Finance & Fury Podcast

Welcome to Finance and Fury, the Say What Wednesday Edition Today we have a question from Luke. Hi Louis, I listen to you often. Very informative and interesting episodes. My question is regarding super/pensions. I lived and worked in the U.K. for about 10 years - and still have a pension there. I also have Super here in Australia. I heard I could bring my U.K. pension back to Australia, then I heard they stopped it, and then I heard I still could. I was hoping you could clarify this for me. Great question! This was a big change to expats retirement planning a couple of years ago that seemed to go pretty unnoticed, so thanks for bringing the topic up. Created issues The issue with the UK Pension transfers to Australia occurred with changes to UK legislation back in 2015. This was due to the UK pensions prohibiting people from transferring their pension funds before they have reached the minimum UK pension age of 55, due to changes in accessibility laws between the two countries (i.e. the UK didn’t want people

The ability to get more achieved - learn how to control your time, not just manage it. This is what this episode will focus on, or put bluntly, it’s about Getting Shit Done!   What is time? Time is the indefinite continued progress of existence and events that occur in apparently irreversible succession from the past, through the present, to the future. The reason this is important is that time is limited – it eventually runs out for all of us. While our total years alive may differ – each day we are all limited to the same amount of time. Whether you are a CEO or retired, we each have 24 hours a day. So how do some people seem to get so much done working with the same time constraints? They do this by creating and controlling time. When I first heard this it took me a while to fully comprehend. How do you create time? Easily, you can either free up tasks or get through them quicker, however focus is the key. I believe that the 9-5 work day has killed productivity. Most people - if they really wanted - co

Welcome to Furious Friday – Today – Continue with the Lucky Country Australia – Today – want to run through how a lot of our luck – especially if you have owned property, comes from the design of Australia’s monetary system since the early 90s. But diminishing marginal returns are a real thing – especially when it comes to money. In this episode we break this down to set the stage for the next two episodes – on Australian property and share markets and their potential returns for next few years.     The heart of every monetary system - money can only be created by a central authority – for guarantee of value – most of human history: Genghis Khan - established paper money in Yuan Dynasty- currency fully backed by silk and precious metals behead those found guilty of counterfeiting – in Before in Song Dynasty just tattoo their faces But this is when the paper money was fully backed by valuable goods When it comes to fiat currency (our current monetary system) – need to have one central Authority to make sur

Welcome to Finance and Fury, the Say What Wednesday edition Today’s question is from Robbie, Hi, and thanks so much for the podcast. Both Mum and Dad are retired however Mum is eligible for the pension before my Father reaches 65 (approx 5 years) however Their combined assets puts them over the threshold to claim the pension. Is it possible for them to transfer money/assets to a trust, or gift money to a sibling to reduce their combined assets below the Centerlink threshold.   Relating this to a non-specific question - is it possible to transfer assets/money that a retiree owns, so as to be under the threshold to be eligible for the Centerlink Pension, and if so, is there a time this would have to be done by (does Centerlink look at the last 5 years or so of assets?)   Today: Run through maximizing pension incomes Little can be done to reduce assessable/deemable assets Asset limit tests, gifting rules and transfer costs   Assets and Income tests: Assessable assets over $387,500 for a couple starts to reduc

Welcome to Finance and Fury Looks like borrowing for property purchase is going to be easier. APRA is looking to make some changes to lending criteria enforced onto the banks. Today: Run through what these changes are Why they are occurring What the lending environment looks like over the next few years What is happening with the RBA and borrowing restrictions from APRA? Interest rates are strongly related to the interbank cash rate Made it clear that they are cutting rates in 2 weeks’ time from 1.5% to 1.25% Banks lend at a margin slightly above the cash rate that covers their expenses, makes a profit and pays the deposit levy The cash rate of 1.5% and variable lending rates of around 3.75% leaves a 2.25% buffer But banks assess your borrowing capacity at an interest rate of 7% This is set by APRA, and they are going to remove the serviceability assessment at 7% Government plans: APRA has removed its quantitative guidance on the level of the serviceability floor rate at 7% Authorised Deposit-taking Inst

Welcome to Finance and Fury, the Furious Friday edition Last week: Being grateful for what we have, where Australia started and where we have come Today: Luck truly running out How it can be manipulated What is luck? Success or failure apparently brought by chance rather than through one's own actions’ The saying that ‘we make our own luck’ What are the outcomes of being lucky? The difference between success and failure If you were born in a Western Country, you were born lucky We have a great upwards mobility of wealth The real luck is being given the ability of choice Have a look at the freedom indexes, they show higher levels of quality of life Where does freedom come from? There is a very strong correlation between free nations (economically and legally) and prosperity/quality of life What exactly makes a nation free, and gives the population every opportunity to build their own success instead of luck? I have been getting into the key figures in the Founding Fathers Not often do you get to see the p

Welcome to Finance and Fury, The Say What Wednesday edition. Where every week we answer your questions. Question from Anton - In your recent podcast you mention countries that have more millionaires and billionaires have more gdp and a higher quality of life. I am interested if you have research that shows the relationship of quality of life for the lower quartile of the population (by net total worth) against the number of millionaires in a Country.   Today: Research on quality of life More millionaires per capita helps For the lower quartile also   St Vinnies CEO Sleepout on the 20th of June – Donation Link   Recap of what I said in that ep   “countries with the highest number of millionaires/billionaires per capita, have higher levels of GDP per capital and higher quality of life scores, even for the poor“   Per capita is important – shows output Concentration of millionaires per capita There really isn’t a lot published about quality of life and number of wealthy people Little research showing benefits

Welcome to Finance and Fury A plan for structural reforms to help increase Australians’ ability for upward mobility. The coalition will likely have enough seats to squeeze through a lot of reforms. Today: Income axes going up aren’t much of a concern What about the taxes you don’t see directly? The effect of these taxes on the economy growth or decline How to reduce your taxable incomes? Taxes – Government revenue source Number of taxes – do you know how may taxes you pay each year? The average Australians pay at least 125 different taxes each year, 99 to Federal, 25 to State and 1 to Local Total tax collected is approximately $528.5 Bn Most tax comes from incomes of individuals and businesses – 59% or $312 Bn Consumption tax like GST makes up 26.8% was supposed to replace state’s stamp duty Business payroll tax makes up 4.7% or $24.7 Bn charged to companies if they have above a threshold employees/wages Excises on specific goods – normally ones on top of GST at Government discretion Sin taxes – consump

Welcome to Finance and Fury, the Furious Friday edition  A reminder of how lucky we are and why we are called the lucky country. Also, what we have to lose if we neglect to remember this Some perspective: You don’t know what you have until you have lost it Taking things for granted like our power, because blackouts suck What about the billions of people who don’t have power or deal with rolling blackouts daily? Who would value having power more? The hatred of the rich shows the lack of gratitude by those who do it Countries with the highest number of millionaires/billionaires per capita have the highest GDP per capita and quality of life They are wealthy (some exceptions) because they provide more value to our lives We are lucky to have “rich people But why are we called the lucky country? First used in 1964 by Donald Horne – The Lucky Country The origin of the phrase was negative in the context of the book “Australia is a lucky country run by second rate people who share its luck” Where did we come

Welcome to Finance and Fury, the Say What Wednesday Edition Today’s question comes from Octav Hi Louie, My question is how the universities are functioning in Australia, especially the one that are governmental managed. How do they make the advertisement for casual and part time positions available? From my experience, the positions are given to students and acquaintances without a selection process.   Today we will talk about universities in Australia An overview The nepotism   Overview: 43 universities in Australia The department of education has the responsibility for administering funding and policy A hybrid model with funding from government and tuition fees The universities adhere to government rules and regulations Funding comes from commonwealth schemes, scholarships, and grants. HECS/HELP debt covers 2.2 million Australian’s debt at around $40.2 billion in total Takes an average of 8.8 years to pay off Uni is set to become more expensive as the government starts covering less of the cost upfront

Welcome to Finance and Fury There is a saying that goes hoping for the best but planning for the worst. With the election around the corner, for those wanting to make it for themselves and create financial security may be in for a bit of a shake up Today I want to recap proposed policies, breakdown of the economy and strategies to avoid pitfalls from election results. Recap of policies: Minimum wages and penalty rates reintroduction has an impact on small business sector Taxes has one of the biggest effects Income tax – more tax from the average income tax payer Capital gains – reducing the discount to 25% from 50% impacts risk/return ratio for those investing in capital growth investments Negative gearing – only on new properties impacts investing decisions Family trusts – higher tax on distributions at minimum of 30% rather than the beneficiaries marginal tax rate Franking credits – still in place, but the rebates will go. This still helps to offset tax, but lower incomes for self-funded retirees State

Welcome to Finance and Fury, the Furious Friday edition This is a continuation from this week’s Say What Wednesday episode, in part one on Who to vote for? Check it out here. Part 1: Political culture Tribalism 3 main parties policies and promises Today: How to tell the difference between promises and policies? Break down how votes tend to end up with 2 parties How to tell a promise from a policy? Every promise focuses only on the outcome Look at if the policy proposal is stating an outcome versus how it will be done Example: “Uni should be free” – how is this achieved? The breakdown is the difference between dialectic and rhetoric Rhetoric - language designed to have a persuasive or impressive effect, but which is often regarded as lacking in sincerity or meaningful content. Dialectic - discourse between two or more people holding different points of view about a subject but wishing to establish the truth through reasoned arguments – but truth requires facts/information Social media and the spread of

Welcome to Finance and Fury, the Say What Wednesday edition Had a few questions recently which is topical. Mostly from friends and family. They know I take interest in politics and policy, and asked me “Who should I vote for?” Can’t tell you that, nor I did them   Today: Discuss 2 things to help make an informed decision Policy, what each party proposes and where they stand on the political and economic spectrum Next week: Where your vote is going with preferences Our political culture: Us vs Them mentality Voting tribalism Creates a dangerous element in any organisation Hate and violence towards the other Personal disclaimer: whoever provides more freedom in their policies Cost benefit and Pros and Cons Parties: 3 main parties: ALP, LNP and The Greens Most people are voting for 1 or 2 main issues For Labor voters, the environment was the top issue (40 percent), followed by the economy and health care (each 11 percent). For Coalition voters, the economy was the top issue (44 percent), followed by the en

Welcome to Finance and Fury Have you ever thought about What would you do if you won the lotto? What would you do with it? This depends on many things: the size, type of lifestyle, and how much you value money now. Today: Talk about how winners end up with no money The tricks and psychology used to make people buy tickets   Who plays the lotto? 11 million participate in gambling 6 million have bought a lotto ticket or scratchie 1 million spend more than 10% of their annual earnings gambling What happens when you win the lotto? It can turn out well or not It takes time to learn about money beyond how to spend it You hear many famous cases of how winners lose their winnings These are great cautionary tales How should you spend it Why doesn’t everyone do this? Value – not worked for and there is a lot of it. It depends on mind frames. Not planned for – it is a lot of money in one go, it’s an oversupply or marginal utility. Knowing yourself with money, having self-control and knowing the value of it There

Welcome to Finance and Fury, The Furious Friday edition Today We will go through how the share market changes with economic theory, particularly the theory of Milton Friedman in regards to shareholder value and certain volatility The share market behaviour changes as the thoughts of investors change It is based around Game Theory To start: What is the predominant thought of today The returns of a company drive demand, people want shares that are doing well Quarterly reports have a short term focus This can take priority over long term health What is the fiduciary duty of directors?   Where does this view come from? Who is Milton Friedman 1962 collection of essays “Capitalism and Freedom” “there is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition, without deception or fraud.” Prices can respond quicker with information

Welcome to Finance and Fury, The Say What Wednesday Edition Today’s question came from Matt and Lucas Labor’s plan for 50% of new cars to be electric by 2030 plus introduce a carbon emissions target for new cars. The Greens have one-upped this. Today we break down the EV market Why they are doing it? Talk about the platitudes and promises What it will cost? Why are they doing it? Paris agreement to reduce CO2 emissions by 46% per person Australia has a growing demand for fuel Most Australians travel to work via car We don’t have the greatest public transport What is EV range anxiety? How much are EVs? Other countries are banning petrol cars What are the charge times for these vehicles? How well do these cars work? Transport takes up 18% of greenhouse gas pollution in Australia Where does electricity in Australia come from? How much CO2 is emitted? How much do these electric cars cost? How will this be done? Labor’s plan was making car dealers responsible for this The majority of cars produce more than

Welcome to Finance and Fury The election has been set for the 18th of May The marketing has been coming in and it has been pretty forward with the smear campaigns It seems like a lot of it preys off people not understanding how the economy works, and there is nothing wrong with this as it is a complicated topic. But its abhorrent that its used to win votes, without providing policy on how a party will run things. Today See through the political messaging used The messages used The tactics used An election promise is not a policy There are 2 sides to every policy ‘those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety’ Under governmental policy, it is a trade off Liberty is the state of being free within society from oppressive restrictions imposed by authority on one's way of life, behaviour, or political views Safety is a state where you are not in danger or risk We have a relative safety measure, economic, terrorism, climate change etc. You

Welcome to Finance and Fury the Furious Friday Edition On the last episode we talked about the City of London Corporation, a mini plutocracy Today we are exploring at what point does a financial sector state to crowd out real economic growth? Referred to as the ‘financial curse’ I have found some contradictions to my previous beliefs – research shows a tipping point Why is finance important? We all use it Each economy has stages with a financial system Reaches an optimal size Beyond this point a financial system starts to inflict damage Profitable techniques start to impact the creation of wealth There is a limit to useful roles of a financial system The Tipping Point: Financial crisis Supporting the creation of wealth vs extracting it from other parts of the economy Shaping laws, rules, thinktanks and culture The damage it does Measurable impact: link to database Finance becomes a net drag on GDP growth and productivity – misallocation of resources Negative relationships between rate of financial secto

Welcome to Finance and Fury, the Say What Wednesday Edition Today’s question from Zed “I recently noticed that Australia seems to be opening lots of lithium mines as the demand for Electric Vehicles rises and we turn away from oil. Is Australia at risk of their lithium mines being undercut by competition from South America in the near to medium future?”   Today: Demand for Lithium Who is providing it?   What is Lithium? Alkali metal Used in rechargeable batteries The supply is increasing   Where Lithium comes from? Lithium from brine (70%) It can take over a year to extract the Lithium through evaporation Lithium from hard rock (30%) Hard rock drilling and extraction through traditional methods Lithium can potentially be recycled   Who are the producers? Bolivia, Argentina, Brazil, and Chile South America produces a lot of the Lithium Australia holds more than 2.7 million MT of identified lithium reserves Chinese companies own more than half of the world’s production   What are the Issues? Oversupply

Welcome to Finance and Fury Everyone has heard of more money, more problems – it is a bit of a contradictory statement It is false as money can cover bills and be used in emergencies It is true as not valuing money can lead to problems How to value money? What is conspicuous consumption? Why does this occur? The display of economic power is a means of their social status What is Affluenza? What did Oliver James say? What does it matter if someone has more stuff than you? Seeing wealthy individuals online can help contribute to the affluenza problem Where it comes from? Marketing triggers your spending habits What does wealth really look like? Societies can remove the negative consumerist effects Price versus value What leads to overconsumption? What creates a society of individualistic consumers? What are downshifting spending habits? The realignment of spending priorities Identify the need for an alternative political philosophy What are the long-term effects of downshifting? What are the elements th