people in big funds? For sure. Yeah. In saying that though, the big funds do bring out different investment options quite, quite, well, I won't say regularly, but they do. Like one that we're specifically favoring at the moment, that particular investment, the funds been around for ever. But the particular investment option that we're picking has only been around for just

40:5912 months. Yeah. Okay. You willing to say what it is? I don't know how my license would feel about you. If you want to ask a specific question, go to equinimates.com slash advice and we'll put you in touch. Just to close out on super and I guess to close this conversation because we are getting towards the end of our discussion, you weren't in favor of leverage with debt recycling. What is your thoughts on leveraging in super? It's a long term investment. Okay. Whether you like it or not. And you got guaranteed cash flows coming in like guaranteed cash flow. It's just like super. It's just another investment. Yeah. That's the way I think about it. Like I think about, okay, investing my personal aim. I'm going to pay the highest marginal tax rate or your marginal tax rate. Then I've got an investment bond, but I'm going to lock it up for 10 years, but I might get a slight reduced tax obligation. If I'm not going to say it as much tax as possible, super. Then I've got to acknowledge, okay, that this isn't decade, a couple of decades. So

42:02gearing through super sure, if you understand it and you've got a long time horizon, there's money to be made. Well, if you're listening to this conversation and you want to talk to Glenn about investing, super annuation, property, just get a general sense check on where you are at on your financial journey. Then head to equitimates.com slash advice and we'll put you in touch with Glenn and the team. You do a lot of work with many, many equitimates community members have been doing now for a number of years as well. So the feedback is awesome and we really appreciate the work that you do, Glenn. And thank you for sharing your time with us today. Thanks guys, appreciate it. Thanks. This podcast is intended for education and entertainment purposes only. Any advice is general advice and has not taken into account your personal financial circumstances. Before acting on general advice, you should consider if it is relevant to your needs. If, on short, speak to a financial professional. The host of this podcast and their guests may have positions

43:06in the companies mentioned. Equitimates media is part of the Betishez Group but maintains editorial independence. We operate under Australian Financial Services License 540-697.