EP. 1255 PEOPLE BUYING PROPERTY WITH $100,000 IN THEIR SUPERANNUATION? CRAZY!!

Ever wondered how a small nation like Australia manages to hold nearly $3.5 trillion in superannuation funds? Join us as we uncover the origins and evolution of Australia's superannuation system, starting with its inception in 1992 under the Hawke government. We'll reveal how this retirement savings scheme has catapulted Australia to the fourth-largest superannuation market globally. Delve into eye-opening comparisons with the $10 trillion value of Australian property and the substantial $2.8 trillion in household debt. Additionally, we explore the increasingly popular trend of using superannuation for property investments and the resulting generational divide on investment strategies.

In the second part of the episode, we revisit a fascinating investor night event where an accountant provided an in-depth presentation on crucial financial topics. Through detailed slides and real-life examples, our guest offered invaluable advice that left the attendees expressing heartfelt gratitude. You'll leave with practical insights that could shape your financial future. Don't miss out on this packed episode that's sure to leave you better informed and inspired to rethink your own financial strategies!

Transcript

Speaker 1: 0:00

Question Superannuation, our war chest for retirement. What are we ranked in the world? We're going to shock you today. Stay tuned, we're talking about Super.

Speaker 2: 0:26

I'm the ringleader, good morning.

Speaker 1: 0:35

What I can't tell you how excited I am to talk about.

Speaker 2: 0:39

Super. I'm the shocked agent. I'm witnessing things I've never witnessed before. With what? With people buying property? People buying property, as simple as it sounds.

Speaker 2: 0:52

This is truly quite amazing what people are doing with in my opinion fairly achievable, small amounts of money to get together, particularly when it's for savings. Amounts of money to, you know, get together, particularly when it's for savings. You know I know people are conscious of 10, 11, 12 percent of their wage being, you know, locked away. But you know, in some ways it's good because it allows you, if you can use that money to purchase a property no, just yeah absolutely.

Speaker 1: 1:21

Now we're going to take you back to the good old days when super was incepted in 1992. The Hawke government turned around and said we're going to make every Australian pay part your employer. Part of your total earnings is going to be percentage is going to be contributed to your retirement. You won't be able to access it to 65, whatever the rules were. And here we are today. Now Billy's gonna give the nugget away early and I normally do this with it.

Speaker 2: 2:02

Huh, it's true, we normally, we normally save this to last, but um before actually before we give the nugget, can I? Just show you what people have got in their super accounts.

Speaker 1: 2:12

The average joe, the average australian ladies and gentlemen, you are going to be. You are going to be in awe, shocked and amazed when we tell you the where we rank in the world with our superannuation war chest. You're going to be shocked. It's a lot of money, but let's talk about it individually then, okay, billy Bob, go tell us okay, have a quick look.

Speaker 2: 2:36

So, uh, let me get rid of this one. That's, this is, is um, this is, I think, a 2021 report. Uh, so a couple years old now. Um, from abs, but, um, can you give me zoom, zoom, yeah, you want.

Speaker 2: 2:55

At the top we've got age. We've got, uh, male, female, uh, greater than 18, but sort of less than um, that 18 to 24 is the top, the top sort of two rows seven. Can you zoom up on that? Yeah, I can, but it's, you might not see it. Nah, yeah, no, I can't see it.

Speaker 2: 3:14

Okay, cool, not very good, um, but let's, let's just go down the list, because what I think is really interesting and we we spoke about this on one of the other episodes is the engine room of your career. So, basically, from your mid-20s to, say, your late 40s, 50s, that's when people are in the engine room, locked away, career-wise, at their best part of their income, career and starting to get some really good savings. I think that's quite exciting because if you're, if you're active, you know, in your super and trying to, you know, buy property, invest it's, you can see quite a considerable amount of cash, so that that that seven grand turns to eleven turns to twenty, to fifty, to, you know, a hundred to nearly two, 200 by the time you're moving into retirement. Have a look at this mark nearly. There's nearly half a million dollars of super sitting there shit, I want to talk about my big numbers.

Speaker 1: 4:18

I've been excited about the big numbers yeah, go.

Speaker 2: 4:21

What are the big numbers?

Speaker 1: 4:23

you ready, ready. Okay, can we get rid of those numbers? How does?

Speaker 2: 4:28

Australia play in the big numbers. I can't see that.

Speaker 1: 4:31

Okay, you ready for this? In Australia, in total, dollars for our superannuation. We have hang on a second. Let me put this into perspective. We have hang on a second. Let me put this into perspective $10 trillion in Australian property $10 trillion in Australian property $10 trillion Going to get better. We have in debt just under $3 trillion in debt. Stock market ASX value just under $3 trillion Right In superannuation in Australia as of a year ago.

Speaker 2: 5:21

We have $3 a half trillion dollars in our super it's a lot of money, it's a huge amount to give you an idea, it's bigger than our ASX.

Speaker 1: 5:38

to give you an idea, it can cancel out our debt, our national debt. To give you an idea, australians are ranked with our superannuation war chest of $3.5 trillion. We have the fourth biggest war chest in the world for retirement Amazing. And we are less than 1% of the population of the world. We are 0.4% of the population. So I'll say it again for anyone who's struggling with these numbers, because I really struggled with these numbers there's $10 trillion in Australian property. There's something like $2.8 trillion in debt in terms of household debt with mortgages and stuff like that. So we're geared and we're in debt to about 30% Australian property value. So we're quite lowly geared. The stock market is circa $ is uh is circa three trillion dollars, but in australian super we have been saving since 1992 and investing in in that since 1992. We are sitting on a war chest of three and a half trillion dollars in super yeah, it's staggering, amazing numbers.

Speaker 2: 7:03

What are you seeing, though? What are people doing with it?

Speaker 1: 7:07

well, people are feeling guilty. Um, people are feeling, uh, avant-garde. They're feeling like they're not doing what mum and dad did, because mum and dad didn't have these opportunities. So what people feel like they should be doing is they feel like they should be buying an investment unit a little one bedroom, little two bedroom in their name and they're going. This is real hard, yeah, but what they're not realizing is they're losing 10%, of which you know was 9.25. Now it's 10.25. It's going up to 12%, 2025. They're losing 10% of their total income to their retirement, which is such well-spent money because it just means when Australians, when our kids retire and when people are retiring, they're going to be, uh, the government's not in trouble having to support, um, people that aren't working. These guys are pretty well funded. The grey nobads are going to be sitting on cash half a mil, to be exact.

Speaker 2: 8:16

At this rate, if you're 75 or more, you can expect, yeah, about half a mil.

Speaker 1: 8:21

So it is impressive what you invested in is even more exciting yeah, true, what?

Speaker 2: 8:29

what excites me is for the people that are doing, um, you know, bits actively in their super before they retire. It's in a completely separate name. So if you're, you know, setting up a self-managed super and you're buying and borrowing in your self-managed super, it's completely separate to your personal name, so it doesn't get in the way of you, you know, achieving your personal sort of goals. If you want to buy a property for yourself, you can be a first-time buyer. You want to be an property for yourself, it'll be a first time buyer. You want to be investor? Do that and you can we're not?

Speaker 2: 9:03

giving. We're not giving advice, though no, but it's exciting.

Speaker 1: 9:09

We said we sat there the other night and we we opposite an accountant and, by the way, if you want to get this this, um, we had an investor night the other night. If you SMS the number 0460 111 111, do you want to write that on there on the comments? Bill 0460 111 111. If you SMS the word smart, you'll get our notes from the night and you'll get our video from the night. And Billy, billy, I like what you're saying.

Speaker 1: 9:42

This is what the accountant was telling us the other night in relation to super and the mortgage broker that it wasn't going to affect our, our lending, our personal lending to ink to is so if you're wishing to upgrade your family home, they actually don't look at the debt that you're holding in your super. So I thought, when the accountant told us that, that I found that real, real interesting because I yeah, I always thought, you know you people think, oh, we can't afford to borrow half me dollars because we want to. We want to make improvements to our home and borrow some money. But the accountant was saying that there's that complete separation. I thought that was cool, shocking shocking for me yeah, sure, yeah, yeah.

Speaker 2: 10:32

A lot of people like wow um, it's low-hanging fruit, I think it's.

Speaker 1: 10:39

You know it's doable it's big and I think that people have to get have to get used to it um, because they're not used to it. So people didn't see mum and dad buying an investment, saw mum and dad buying an investment one bedroom unit, dy and they think that's what they got to do and then they feel guilty because they haven't or can't um. But I think what people have to get um adjusted to is super, isn't it's, he's a war chest. It is there and we're starting to see buyers come out buy storage units for $198,000 with their super. We're starting to see people come out and buy, particularly with off the plan because it's not ready for sort of two, three years, so they can put more into their super. And then we're starting to see people buy warehouses and residential units.

Speaker 1: 11:33

We're starting to see people borrow money from banks in their super. So they're laying down $100,000 and they're borrowing, say, you know, $100,000 in their super. So this is a fundamental change that I'm seeing in the Australian property market and I was trying to understand why we're not being rocked harder by interest rates as a country. And then, when you understand, we've had 13 rate rises and when you understand, we've had 13 months of rate rises and 13 months of property growth. I think when you look at our overall balance sheet of an Australian economy and having that $3.5 trillion sitting there in super, it's actually normalised, stabilised and made Australia great again again we've got questions.

Speaker 2: 12:33

Um, I completely agree this. These things are, um, they sound like a foreign language, but when you, you know, sit down with a good accountant that'll talk you through his terms um how do you?

Speaker 1: 12:45

take money from your super and buy a property easy terms okay, um, you don't just talk to your accountant, you talk to someone who's pro what you're pro about, because I find that sometimes people have a get sandbagged by their accountant because their accountant's sometimes not qualified to give the advice out and they go, oh no, you can't do it. The person really, really wanted to do it. So I think, talk to someone who's done it first. Ask family and friends about and see who's done it. Talk to their advisors who they did it with. Talk to your accountant and, yeah, just, I think, get familiar with it. But first thing is, if you hit that SMS, that was an accountant chatting about it the other night on the investor night that we ran and all the slides are in there and everything for that. So, yeah, interesting.

Speaker 2: 13:49

Yeah, that is actually. That's a good answer. That's the real-life webinar. We did little presentation and the slides. There you go. That's the show. Go super. Have a good day.

Speaker 1: 14:03

Thanks, bill. Have a good week, have a good day and Bill thanks for your financial advice.

Speaker 2: 14:10

Not at all. Thank you for your financial advice. See you guys take care.