April 2, 2025 • 31 mins
Trump's upending of world trade happens to coincide with challenging times for Big Super: The major funds face weak share markets while battling a range of administrative failures that have put Australian Super and CBUS in the headlines for all the wrong reasons.It might be time to take control.
Hugh Robertson of Centaur Financial Services joins Associate Editor - Wealth, James Kirby in this episode.
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In today's show, we cover:
- Tariff turmoil triggers a second look at Self Managed Super Funds
- The Banks are offering 7 per cent yields again
- The minimum you need for an SMSF
- Learning about education bonds
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:09):
Hello, and welcome to The Australian's Money Puzzle podcast. I'm
James Kirkby. Welcome aboard everybody. Whoa what a week? So
here we go. Trump's Liberation Day has arrived. Ten tariffs
right across the board for everything coming into the US. Now,
just so you know the general tariff rate, you know
at the moment it's about two and a half percent,
(00:31):
so it's a quadrupling of tariffs going into the US.
It's a change to the world order as we know it.
And Australia got no exemptions whatsoever. That's worth pointing out too.
That was announced. We don't know what's going to happen
to markets, right, but it was announced after the Wall
Street in this says closed. But now Jones futures as
(00:52):
we speak to you middle of Thursday are down three percent.
And I want to put forward a show to you
to which hopefully you might listen to in conjunction with
Tuesday's show, because every now and again there is a
theme that dominates markets and we zone in on it
and it's worth bearing with us when we do this.
(01:14):
If you recall about a year ago we covered artificial intelligence,
I think a fair bit before it became a very
generally covered issue. It was probably more like a year
and a half ago. And this again is one of
those themes that's going to change how your super operates,
how your investments operate. It is crucial. So listen to
Cameron if you can. From Tuesday's show. You know one
(01:37):
of the things you think about how tuned in he is.
And if you listen to the show, you know that
he literally knows Trump. He has been in the Oval Office,
He's been at all the rallies. He met the point
that Adon Musk wouldn't last a year. And here we
are forty eight hours later, and there are reports this
morning that Mosk is, in the delightful phrase of Anthony Scaramucci,
heading for the wood chipper. So what does it all
(01:59):
mean for you, the active investor? I have a top
financial advisor this morning. He's on the top the Barons
one hundred and fifty list. It's Hugh Robertson of Centaur.
Speaker 2 (02:08):
How are you, Hugh, I'm good, James, how are you going?
Interesting times?
Speaker 1 (02:14):
You pick your moment, You pick your moment to come
on the show, or tell you that. I want to
just look for the listeners now, have in some ways
kind of cover the big picture about Trump on what's
going on, and it's all come to pass, and I
think it's you know, I think it's safe to say
it was worse and more severe than people might have
hoped in terms of what he's doing in terms of
(02:35):
closing the doors basically to free trade around the world.
And I want to look in two ways. It's simply
I mean, obviously anybody can do and make what they
wish of it for their investing. But let's just have
a look at super and let's split it into two parts.
Your super if you have big Super, and anyway, what
big super is doing is always interesting, even if you
don't participate in Big Super. And then we'll also look
(02:56):
at smsfs and their reaction. But I suppose the immediate question, Hugh,
which I certainly would be worried that our major super
funds in Australia have gone big basically on the US,
have lifted their bets on the US and you can
(03:17):
see the proportion of stocks that they hold there has
risen and they have dropped their cash levels as well
at the very same time just as this is happening.
It's just one of those times where I think the
power of the independent investor is at its best because
you can move. But what's your impression of big super
major super funds and their approach to these historic days
(03:40):
so far?
Speaker 3 (03:42):
When you get times of great volatility, you want to
probably be invested a little bit closer to home, where
you feel you have.
Speaker 2 (03:48):
A little bit more control.
Speaker 3 (03:50):
When you look at the big super funds, I think,
as an example, Australian Souper now sins about seventy percent
of its inflows overseas, so that will be impacted by
the tariffs at a pretty grand scale. And I think
as we see more of this industry consolidation of the megafunds,
the big industry funds, they're going to dwarf. They're going
(04:11):
to be so big in size that they're going to
dwarf the ASX itself. So it's going to be a
continual thing that they're going to have to allocate money
overseas just so that they don't move markets with one
single investment. So I think you'll see more global exposure
and you're going to see more in the unlisted space.
So probably two areas that scare most investors right now.
Speaker 1 (04:34):
I might suggest yeah, well, we know for a variety
of reasons. It's all come through in various ways. The
Morgan Standing, for instance, as sell that thirty percent of
the AX is held by Big Super. So okay, fair enough,
you know, they a hit saturation point and they must
move abroad. But the thing I'm a bit concerned about
is the nature of their exposure to the share market
(04:55):
and the nature of our Big Super choices for people,
the classifications, you know, we're balanced where what people think
is balanced has actually got a fair spin skew towards growth,
a fair skew towards the share market. And the share
market was good for Big Super for years and years.
But here's the thing. They've lifted their exposure to the US.
The US is the worst performing market in the world
(05:16):
so far this year. It's down about five five and
a half percent so far. Our market's down about four
four and a half. The European markets are actually up
about six percent. Point I'm making is is there something
of a reckoning perhaps coming for not so much for
Big Super, but for people who thought they're super funds
(05:37):
sort of knew something no one else did. They were
doing so well for so many.
Speaker 3 (05:40):
Years yes, it needs to be because now earnings are
going to be.
Speaker 2 (05:46):
Impacted by tariffs.
Speaker 3 (05:49):
You've got price expansion that's happened over the past few
years that hasn't necessarily kept up with the earnings growth.
Speaker 2 (05:55):
So you're globally, you know.
Speaker 3 (05:58):
Especially the US market is expensive on you know, the
fundamental metrics, and where you where might your opportunities be,
maybe in Europe or in Asia. You're probably not getting
much of an allocation into.
Speaker 2 (06:11):
Those asset classes.
Speaker 3 (06:13):
So it's going to be in it's going to be
a difficult uphill road for investors in big super funds
over the next sort of three to five years, you'd imagine,
especially with the volatility that a Trump presidency usually brings.
Speaker 1 (06:27):
What do you think people should do? Obviously we're going
to get people asking, as we always do times of
severe stress, whether they're in an appropriate setting in their
big super fund. And this issue of definitions, and you
think it's obscure, folks, it's not. This is so important.
There's no legal definition on these super funds allocation. So
(06:51):
you go into your big super fund number one and
you have your choices and one's conservative and one's balanced,
and one's growth. But the fact is, you know that
growth is really spins towards shares and balanced is a
lot more turned towards shares and a lot less balanced
than you might think in the classical sense of the world.
And I can prove this to you because the ratings
agencies they actually ignore, often ignore the classification the bonds
(07:15):
have calling them balanced, and they define them as grilled.
And they're right to do so. Am I on the right? Check?
Speaker 2 (07:21):
Here?
Speaker 1 (07:21):
Am I making? Am I over the top on this one?
Speaker 2 (07:23):
Here? No, you're right.
Speaker 3 (07:25):
There was a big industry fund a while ago that
used to call it self balance that had ninety two
percent in growth assets. There's no one in this world
that would think that's balanced, you know so. And that's
part of the regulatory regime where they need to hold
these big funds to account a bit more.
Speaker 2 (07:43):
Which we're starting to see. We're starting to see that
there's you know, they've lost a bit of shine.
Speaker 3 (07:49):
But I think from the investor point of view, going
through a market like now, you've really.
Speaker 2 (07:53):
Got to focus on your cash flows.
Speaker 3 (07:55):
If growth has been great for the past few years,
and what I mean by then in your shares you
had the capital appreciation, what you're seeing now is how
are we going to get that income from shares? How
are we going to get cash flows? So probably more
important than ever in times of uncertainty is that we're
going to go and get paid those dividends, whether Australian
or global, And that's probably one things where when you're
(08:16):
in those big megafunds or industry funds, they don't pay
out the dividends. That just keeps getting reinvested back into
the unit price. So I think there's a really big
difference there for people to appreciate that it's pretty valuable
now to be able to extrapolate that income out of
your investments. Both your growth assets shares and property and
your defensive assets are fixed interest in cash.
Speaker 1 (08:40):
So what should people should they We're not telling people
what to do, it's not advice information only, but I
expect people should review at least whether they are comfortable
with the positions that they have taken, and they might
go an extra yard and find out exactly what their
allocation means. What does balance actually mean because it can
(09:00):
mean different things. I mean, our super's definition of balance
could be different than hestes, which could be different than holsplus.
Speaker 3 (09:08):
And I think clients and investors would just assume that they're.
Speaker 2 (09:14):
It's the same for all of them.
Speaker 3 (09:16):
So I think that's a really good point, James, that
you've got to really look behind, you know, look behind
the label and actually spend a little bit of time
investigating it because there might be something that you're not
comfortable with as your risk tolerance or even your capacity
to take risks right now if you're nearing into retirement.
Speaker 1 (09:32):
Yes, are they all? Can I paint them more of
the same brush By that, I mean, are the big
private ones than none, the retailed ones as we call them,
the whatever, the amps of this world, other colonial et cetera.
Is the issue similar with them.
Speaker 2 (09:51):
You've usually got a little bit more choice there.
Speaker 3 (09:54):
To be fair to them, you've got a bit more choice,
So you can break it down. They usually don't have,
you know, a set standard fund that you're in nowadays,
so usually you'll get options there. You know, you might
have over one hundred different investment options there that you
get to choose from, and you can kind of choose
your asset allocation a.
Speaker 2 (10:13):
Little in a little bit more of a bespoke manner.
Speaker 3 (10:16):
So again, though for any single person, you know, outside
we all know that outside of your house, your super
is your biggest asset. So you've really got to spend
the you know, spend an hour on it, looking for
looking through and understanding it and not to you know,
or talk to someone that can give you that advice
as you know that education might save you, you know,
(10:38):
possibly tens or hundreds of thousands of dollars.
Speaker 1 (10:41):
Okay, really valuable folks. So I mean, we've had this
point on the shore before, but there's times for it.
It's really matters. Don't assume you understand what the definition
is of growth or balance. Have a look, have a look.
It's not that complicated, all right, It's really not that
complicated that that your fond it could be a lot
more exposed to shares than you realize if you just
(11:03):
assume that balance means balanced in the sense that you
and I understand balance to be. And as Hughes pointed out,
there is a major fund that had ninety percent of
their holding some shares and they were classified as balanced.
And by the way, can I just say, every time
I bring this up in print, I get a you
know that they're on like in two minutes complaining about
(11:23):
this and that it's all fine. Well, I don't think
it is all right now. Also, Hugh, while we're talking
about this, one of the big issues of late in
super and in Big Super. And when I say Big Super,
I mean all those big industry funds and all those
big retail funds that many people have their life savings in.
(11:44):
There's all sorts of scandals and letdowns going on at
the moment in terms of standards. Right Joe Longo, head
of ASIK, has said they're the poster child of poor
corporate governance. That's a spectacular line. I don't forget that
pretty fast. And we had all this stuff with death
benefits and disappointments and court actions Australian Super aera in
(12:05):
their SeaBus are in there. There's a blockout in Hester
where you can't even get at you through the site
for fifty days because they're doing a technology change over.
But here's what I want to point I'm leading to.
There used to be an enormous amount of funds. There's
mergers happening all the time. Art For instance, the second
biggest fund is the second biggest fund because it's a merger,
(12:28):
a recent merger of Sun Super around the old Queensland
super Now. Mercer says that there's still about ninety significant
super funds that's going to shrink to about twenty. And
the issue I want to bring up you is when
you're in one of these funds that's a target, you
(12:50):
can have a lot of headaches and complications and bureaucracy
drive you completely nuts. If you happen to be unfortunate
enough to be in a small fund that's taken over.
Find out a giant fund but at one hundred billion
in assets, just buys your fund that had sixty billion
in assets, and it gets two lines in a newspaper
one day, and that's about it. You might even miss it.
But all sorts of things happen afterwards as that consolidation happens,
(13:14):
and it will happen. It has to happen because they
need the scale and they need the technology investment to
stay at the level they're at. What's the sort of
upsides and downsides of that consolidation where the world we
know of big super funds is going to shrink fast,
is shrinking fast into a handful of key players.
Speaker 3 (13:34):
I think you definitely lose innovation, there is competition around you,
You lose innovation and if you think, you know, we've
got an aging population, we should be spending more money
on designing better retirement outcomes for our clients. And how
the investors and the members of these super funds. I
think that's one that everyone will feel at the individual level,
(13:56):
it is a race of the bottom with costs. So
we're just trying to reduce fees, and then you get
these substandard service levels.
Speaker 2 (14:03):
You get these issues.
Speaker 3 (14:04):
Around death payments and pension payments. So you know they've
done a really good, you know, run on ad saying
that it's all about cost, but you know, clients, do
you know, do value good service?
Speaker 2 (14:17):
Still?
Speaker 3 (14:18):
People do value service, and I think that's something that
needs to lift within those funds. And I think you're
also going to see that they're going to become a
victim of their own success in the fact that they're
going to be so large that the way they invest
you lock yourself into very average returns.
Speaker 1 (14:36):
Very interesting. We really flushed out out another day that point, Q,
but it's very interesting, and because as you see, if
you become it's like the old thing about the issue,
if some company or factor dominates and it's then it
becomes the average if you know what I mean, very
hard to be better than average if you represent the
average as those handful of funds will do sooner or later. Okay, look,
(14:57):
well take a short break. I want to bring up
a really interesting point now about Trump, about this sort
of inflection point we have in market. So where we
sit markets down five percent for the year or so
after a whole polygod years when you could just close
your eyes your fond are bringing in double digits every year.
Maybe it's time to take a look at self managed
super funds and who they might shoot back in a moment. Hello,
(15:27):
Welcome back to the Australian's Money Post little podcast. James
Kirby here talking to Hugh Robertson of Centaur Financial Services,
operates up in the Gold Coast. There with the beautiful
Gold Coast hinterland outside his window. Now, Q, you would think,
damn good time for the self managed super fun sector
to parade their wares. I mean I have a self
(15:50):
managed super fund. I don't. There are times when there
were times in the when the super funds were big.
Super funds were knocking it out of the park, you know,
ten eleven, twelve percent, and you were saying like, gee,
you know, we get ten or eleven twenty percent and
you don't have to think or do anything. You know,
why am I doing it now? This year? I feel
so much better, you know this feeler this year I have.
(16:12):
I am nimble, may I say? And I was able
to move in and I bought gold DTF for instance,
you know, relatively significantly for the size of my fund,
for instance, a few months ago. And I'm so glad
I did. I'm so glad I did because I couldn't
think of anything else worth buying at the time. Now
I'm not saying they're perfect, but the point I'm making is,
is this a climate where the attractions of a self
(16:37):
managed super fund, knowing their limitations and their difficulties and
the work involved in them, they may they may look
more attractive.
Speaker 2 (16:46):
Yes, one hundred percent.
Speaker 3 (16:49):
And we've done the same chimes within our business where
we've not always been.
Speaker 2 (16:56):
It's not being necessary to have an SMSF.
Speaker 3 (16:58):
We've been able to kind of get that those good
investment outcomes without having a self manation shuper fund.
Speaker 2 (17:04):
But I think now control.
Speaker 3 (17:06):
We've got this geopolitical uncertainty both within Australia and abroad.
So I think without having control over you know what
we said before, the second biggest asset you own is important.
The administration isn't what it used to be. Technology is
taken care of a lot of that, the costs aren't
as expensive as you may think, and just that element
(17:29):
of control, and it probably coincides with the rise of
ETFs and.
Speaker 2 (17:34):
In particular thematic ETFs.
Speaker 3 (17:36):
But now you can really tailor the portfolio to something
that you know, you're comfortable with. You're not relying on
a manager to allocate to gold, you know. If you
want that for that peace of mind of that inflation protection.
Speaker 1 (17:48):
You just buy and good. Yeah, And I mean, really
one's as good as the other. They're just reproduced the price,
assuming that they're they're the same setting it that they're
all on hedged or whatever, and they're not playing any
games around leverage.
Speaker 3 (18:02):
So I think that's I think it's a very valid
statement to consider looking at them at them now.
Speaker 1 (18:08):
The other point I wanted to make was that the
big supper fonts had been dropping their cash levels going
into what was clearly and obviously a very difficult time.
Have we only notion about cash and smsfs and whether
they were being more defensive.
Speaker 3 (18:23):
Yes, we're from our perspective, are the clients of ours.
We took profits the end of last year. Markets were good.
You know, you always harvest some of those returns and
you wait for winter. There was the uncertainty. Remember when
Trump got in, the markets were pretty bullish to begin
with around the tax cuts and very much pro business agenda.
(18:43):
But as we've now sort of got through a little
bit of that and we've seen you know, the impact
of tariffs, there's this little bit of uncertainty. So for us,
we've had the correction of ten percent. You know, now
we're actually waiting for today to be a time to
actually start looking back in markets via a dollar cost average.
So remembering when you're in an SMSF, you don't need
(19:04):
to if you wanted to take an allocation, let's say,
for example, NASDAK and you wanted a five percent allocation,
you don't need to take five percent today. You can
do one percent today, one percent next week and slowly
build up.
Speaker 2 (19:16):
Your positions and deploying that capital as per.
Speaker 3 (19:20):
Something that you're comfortable with is really intelligent in volatile markets.
Speaker 1 (19:26):
One or two things I want to I'm bouncing around,
but I'm at the same time it's very interesting. I
hope for listeners too. There's big picture and a small
picture here in terms of SMSF as an option and
then options within smsfs. But just to go back to itself,
what's the working number you have? I come into you
and I said, off to start in an SMSF and
(19:48):
you see, well, listen, you really can't start it without X.
What's your number? As logan Roy says.
Speaker 2 (19:55):
It would always be a number of names.
Speaker 3 (19:57):
I think when you look at it, it used to
be seen as around five hundred thousand, but over the
last couple of years that's come down to two hundred thousand.
And that again coincides with the rise of ETFs technology
lowering the costs. And it's also this you talked about
it previously, around things around administration. If you want to
(20:18):
get contributions into super before end of financial year, you know,
with the big funds, it can be quite difficult to
meet their timelines, whereas in a self managed super fund
you can do it the day before in June twenty nine.
So there's things around that where there's a bit more
flexibility around the self managed super fund that I think,
and it's been interest too. The research is shown that
(20:40):
younger people are opening them as well, So it's not
just someone with a really big balance, it's someone that
actually wants to take control of it. Which makes a
lot of sense to me because it's you know, it
is going to be such a big investment for you
with your mandated SGC and the caps that you've got
to put money in that.
Speaker 2 (20:55):
Why wouldn't you want to have more control over that?
Speaker 1 (20:57):
Well? Yeah, twelve percent of the year money by low
having to go into super when you say two hundred thousand,
that sounds very low to me. Is that imagining an
ETF heavy SMSF Basically.
Speaker 3 (21:11):
Yes, you'd be able to keep your costs down via that,
and it's also then you can use your software nowadays
that does a lot of the heavy lifting from the
reporting requirements, and even the accountants and the audits now
are quite well priced, so that that tends to be
as around between two hundred and two fifty was your
break even cost of having an SMSF versus the industry ones?
Speaker 1 (21:35):
Well, I'll just say to listeners, I mean, as I said,
I'm skeptical on that one folk, So I think it
would be much higher than that myself. However, I'm talking
about a fully diversified SMSF where you're doing all sorts
of things. It's not just ETFs. It could be sharedes,
it could be young securitized model just it could be
property direct.
Speaker 2 (21:55):
Yeah, yeah, you're going up there.
Speaker 3 (21:57):
Back to that the notion that was and that was
more what portfolios looked like when around the early twenty
twenty to twenty one twenty two, and that number then
was closer to five hundred thousand.
Speaker 1 (22:10):
Yeah, okay, thank you, Hugh. All right, now, one thing
I wanted to zone in on on the SMSFS, which
is relevant to all listeners, but if also on SMSFS,
you know, and Hugh mentioned at the start about income
we need income. Income will become more important defensive assets.
Have you noticed you that the big banks are now
paying eight percent franked except Comebank, Well, the top three
(22:35):
A and Z, West, BAK and now are between seven
and eight percent fully franked dividend yield as we speak.
If you bought them today, Comebank is less than four percent.
Speaker 3 (22:45):
And if I was invested in those, I wouldn't really
be worried about the capital volatility because the eight percent
is going to meet my income needs.
Speaker 2 (22:53):
Yes, especially from a retiree.
Speaker 1 (22:55):
That's right. If you're a retiring and you're getting the
absolute maximum bank for your you grossed up to Frankie,
I'll be even higher than seven or eight.
Speaker 3 (23:03):
Wuld it And yeah, and if you're an accumulator, it's
not bad to be reinvesting those and really getting that
snowball of compound growth working for you either.
Speaker 1 (23:11):
Okay, very good. All right, now there's a lot there
to digest. I hope that was all useful to you.
I want to go to questions because we've got great
questions back in a moment. Hello, welcome back to the
(23:32):
Australian's Money Puzzle on Deliberation Day. Deliberation Day broadcast Liberation Day.
By the way, as if you don't know, is what
Trump is calling, He's Tariff's Day. All right, question, Luke,
what are your thoughts in education bonds, particularly their tax advantages.
(23:53):
I am seeing claims of a thirty percent bonus. This
works great if my six year old and four year
old can be beneficiaries. I'm sure of how it may
change under tax loan. A long time out of five
financial advisers don't like these when they're on the show.
What do you think of them?
Speaker 2 (24:07):
Here?
Speaker 1 (24:08):
I've just given you context, right, just.
Speaker 2 (24:10):
In fairly fair, I'm in the eighty percent. Okay, look
they I see how it works.
Speaker 3 (24:18):
But the fees, you've got a factor in the fees,
You've got a factor in the inflexibility of it. And
a thought that I've had around that is would you
not be better off and the kids are better off
getting the money when they're eighteen in the adult tax rates.
So given the ages of the children, you might be
(24:39):
better off salary sacrificing into super. And when the kids
go on to university or whatnot and get that debt,
you could probably compound the return better through putting the
money into Super taxed at fifteen percent on earnings, and
then upon retirement there might be a few years later
until your age sixteen can access it.
Speaker 2 (24:59):
You could then pay that off for them.
Speaker 1 (25:01):
What about the argument that if you're topped out, if
you're lucky enough to have topped.
Speaker 2 (25:05):
Up, and I would probably then use my non concessionals.
Speaker 1 (25:08):
You wouldn't over education bonds.
Speaker 3 (25:11):
Yes, I've never we've never really been a big user
of them. The range of investment options was never great.
The tax you know, the examples there that you can
find online look good. But at eighteen, you know, I
think of myself with four children, ten, eight, six, and four,
and even though I've got what sixteen years until I'm sixty,
(25:32):
I still and my kids go to private school. I
still haven't thought about there hasn't been enough benefit there.
Speaker 1 (25:38):
But you so like someone who would have thought it through,
both as a professional and privately. Okay, very interesting, all right,
I hope that's useful to you, Luke. We're not dismissing
them out of hand, but I just find, Luke, every
time I put this in front of an advisor on
the show, they are not supportive of them. Okay, that
(26:00):
is they are they believe there's better value to be
had elsewhere with your money. All right, Andy, And the
context of Andy question interesting because you know, in the election,
which we are in the middle of an election campaign,
people a sort of struggling to find differences between the
two parties. I don't mean we know they're different big government,
small government and all that, but precisely on financial measures
(26:23):
or investment measures and in housing. The big ticket from
the Albanasa administration is the Shared Home Ownership scheme, which
whereby the government will put up thirty percent for an
existing house forty for a new and you share ownership
with them. You know, that's their one and the Coalition's
one is Super for Home Deposit, where you can get
(26:45):
up to fifty thousand out of your SUPER to buy
a house which you of course own entirely yourself. Now
Andy's question, is the First Home Super saving scheme worth
the effort? I believe it is quite come plex, But
more recently I came across someone who had used it
and had no complaints at all. The First Home Super
(27:07):
Saber scheme, by the way, about thirty five thousand people
have used it. It's the lowest participation of the various
first home schemes, like the Guarantee scheme, but it is
a scheme where Super one way or another was being used,
or a super money that might have gone into Super
has been used. Have you used it, Hugh, have you
come across it?
Speaker 2 (27:28):
Do you know?
Speaker 1 (27:29):
Is it worth the effort to tunnel through the bureaucracy
to make it work.
Speaker 3 (27:34):
In its current format. I'm not a big advocate for it.
I didn't mind what the Coalition put forward, though, I
thought that there was an element there that you know,
part of the gains would have to go back into
the super as well.
Speaker 1 (27:49):
Yeah, to be fair, Yeah, to be fair, just to
finish off on that coalition. Think about the fifty thousands
you can take off to buy your house. When you
sell the house, if they distick, the fifty thousand must
be replaced back into your super isn't that right? Yeah,
which is the point people forget?
Speaker 3 (28:05):
Yeah, And I think that that method people are still
you don't want to just rob your super fund, you know,
you don't want to take it out of there in
it not go back. I'm not a fan of the
co ownership model, and you know, we still want people
to be able to afford houses, but I think that's
more on that.
Speaker 2 (28:23):
We just need to be able to build more.
Speaker 1 (28:24):
Houses, yes, supply to yeah, taking out super. Okay, So
there you are, and the first home super skate Saber
scheme it's there. People do make it work for them.
I think they make it work for them because people
will try anything that's available on this and I think
the shared home equity scheme will be popular by the way,
I do, so will super from you from so will
(28:47):
housing deposits from your super They'll both fly because people
will try anything, even the FHSS. All right, final questions
from Rowan. There is usually quite a delay between the
RBA cutting the official indust rate and banks passing those
cuts through. Yes, does the RBA take into account banks
usual delays when deciding when to cut rates. I wouldn't
(29:07):
think so, Rowan. For what it's worth, there's no law
that says they must. In fact, the RBA has no particular, written,
explicit power to tell the banks to follow the official rate.
It's a guideline and the banks are pretty fast and
putting up the deposit rates. It's got to give them
full credence for that, don't you So they wouldn't. Basically
(29:30):
they wouldn't. I don't think so. I mean maybe if
they were thinking about it really finally, and maybe there
was atrocious behavior, they might.
Speaker 4 (29:36):
But what do you think you I went and had
a quick research for this and it was an Z
and NAB have typically taken ten days to cut to cut, and.
Speaker 2 (29:49):
Westpac has taken typically fourteen.
Speaker 3 (29:52):
And again there's no it's a commercial reason for them,
you know, they don't have to. RBA's kind of meant
to be you know, somewhat an independent, but they take
it into account. And I think even when you compare it,
you know, a thirteen day delay on a five hundred
(30:13):
thousand dollars loan cost forty five dollars.
Speaker 1 (30:16):
More assuming they cut. There's two things there isn't there.
There's the fourteen days, but then there's do they give
the whole cut? Which they don't always And again they
don't have to. A short answer roman is they don't
have to, and it wouldn't be it wouldn't be a
top factor for them in their deliberations, that is, if
they ever cut again. Oh yes, so the economists tell
(30:42):
us they're going to cut again, And I know I'm
terribly cynical about it. I hope, so I'll tell you, well,
but I wouldn't be. I wouldn't be building it into
my plans. Would you be building a recut into your plan?
Speaker 2 (30:52):
To you?
Speaker 1 (30:52):
No, right, there you go question without notice. I should
have warned you. I was going to hit you with
that one, but then I should have warned you. But
all the questions I hit you that I didn't line
you up for. And that's because you're very good to
talk on the show and We know you can handle
them all and you did very well as usual. Thanks
very much, Hugh Robertson of Centaur Financial.
Speaker 2 (31:10):
Services, Thank you very much for having me, James.
Speaker 1 (31:14):
Great to have Hugh on the show again. Okay, folks,
keep those questions, comments, observations, complaints. Happy to see them
all the money puzzle at the Australian dot com dot
u send them in, record them if you like, on
a voice memo and send them in as an email.
We'd love to hear them. We're collecting them. Talk to
(31:34):
you soon.
Hello, and welcome to The Australian's Money Puzzle podcast. I'm
James Kirkby. Welcome aboard everybody. Whoa what a week? So
here we go. Trump's Liberation Day has arrived. Ten tariffs
right across the board for everything coming into the US. Now,
just so you know the general tariff rate, you know
at the moment it's about two and a half percent,
(00:31):
so it's a quadrupling of tariffs going into the US.
It's a change to the world order as we know it.
And Australia got no exemptions whatsoever. That's worth pointing out too.
That was announced. We don't know what's going to happen
to markets, right, but it was announced after the Wall
Street in this says closed. But now Jones futures as
(00:52):
we speak to you middle of Thursday are down three percent.
And I want to put forward a show to you
to which hopefully you might listen to in conjunction with
Tuesday's show, because every now and again there is a
theme that dominates markets and we zone in on it
and it's worth bearing with us when we do this.
(01:14):
If you recall about a year ago we covered artificial intelligence,
I think a fair bit before it became a very
generally covered issue. It was probably more like a year
and a half ago. And this again is one of
those themes that's going to change how your super operates,
how your investments operate. It is crucial. So listen to
Cameron if you can. From Tuesday's show. You know one
(01:37):
of the things you think about how tuned in he is.
And if you listen to the show, you know that
he literally knows Trump. He has been in the Oval Office,
He's been at all the rallies. He met the point
that Adon Musk wouldn't last a year. And here we
are forty eight hours later, and there are reports this
morning that Mosk is, in the delightful phrase of Anthony Scaramucci,
heading for the wood chipper. So what does it all
(01:59):
mean for you, the active investor? I have a top
financial advisor this morning. He's on the top the Barons
one hundred and fifty list. It's Hugh Robertson of Centaur.
Speaker 2 (02:08):
How are you, Hugh, I'm good, James, how are you going?
Interesting times?
Speaker 1 (02:14):
You pick your moment, You pick your moment to come
on the show, or tell you that. I want to
just look for the listeners now, have in some ways
kind of cover the big picture about Trump on what's
going on, and it's all come to pass, and I
think it's you know, I think it's safe to say
it was worse and more severe than people might have
hoped in terms of what he's doing in terms of
(02:35):
closing the doors basically to free trade around the world.
And I want to look in two ways. It's simply
I mean, obviously anybody can do and make what they
wish of it for their investing. But let's just have
a look at super and let's split it into two parts.
Your super if you have big Super, and anyway, what
big super is doing is always interesting, even if you
don't participate in Big Super. And then we'll also look
(02:56):
at smsfs and their reaction. But I suppose the immediate question, Hugh,
which I certainly would be worried that our major super
funds in Australia have gone big basically on the US,
have lifted their bets on the US and you can
(03:17):
see the proportion of stocks that they hold there has
risen and they have dropped their cash levels as well
at the very same time just as this is happening.
It's just one of those times where I think the
power of the independent investor is at its best because
you can move. But what's your impression of big super
major super funds and their approach to these historic days
(03:40):
so far?
Speaker 3 (03:42):
When you get times of great volatility, you want to
probably be invested a little bit closer to home, where
you feel you have.
Speaker 2 (03:48):
A little bit more control.
Speaker 3 (03:50):
When you look at the big super funds, I think,
as an example, Australian Souper now sins about seventy percent
of its inflows overseas, so that will be impacted by
the tariffs at a pretty grand scale. And I think
as we see more of this industry consolidation of the megafunds,
the big industry funds, they're going to dwarf. They're going
(04:11):
to be so big in size that they're going to
dwarf the ASX itself. So it's going to be a
continual thing that they're going to have to allocate money
overseas just so that they don't move markets with one
single investment. So I think you'll see more global exposure
and you're going to see more in the unlisted space.
So probably two areas that scare most investors right now.
Speaker 1 (04:34):
I might suggest yeah, well, we know for a variety
of reasons. It's all come through in various ways. The
Morgan Standing, for instance, as sell that thirty percent of
the AX is held by Big Super. So okay, fair enough,
you know, they a hit saturation point and they must
move abroad. But the thing I'm a bit concerned about
is the nature of their exposure to the share market
(04:55):
and the nature of our Big Super choices for people,
the classifications, you know, we're balanced where what people think
is balanced has actually got a fair spin skew towards growth,
a fair skew towards the share market. And the share
market was good for Big Super for years and years.
But here's the thing. They've lifted their exposure to the US.
The US is the worst performing market in the world
(05:16):
so far this year. It's down about five five and
a half percent so far. Our market's down about four
four and a half. The European markets are actually up
about six percent. Point I'm making is is there something
of a reckoning perhaps coming for not so much for
Big Super, but for people who thought they're super funds
(05:37):
sort of knew something no one else did. They were
doing so well for so many.
Speaker 3 (05:40):
Years yes, it needs to be because now earnings are
going to be.
Speaker 2 (05:46):
Impacted by tariffs.
Speaker 3 (05:49):
You've got price expansion that's happened over the past few
years that hasn't necessarily kept up with the earnings growth.
Speaker 2 (05:55):
So you're globally, you know.
Speaker 3 (05:58):
Especially the US market is expensive on you know, the
fundamental metrics, and where you where might your opportunities be,
maybe in Europe or in Asia. You're probably not getting
much of an allocation into.
Speaker 2 (06:11):
Those asset classes.
Speaker 3 (06:13):
So it's going to be in it's going to be
a difficult uphill road for investors in big super funds
over the next sort of three to five years, you'd imagine,
especially with the volatility that a Trump presidency usually brings.
Speaker 1 (06:27):
What do you think people should do? Obviously we're going
to get people asking, as we always do times of
severe stress, whether they're in an appropriate setting in their
big super fund. And this issue of definitions, and you
think it's obscure, folks, it's not. This is so important.
There's no legal definition on these super funds allocation. So
(06:51):
you go into your big super fund number one and
you have your choices and one's conservative and one's balanced,
and one's growth. But the fact is, you know that
growth is really spins towards shares and balanced is a
lot more turned towards shares and a lot less balanced
than you might think in the classical sense of the world.
And I can prove this to you because the ratings
agencies they actually ignore, often ignore the classification the bonds
(07:15):
have calling them balanced, and they define them as grilled.
And they're right to do so. Am I on the right? Check?
Speaker 2 (07:21):
Here?
Speaker 1 (07:21):
Am I making? Am I over the top on this one?
Speaker 2 (07:23):
Here? No, you're right.
Speaker 3 (07:25):
There was a big industry fund a while ago that
used to call it self balance that had ninety two
percent in growth assets. There's no one in this world
that would think that's balanced, you know so. And that's
part of the regulatory regime where they need to hold
these big funds to account a bit more.
Speaker 2 (07:43):
Which we're starting to see. We're starting to see that
there's you know, they've lost a bit of shine.
Speaker 3 (07:49):
But I think from the investor point of view, going
through a market like now, you've really.
Speaker 2 (07:53):
Got to focus on your cash flows.
Speaker 3 (07:55):
If growth has been great for the past few years,
and what I mean by then in your shares you
had the capital appreciation, what you're seeing now is how
are we going to get that income from shares? How
are we going to get cash flows? So probably more
important than ever in times of uncertainty is that we're
going to go and get paid those dividends, whether Australian
or global, And that's probably one things where when you're
(08:16):
in those big megafunds or industry funds, they don't pay
out the dividends. That just keeps getting reinvested back into
the unit price. So I think there's a really big
difference there for people to appreciate that it's pretty valuable
now to be able to extrapolate that income out of
your investments. Both your growth assets shares and property and
your defensive assets are fixed interest in cash.
Speaker 1 (08:40):
So what should people should they We're not telling people
what to do, it's not advice information only, but I
expect people should review at least whether they are comfortable
with the positions that they have taken, and they might
go an extra yard and find out exactly what their
allocation means. What does balance actually mean because it can
(09:00):
mean different things. I mean, our super's definition of balance
could be different than hestes, which could be different than holsplus.
Speaker 3 (09:08):
And I think clients and investors would just assume that they're.
Speaker 2 (09:14):
It's the same for all of them.
Speaker 3 (09:16):
So I think that's a really good point, James, that
you've got to really look behind, you know, look behind
the label and actually spend a little bit of time
investigating it because there might be something that you're not
comfortable with as your risk tolerance or even your capacity
to take risks right now if you're nearing into retirement.
Speaker 1 (09:32):
Yes, are they all? Can I paint them more of
the same brush By that, I mean, are the big
private ones than none, the retailed ones as we call them,
the whatever, the amps of this world, other colonial et cetera.
Is the issue similar with them.
Speaker 2 (09:51):
You've usually got a little bit more choice there.
Speaker 3 (09:54):
To be fair to them, you've got a bit more choice,
So you can break it down. They usually don't have,
you know, a set standard fund that you're in nowadays,
so usually you'll get options there. You know, you might
have over one hundred different investment options there that you
get to choose from, and you can kind of choose
your asset allocation a.
Speaker 2 (10:13):
Little in a little bit more of a bespoke manner.
Speaker 3 (10:16):
So again, though for any single person, you know, outside
we all know that outside of your house, your super
is your biggest asset. So you've really got to spend
the you know, spend an hour on it, looking for
looking through and understanding it and not to you know,
or talk to someone that can give you that advice
as you know that education might save you, you know,
(10:38):
possibly tens or hundreds of thousands of dollars.
Speaker 1 (10:41):
Okay, really valuable folks. So I mean, we've had this
point on the shore before, but there's times for it.
It's really matters. Don't assume you understand what the definition
is of growth or balance. Have a look, have a look.
It's not that complicated, all right, It's really not that
complicated that that your fond it could be a lot
more exposed to shares than you realize if you just
(11:03):
assume that balance means balanced in the sense that you
and I understand balance to be. And as Hughes pointed out,
there is a major fund that had ninety percent of
their holding some shares and they were classified as balanced.
And by the way, can I just say, every time
I bring this up in print, I get a you
know that they're on like in two minutes complaining about
(11:23):
this and that it's all fine. Well, I don't think
it is all right now. Also, Hugh, while we're talking
about this, one of the big issues of late in
super and in Big Super. And when I say Big Super,
I mean all those big industry funds and all those
big retail funds that many people have their life savings in.
(11:44):
There's all sorts of scandals and letdowns going on at
the moment in terms of standards. Right Joe Longo, head
of ASIK, has said they're the poster child of poor
corporate governance. That's a spectacular line. I don't forget that
pretty fast. And we had all this stuff with death
benefits and disappointments and court actions Australian Super aera in
(12:05):
their SeaBus are in there. There's a blockout in Hester
where you can't even get at you through the site
for fifty days because they're doing a technology change over.
But here's what I want to point I'm leading to.
There used to be an enormous amount of funds. There's
mergers happening all the time. Art For instance, the second
biggest fund is the second biggest fund because it's a merger,
(12:28):
a recent merger of Sun Super around the old Queensland
super Now. Mercer says that there's still about ninety significant
super funds that's going to shrink to about twenty. And
the issue I want to bring up you is when
you're in one of these funds that's a target, you
(12:50):
can have a lot of headaches and complications and bureaucracy
drive you completely nuts. If you happen to be unfortunate
enough to be in a small fund that's taken over.
Find out a giant fund but at one hundred billion
in assets, just buys your fund that had sixty billion
in assets, and it gets two lines in a newspaper
one day, and that's about it. You might even miss it.
But all sorts of things happen afterwards as that consolidation happens,
(13:14):
and it will happen. It has to happen because they
need the scale and they need the technology investment to
stay at the level they're at. What's the sort of
upsides and downsides of that consolidation where the world we
know of big super funds is going to shrink fast,
is shrinking fast into a handful of key players.
Speaker 3 (13:34):
I think you definitely lose innovation, there is competition around you,
You lose innovation and if you think, you know, we've
got an aging population, we should be spending more money
on designing better retirement outcomes for our clients. And how
the investors and the members of these super funds. I
think that's one that everyone will feel at the individual level,
(13:56):
it is a race of the bottom with costs. So
we're just trying to reduce fees, and then you get
these substandard service levels.
Speaker 2 (14:03):
You get these issues.
Speaker 3 (14:04):
Around death payments and pension payments. So you know they've
done a really good, you know, run on ad saying
that it's all about cost, but you know, clients, do
you know, do value good service?
Speaker 2 (14:17):
Still?
Speaker 3 (14:18):
People do value service, and I think that's something that
needs to lift within those funds. And I think you're
also going to see that they're going to become a
victim of their own success in the fact that they're
going to be so large that the way they invest
you lock yourself into very average returns.
Speaker 1 (14:36):
Very interesting. We really flushed out out another day that point, Q,
but it's very interesting, and because as you see, if
you become it's like the old thing about the issue,
if some company or factor dominates and it's then it
becomes the average if you know what I mean, very
hard to be better than average if you represent the
average as those handful of funds will do sooner or later. Okay, look,
(14:57):
well take a short break. I want to bring up
a really interesting point now about Trump, about this sort
of inflection point we have in market. So where we
sit markets down five percent for the year or so
after a whole polygod years when you could just close
your eyes your fond are bringing in double digits every year.
Maybe it's time to take a look at self managed
super funds and who they might shoot back in a moment. Hello,
(15:27):
Welcome back to the Australian's Money Post little podcast. James
Kirby here talking to Hugh Robertson of Centaur Financial Services,
operates up in the Gold Coast. There with the beautiful
Gold Coast hinterland outside his window. Now, Q, you would think,
damn good time for the self managed super fun sector
to parade their wares. I mean I have a self
(15:50):
managed super fund. I don't. There are times when there
were times in the when the super funds were big.
Super funds were knocking it out of the park, you know,
ten eleven, twelve percent, and you were saying like, gee,
you know, we get ten or eleven twenty percent and
you don't have to think or do anything. You know,
why am I doing it now? This year? I feel
so much better, you know this feeler this year I have.
(16:12):
I am nimble, may I say? And I was able
to move in and I bought gold DTF for instance,
you know, relatively significantly for the size of my fund,
for instance, a few months ago. And I'm so glad
I did. I'm so glad I did because I couldn't
think of anything else worth buying at the time. Now
I'm not saying they're perfect, but the point I'm making is,
is this a climate where the attractions of a self
(16:37):
managed super fund, knowing their limitations and their difficulties and
the work involved in them, they may they may look
more attractive.
Speaker 2 (16:46):
Yes, one hundred percent.
Speaker 3 (16:49):
And we've done the same chimes within our business where
we've not always been.
Speaker 2 (16:56):
It's not being necessary to have an SMSF.
Speaker 3 (16:58):
We've been able to kind of get that those good
investment outcomes without having a self manation shuper fund.
Speaker 2 (17:04):
But I think now control.
Speaker 3 (17:06):
We've got this geopolitical uncertainty both within Australia and abroad.
So I think without having control over you know what
we said before, the second biggest asset you own is important.
The administration isn't what it used to be. Technology is
taken care of a lot of that, the costs aren't
as expensive as you may think, and just that element
(17:29):
of control, and it probably coincides with the rise of
ETFs and.
Speaker 2 (17:34):
In particular thematic ETFs.
Speaker 3 (17:36):
But now you can really tailor the portfolio to something
that you know, you're comfortable with. You're not relying on
a manager to allocate to gold, you know. If you
want that for that peace of mind of that inflation protection.
Speaker 1 (17:48):
You just buy and good. Yeah, And I mean, really
one's as good as the other. They're just reproduced the price,
assuming that they're they're the same setting it that they're
all on hedged or whatever, and they're not playing any
games around leverage.
Speaker 3 (18:02):
So I think that's I think it's a very valid
statement to consider looking at them at them now.
Speaker 1 (18:08):
The other point I wanted to make was that the
big supper fonts had been dropping their cash levels going
into what was clearly and obviously a very difficult time.
Have we only notion about cash and smsfs and whether
they were being more defensive.
Speaker 3 (18:23):
Yes, we're from our perspective, are the clients of ours.
We took profits the end of last year. Markets were good.
You know, you always harvest some of those returns and
you wait for winter. There was the uncertainty. Remember when
Trump got in, the markets were pretty bullish to begin
with around the tax cuts and very much pro business agenda.
(18:43):
But as we've now sort of got through a little
bit of that and we've seen you know, the impact
of tariffs, there's this little bit of uncertainty. So for us,
we've had the correction of ten percent. You know, now
we're actually waiting for today to be a time to
actually start looking back in markets via a dollar cost average.
So remembering when you're in an SMSF, you don't need
(19:04):
to if you wanted to take an allocation, let's say,
for example, NASDAK and you wanted a five percent allocation,
you don't need to take five percent today. You can
do one percent today, one percent next week and slowly
build up.
Speaker 2 (19:16):
Your positions and deploying that capital as per.
Speaker 3 (19:20):
Something that you're comfortable with is really intelligent in volatile markets.
Speaker 1 (19:26):
One or two things I want to I'm bouncing around,
but I'm at the same time it's very interesting. I
hope for listeners too. There's big picture and a small
picture here in terms of SMSF as an option and
then options within smsfs. But just to go back to itself,
what's the working number you have? I come into you
and I said, off to start in an SMSF and
(19:48):
you see, well, listen, you really can't start it without X.
What's your number? As logan Roy says.
Speaker 2 (19:55):
It would always be a number of names.
Speaker 3 (19:57):
I think when you look at it, it used to
be seen as around five hundred thousand, but over the
last couple of years that's come down to two hundred thousand.
And that again coincides with the rise of ETFs technology
lowering the costs. And it's also this you talked about
it previously, around things around administration. If you want to
(20:18):
get contributions into super before end of financial year, you know,
with the big funds, it can be quite difficult to
meet their timelines, whereas in a self managed super fund
you can do it the day before in June twenty nine.
So there's things around that where there's a bit more
flexibility around the self managed super fund that I think,
and it's been interest too. The research is shown that
(20:40):
younger people are opening them as well, So it's not
just someone with a really big balance, it's someone that
actually wants to take control of it. Which makes a
lot of sense to me because it's you know, it
is going to be such a big investment for you
with your mandated SGC and the caps that you've got
to put money in that.
Speaker 2 (20:55):
Why wouldn't you want to have more control over that?
Speaker 1 (20:57):
Well? Yeah, twelve percent of the year money by low
having to go into super when you say two hundred thousand,
that sounds very low to me. Is that imagining an
ETF heavy SMSF Basically.
Speaker 3 (21:11):
Yes, you'd be able to keep your costs down via that,
and it's also then you can use your software nowadays
that does a lot of the heavy lifting from the
reporting requirements, and even the accountants and the audits now
are quite well priced, so that that tends to be
as around between two hundred and two fifty was your
break even cost of having an SMSF versus the industry ones?
Speaker 1 (21:35):
Well, I'll just say to listeners, I mean, as I said,
I'm skeptical on that one folk, So I think it
would be much higher than that myself. However, I'm talking
about a fully diversified SMSF where you're doing all sorts
of things. It's not just ETFs. It could be sharedes,
it could be young securitized model just it could be
property direct.
Speaker 2 (21:55):
Yeah, yeah, you're going up there.
Speaker 3 (21:57):
Back to that the notion that was and that was
more what portfolios looked like when around the early twenty
twenty to twenty one twenty two, and that number then
was closer to five hundred thousand.
Speaker 1 (22:10):
Yeah, okay, thank you, Hugh. All right, now, one thing
I wanted to zone in on on the SMSFS, which
is relevant to all listeners, but if also on SMSFS,
you know, and Hugh mentioned at the start about income
we need income. Income will become more important defensive assets.
Have you noticed you that the big banks are now
paying eight percent franked except Comebank, Well, the top three
(22:35):
A and Z, West, BAK and now are between seven
and eight percent fully franked dividend yield as we speak.
If you bought them today, Comebank is less than four percent.
Speaker 3 (22:45):
And if I was invested in those, I wouldn't really
be worried about the capital volatility because the eight percent
is going to meet my income needs.
Speaker 2 (22:53):
Yes, especially from a retiree.
Speaker 1 (22:55):
That's right. If you're a retiring and you're getting the
absolute maximum bank for your you grossed up to Frankie,
I'll be even higher than seven or eight.
Speaker 3 (23:03):
Wuld it And yeah, and if you're an accumulator, it's
not bad to be reinvesting those and really getting that
snowball of compound growth working for you either.
Speaker 1 (23:11):
Okay, very good. All right, now there's a lot there
to digest. I hope that was all useful to you.
I want to go to questions because we've got great
questions back in a moment. Hello, welcome back to the
(23:32):
Australian's Money Puzzle on Deliberation Day. Deliberation Day broadcast Liberation Day.
By the way, as if you don't know, is what
Trump is calling, He's Tariff's Day. All right, question, Luke,
what are your thoughts in education bonds, particularly their tax advantages.
(23:53):
I am seeing claims of a thirty percent bonus. This
works great if my six year old and four year
old can be beneficiaries. I'm sure of how it may
change under tax loan. A long time out of five
financial advisers don't like these when they're on the show.
What do you think of them?
Speaker 2 (24:07):
Here?
Speaker 1 (24:08):
I've just given you context, right, just.
Speaker 2 (24:10):
In fairly fair, I'm in the eighty percent. Okay, look
they I see how it works.
Speaker 3 (24:18):
But the fees, you've got a factor in the fees,
You've got a factor in the inflexibility of it. And
a thought that I've had around that is would you
not be better off and the kids are better off
getting the money when they're eighteen in the adult tax rates.
So given the ages of the children, you might be
(24:39):
better off salary sacrificing into super. And when the kids
go on to university or whatnot and get that debt,
you could probably compound the return better through putting the
money into Super taxed at fifteen percent on earnings, and
then upon retirement there might be a few years later
until your age sixteen can access it.
Speaker 2 (24:59):
You could then pay that off for them.
Speaker 1 (25:01):
What about the argument that if you're topped out, if
you're lucky enough to have topped.
Speaker 2 (25:05):
Up, and I would probably then use my non concessionals.
Speaker 1 (25:08):
You wouldn't over education bonds.
Speaker 3 (25:11):
Yes, I've never we've never really been a big user
of them. The range of investment options was never great.
The tax you know, the examples there that you can
find online look good. But at eighteen, you know, I
think of myself with four children, ten, eight, six, and four,
and even though I've got what sixteen years until I'm sixty,
(25:32):
I still and my kids go to private school. I
still haven't thought about there hasn't been enough benefit there.
Speaker 1 (25:38):
But you so like someone who would have thought it through,
both as a professional and privately. Okay, very interesting, all right,
I hope that's useful to you, Luke. We're not dismissing
them out of hand, but I just find, Luke, every
time I put this in front of an advisor on
the show, they are not supportive of them. Okay, that
(26:00):
is they are they believe there's better value to be
had elsewhere with your money. All right, Andy, And the
context of Andy question interesting because you know, in the election,
which we are in the middle of an election campaign,
people a sort of struggling to find differences between the
two parties. I don't mean we know they're different big government,
small government and all that, but precisely on financial measures
(26:23):
or investment measures and in housing. The big ticket from
the Albanasa administration is the Shared Home Ownership scheme, which
whereby the government will put up thirty percent for an
existing house forty for a new and you share ownership
with them. You know, that's their one and the Coalition's
one is Super for Home Deposit, where you can get
(26:45):
up to fifty thousand out of your SUPER to buy
a house which you of course own entirely yourself. Now
Andy's question, is the First Home Super saving scheme worth
the effort? I believe it is quite come plex, But
more recently I came across someone who had used it
and had no complaints at all. The First Home Super
(27:07):
Saber scheme, by the way, about thirty five thousand people
have used it. It's the lowest participation of the various
first home schemes, like the Guarantee scheme, but it is
a scheme where Super one way or another was being used,
or a super money that might have gone into Super
has been used. Have you used it, Hugh, have you
come across it?
Speaker 2 (27:28):
Do you know?
Speaker 1 (27:29):
Is it worth the effort to tunnel through the bureaucracy
to make it work.
Speaker 3 (27:34):
In its current format. I'm not a big advocate for it.
I didn't mind what the Coalition put forward, though, I
thought that there was an element there that you know,
part of the gains would have to go back into
the super as well.
Speaker 1 (27:49):
Yeah, to be fair, Yeah, to be fair, just to
finish off on that coalition. Think about the fifty thousands
you can take off to buy your house. When you
sell the house, if they distick, the fifty thousand must
be replaced back into your super isn't that right? Yeah,
which is the point people forget?
Speaker 3 (28:05):
Yeah, And I think that that method people are still
you don't want to just rob your super fund, you know,
you don't want to take it out of there in
it not go back. I'm not a fan of the
co ownership model, and you know, we still want people
to be able to afford houses, but I think that's
more on that.
Speaker 2 (28:23):
We just need to be able to build more.
Speaker 1 (28:24):
Houses, yes, supply to yeah, taking out super. Okay, So
there you are, and the first home super skate Saber
scheme it's there. People do make it work for them.
I think they make it work for them because people
will try anything that's available on this and I think
the shared home equity scheme will be popular by the way,
I do, so will super from you from so will
(28:47):
housing deposits from your super They'll both fly because people
will try anything, even the FHSS. All right, final questions
from Rowan. There is usually quite a delay between the
RBA cutting the official indust rate and banks passing those
cuts through. Yes, does the RBA take into account banks
usual delays when deciding when to cut rates. I wouldn't
(29:07):
think so, Rowan. For what it's worth, there's no law
that says they must. In fact, the RBA has no particular, written,
explicit power to tell the banks to follow the official rate.
It's a guideline and the banks are pretty fast and
putting up the deposit rates. It's got to give them
full credence for that, don't you So they wouldn't. Basically
(29:30):
they wouldn't. I don't think so. I mean maybe if
they were thinking about it really finally, and maybe there
was atrocious behavior, they might.
Speaker 4 (29:36):
But what do you think you I went and had
a quick research for this and it was an Z
and NAB have typically taken ten days to cut to cut, and.
Speaker 2 (29:49):
Westpac has taken typically fourteen.
Speaker 3 (29:52):
And again there's no it's a commercial reason for them,
you know, they don't have to. RBA's kind of meant
to be you know, somewhat an independent, but they take
it into account. And I think even when you compare it,
you know, a thirteen day delay on a five hundred
(30:13):
thousand dollars loan cost forty five dollars.
Speaker 1 (30:16):
More assuming they cut. There's two things there isn't there.
There's the fourteen days, but then there's do they give
the whole cut? Which they don't always And again they
don't have to. A short answer roman is they don't
have to, and it wouldn't be it wouldn't be a
top factor for them in their deliberations, that is, if
they ever cut again. Oh yes, so the economists tell
(30:42):
us they're going to cut again, And I know I'm
terribly cynical about it. I hope, so I'll tell you, well,
but I wouldn't be. I wouldn't be building it into
my plans. Would you be building a recut into your plan?
Speaker 2 (30:52):
To you?
Speaker 1 (30:52):
No, right, there you go question without notice. I should
have warned you. I was going to hit you with
that one, but then I should have warned you. But
all the questions I hit you that I didn't line
you up for. And that's because you're very good to
talk on the show and We know you can handle
them all and you did very well as usual. Thanks
very much, Hugh Robertson of Centaur Financial.
Speaker 2 (31:10):
Services, Thank you very much for having me, James.
Speaker 1 (31:14):
Great to have Hugh on the show again. Okay, folks,
keep those questions, comments, observations, complaints. Happy to see them
all the money puzzle at the Australian dot com dot
u send them in, record them if you like, on
a voice memo and send them in as an email.
We'd love to hear them. We're collecting them. Talk to
(31:34):
you soon.
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