00:00:00:00 - 00:00:26:13
Unknown
So we can. Okay, so we're aiming for these. We're recording the whole thing, obviously. Yeah. We are aiming to get some nice snippets and stuff that the snippets that we can take out of them. Yeah, go on. That good stuff. Yeah. Okay. First time doing it. So have I going to place this in the center. actually, as you put it, send it to me.
00:00:27:07 - 00:00:59:04
Unknown
Adam is going to talk to right. No, no. Mainly I'll go on in the afternoon. They made them all on other stuff. Yeah. I thought you finished your, your one hour slot. Make no, there's more to record. Well hello there. Yeah, she milestone. Yes, she. We're living it. Be live your life. Your life. So, Yeah, well, you feel sweet.
00:00:59:04 - 00:01:33:07
Unknown
The sound only on me. The camera. Yeah. I start again. You're making me very nervous, man. I have a big star in 15 years of my life. Okay, well, hey, thanks for joining us on this podcast. I know you've been with many people. Well, why don't you tell us a bit about yourself? Okay, So I've been I started with ZG in 2017.
00:01:33:09 - 00:02:03:07
Unknown
Previously, I was a client of Alan, and how it all started is Alan helped to build my wealth. I from 2012, that's when I got to know Alan Right. And at that time I didn't know anything about investment property and everything, but Alan helped me to, you know, kickstart my property investment journey by extracting the equity and do all that stuff, which, you know, I share with my clients nowadays how I actually grew my wealth.
00:02:03:09 - 00:02:26:15
Unknown
It's not how much you earn, but how much and you save and how much you can invest and how much you can earn from that investment later on. All right. So 2017 was when I started with this energy. But before that, just a little bit of history. In 2012, I built my I've got so this is not the arrogant or whatever, but just to share how I built my wealth, right.
00:02:26:15 - 00:03:00:21
Unknown
So from nothing I had my own owner occupied property which has been paid off, and after that I acquired for investment properties in my own personal name and also and estimates of property. So altogether five properties in various different structures and that's also because you want to maximize your tax benefits on this stuff. Right. And then from then on, I started being a broken 2017 and help a lot of clients grow your wealth like myself and probably be better than myself.
00:03:00:21 - 00:03:25:21
Unknown
That's what I want all my clients to be. Right. And yeah, continue to do that. That's what I love and passion for that basic. And I know where I always believe in this saying, Hey, in business. So in our brokerage business, it's not the strongest or the smartest that will survive these changes is actually the ones that are most adaptive to change.
00:03:25:23 - 00:03:58:06
Unknown
And that's why you here, because I feel you mentioned one of the structures really well is utilizing what we call a self-managed super fund. In short, it's a massive, I believe, or a bit of a an expert in that area. So why don't you tell the audience what it is? and also the reason it's going to that now this is not financial advice I just want to highlight is just from our own personal experiences because you have a property, two properties in life in this and so it's just sharing so we can add some value to our audience.
00:03:58:06 - 00:04:23:19
Unknown
Okay, So, so SMSF, as Alan has explained here, is shortfall self-managed super fund. All right, So as the name suggests, you are taking over the management of your superannuation monies and controlling how you want to invest in the different asset classes that you want to. Of course, based on the advice that you receive from the financial planner. All right.
00:04:23:21 - 00:04:47:23
Unknown
So again, looking back, if I had known more about SMSF, right, I think I would then, you know, restructure my asset holding to have more assets in the self-managed super fund. Right. So that's something for a lot of the investors out there to consider. Right. How you actually own your asset as the ownership. Is it in your personal name, is it the trust in the self-managed super fund?
00:04:48:00 - 00:05:17:01
Unknown
Right. So you just need to understand how it all works out in those different asset classes. So a little bit about the SMSF and why SMSF is popular today. So again, during the accumulation stage, it's only 15% of tax that you pay on the income, right? And when you dispose of your asset during the first 12 months, you pay only a 30% capital gains tax.
00:05:17:03 - 00:05:54:08
Unknown
And if it's after 12 months, it's 10% capital gains tax. And the beautiful part about this is during the retirement phase there is no tax on income derived through the SMSF for the market value of assets up to 1.9 million currently. So I mean, let me just ask because some of the comments like I mean, we're business owners and we're he he made a super I don't get to touch my money till later on now I mean maybe talk a bit more so so access to money is one second, one is also the taxation right.
00:05:54:08 - 00:06:17:22
Unknown
So you think 15% versus what. Right. Potentially right. Maybe your own business, which is right. You know X amount of percent. Right. You know what it is So over to you. Right. Well, okay, So let's say considering my own personal situation, I so my business is running a solar trailer structure. So I pay say on average 30, 35%, depending on how much I earn.
00:06:18:01 - 00:06:43:20
Unknown
Right. So the maximum tax cap is 47%, I believe, for personal income. So but if you do actually derive that income in that super right, you only pay 15% of your tax from the income that you derive from the super. And why is that? And why is it that you want to do that in your super and you can't get access to that money?
00:06:43:21 - 00:07:08:21
Unknown
I'm just curious, I think the the, the SMSF strategy is probably not about accessing money to date, right? It's planting the seeds for your retirement and also asking that question as in how much money do you need? What is the magic number you need for retirement? Right. So it could be 50,000, It could be 60. But everybody has got a different number.
00:07:08:23 - 00:07:32:19
Unknown
I want to show you a number. Okay. My number would be probably 60,000. Right? So so based on, let's say, 60,000 worth of income that you're going to get when you retire, and let's say we are factoring in 5% of return on the asset, which means you'll need 1.2 million worth of unencumbered asset in any structure that you hope.
00:07:32:24 - 00:07:59:16
Unknown
But more importantly is the income that you derive in the super when you retire is taxed at 0%. So meaning if it's a 1.2 million asset returning 5%, you getting 60,000 without tax. And that's the beauty of holding the asset in the self-managed super fund. Okay. Well, I believe one of the key things we always talk about is, well, how much you make is how much you keep, but hopefully it's what you do with your money.
00:07:59:16 - 00:08:24:00
Unknown
Right. So another concept, you know what? Besides the taxation, was there any other reasons why in this market, one thing is the power to leverage, right? So if you use your SMSF, let's say, to purchase shares or manage funds, for example, if you had 200,000 in yourself managed super fund, it's all you can ever use like to purchase shares, just 200,000.
00:08:24:06 - 00:08:50:05
Unknown
But let's say for example, you had 200,000 in your self-managed super fund and you wanted to purchase an asset at 500,000. Now the beauty of it is we can go to lenders that will offer you a loan in the self-managed super fund name, right? So what it means is with, let's say, a 100,000 deposit, you are able to leverage a $500,000 asset that is continuing to grow at, say, 6% on the average compounded annually.
00:08:50:07 - 00:09:15:04
Unknown
But your initial capital is only 100,000 from the super fund itself. So let's say for a 510 years and, and just use argument numbers, right, because they might cause a bit hard to record what would be the return versus like let's say shares at a direct flight, you know, at 10% let's just say okay so this is just been hypothetical, right?
00:09:15:04 - 00:09:48:09
Unknown
So no, no no. I mean, just based on personal experience. Right. So let's say your asset grows at six or 7% per year, Right? But it's growing based on a $500,000 asset. Right. Well, if you had shares at 100,000, 200,000, that's let's say growing at 5%, that's 5% at $200,000. Right. So you can see that the power of leverage actually compounds your growth even faster because you're basing it on a higher number.
00:09:48:09 - 00:10:15:17
Unknown
Then you compound this as you both double, right. So 100 shares doubled. So yeah, but that's what you get if you like that 100,000 invested in the property and it doubles. What's the profit that you get if you were like so 500 K doubles, it becomes one. okay. So if 500 K becomes a million, a million and convert to shares, if it's hard to 2000 and it doubles, it will become 200,000.
00:10:15:19 - 00:10:40:24
Unknown
Right. So although I mean you still earn 100%, but because you have leveraged on your SMSF to borrow money, you potentially can have access to that 500,000 appreciation in your super fund. And obviously during your retirement phase, that 500,000 is actually tax free, which is a beauty. So yeah, that's $1,000,000. With that, let's assume it's interest money. So since the beginning, 400.
00:10:41:04 - 00:11:10:22
Unknown
So you made 600, right? And then your initial investment, 130 was 600% return on your money versus 100% in shares. Now that length of time, not sure because we don't have a crystal ball, but it's just the idea of the structure and leverage. We know some financial planners and I believe he's studying the masters of financial planning. And he said the secret to great wealth is through leverage right now.
00:11:10:22 - 00:11:32:06
Unknown
I'm not saying to go out there and borrow as much money, really understand your risk profile and understand that the asset there's risk in investing in whatever you do, but you need to make sure that you calculate the risk and invest accordingly. Yes. Okay, great. I think that's the reason it's called Return on investment, a ROI and compound interest.
00:11:32:06 - 00:11:54:06
Unknown
We'll touch on that a bit later on in our podcast. But yeah, so what have you seen some of the results? So I know you've helped many super funds or estimates their clients. Yeah. So where were they before and where are they now? So I think one thing to one thing that come to my mind is this client who started with the $180,000 in the super fund, right?
00:11:54:06 - 00:12:12:18
Unknown
So they came to me and said, okay, we want to do something with the super, but we only have $180,000. So to them it wasn't much of the money that they could do or they could purchase an asset. But I said, Hey, no problem. We've got, you know, again, to be able to maximize your wealth, you need to work with a team of professionals.
00:12:12:18 - 00:12:44:01
Unknown
So not only the mortgage broker, but you need a good team like the financial planner. You need a team of somebody who could help you probably select the correct property to to achieve that optimal. Right. So for this particular claim, we had 180,000 the super and they managed to purchase two properties in South Australia. Right. And well the returns are the property at the moment are like about 6% for each property.
00:12:44:03 - 00:13:08:03
Unknown
So I think they would have been set up for life now with two properties in the super and just holding them out to retirement. Right. Yeah. Cool. Okay, so this is one example. How about yourself? Like what do you buy? And like, I mean, I would I mean myself, I invest a lot more in super because it's planning for my retirement, right?
00:13:08:03 - 00:13:38:13
Unknown
So is there other benefits or facts that you want to share with the audience around this? Is it. And okay. So the thing is, investing using your SMSF is a little bit risky in a way because it is your retirement fund that you are using, Right? So maybe I'd like to touch on a little bit about that, the pitfalls that you have to look out for when you invest using your as an asset, Right?
00:13:38:15 - 00:14:02:24
Unknown
So the first thing that comes to mind would be your asset classes that you are going to invest in your self-managed super fund should be properly structured. What I mean by that is your asset allocation strategies, whether it is property managed funds, shares or crypto or whatever it could be, has to be discussed with a good financial planner.
00:14:03:01 - 00:14:35:02
Unknown
All right. And secondly, would be acquiring the asset that needs to suit the objectives of an SMSF fund. All right. So in this case, if it's property, again, we work with various property partners who are able to deliver a high quality asset that matches your asset strategy. And also, I mean, lastly is what with a team of professionals that know the same asset process from the start to the end and also beyond, Right?
00:14:35:04 - 00:14:52:16
Unknown
Yeah, because correct me if I'm not wrong, because sometimes self-managed super fund may be a complex process if you're doing it yourself. What have been some of the challenges in being clients? Like, Hey, I don't want to use your network, I want to do it myself? And what have been some of the challenges? Can you just highlight to the audience?
00:14:52:18 - 00:15:12:13
Unknown
I think the most basic one is, of course, when you invest in a self using a self-managed super fund to invest, the first thing is the rolling over of your funds from the retail industry funds to your self-managed super fund. It sounds easy enough, right? Just give a call, make a call to the retail fund and roll that money over.
00:15:12:15 - 00:15:39:23
Unknown
Right. So so we have got a few clients who said, no, we don't need the help of a financial planner because they've costed all that stuff. So they do that process by themselves. Now the trick is, I mean, the catch was when they started rolling over that super fund from the retail fund to the self-managed funds. One of the challenges was with the name convention and all that stuff, which they do not know, right?
00:15:39:23 - 00:15:59:19
Unknown
So and what happens is that rolling over process instead of being a one week process, could take four weeks, six weeks or even two months to get that money roll over. And what that means is it's starting up your self-managed super fund setup process, because without that money being in the self-managed super fund, you're not able to purchase the property.
00:15:59:21 - 00:16:18:03
Unknown
All right. So that's one challenge. And so I think the second one, the more common ones are, you know, how you can actually go on to the Internet, you can actually set up a trust by yourself. You can actually set up the self-managed super fund by yourself to basically you can do everything by yourself like a DIY shop.
00:16:18:05 - 00:16:50:06
Unknown
So we have that clients who went to get the DIY stuff going and when they actually get through that purchasing process, the dates are not set up properly, They are not compliant with the state laws or whatever. So that means you have to redo all this, translates everything again. All right. So the advice is that it may be easy to get information on the Internet, but nothing beats, you know, getting that help from a qualified professional to do that job for you.
00:16:50:12 - 00:17:11:05
Unknown
All right. Yes, it may cost a little more, but it's going to get you right from the start to the end. Right. And without any stress to you, when you do that purchasing process. And that's why sometimes even for myself, Mike from the previous episode was talking about how you what's the biggest learning's right? Sometimes we feel like, hey, we need to master that skill, right?
00:17:11:07 - 00:17:32:11
Unknown
But you know, let's say today we're doing podcast. I mean, I've got two hats, a few bikes, but with the help of like an outlet, like it makes this experience so much easier because I feel like our tagline. Another one, Draining your Wealth requires a group of trusted experts. So what I have mean experts is the wise. It's not your not your coaches, but your mentors that have walk the road.
00:17:32:13 - 00:17:51:04
Unknown
Trust it in a sense, because we have tested them right, because they delivering a set of results. No doubt you can find your expert on Google, but guess what? You need to build that relationship with a counter and build that relationship with the financial planner. Feel that relationship with their lender or the broker. So, yes, you're more than happy to do it yourself.
00:17:51:04 - 00:18:13:07
Unknown
But my question is, how much easier time with. Right? I mean, would you like if your time is worth like $300 or $500 an hour, why are you doing a task? And that is like $30 or $40, Right? Because, you know, we've already done it many times. Right. So I think that's something to be aware of because there's no doubt in Facebook there's a forum.
00:18:13:09 - 00:18:35:17
Unknown
Right. There's a lot of information out there. But you know, if it's a group of trusted experts, what would be the speed of delivery if we were to work with our team versus someone that doesn't have a team? Good question. So in a normal conversion process, maybe you roll over the retail fund, set up that self-managed super fund for you and also get you ready for lending.
00:18:35:18 - 00:18:57:21
Unknown
Right. A typical process would be about 4 to 6 weeks if there are no, you know, hiccups during the roll over or everything else. Right. So but I've seen probably some go as long as eight weeks to ten weeks. Right. So what I'm trying to say is, even though you engage a professional to do the role of a, there could be hiccups.
00:18:57:23 - 00:19:21:19
Unknown
But what it means is that professional will be able to navigate around those hiccups and get that issue resolved for you. Right. If you were to do it by yourself, it's just going to be stuck in that queue and you probably don't know what's happening in there. And that's where, you know, your your super fund just gets stagnant and stays there for three four months that I've, I've had experience before a client.
00:19:21:19 - 00:19:51:15
Unknown
Right. Well that particular client actually used a professional and that super fund was left there for four or five months with the roll over not being done. The trust, it's not set up properly. So again, it's not only a professional, but a trusted professional. So when you know you come to ZG Finance, you know that you are working with a group of experts that know the estimates from the back to the front to the end, right?
00:19:51:15 - 00:20:08:23
Unknown
And we are able to deliver that result for you right? And let's say, look, I mean, I appreciate that we work with a team. There are some clients that persist, do not work with us or other experts. What would be some tips like, you know, two or three that you should be vetting like those accountants or financial planner?
00:20:09:00 - 00:20:32:01
Unknown
What are some of the questions you should be asking them to make sure that they deliver? You know, that that that service of a setting up that is the best effort efficiently. What would be those questions? I think the the pivotal role for the SMSF set up will probably be your financial planner, the first one because the SMSF is highly dependent on your strategy.
00:20:32:01 - 00:21:02:22
Unknown
So that needs a good financial planner to not out. You know what? What are you going to do with that? As I said, what asset class you're going to be investing in, Right. So I would say you get a good financial planner to help you with that journey. Right. And secondly, if you require lending, I mean, if you're going to purchase a property of course, a trusted mortgage professional who has done massive loans is the most important of any, would you say probably two massive loans, right?
00:21:02:23 - 00:21:27:15
Unknown
Yeah, probably in a year. You have to be doing that every day, every week, every second. Right. To be able to know the changes, the policies of the semester loan, Right. It's quite a complex loan in the sense that because it involves the trust entities. So make sure you get not only a normal finance broker, but a broker who specializes in doing massive loans.
00:21:27:17 - 00:21:55:15
Unknown
Right? That's most important. Thirdly, would be probably get a good accountant because while you actually having the SMSF in place, your SMSF goes through a few stages, right? When you start purchasing, it's probably the accumulation phase and then you have that transition to retirement and finally that retirement phase. So in each of those phases, the accountant provides that correct advice for you to move from one state to another.
00:21:55:17 - 00:22:27:08
Unknown
Right? So I think the three persons that you need to have in your team would be a good financial planner, a good finance broker and a good SMSF tax accountant. And let's talk about the fourth one, because selecting the right asset, because with that we have different property buyers, agents and so forth. And I mean, you and I like, you know, I like to touch you and see that property, but it's I mean, another method is off the plan.
00:22:27:10 - 00:22:53:20
Unknown
But talk to us about the fourth, you know, finding a good net agent. I left it up. Okay. So yes, so definitely, you know, the end result of any investment is to put in a quality asset, right? So the equality asset could be what shares property or whatever. But so if you're going to put in a quality asset like property, for example, the first thing is of course, to determine what type of property you're going to put in.
00:22:53:20 - 00:23:20:04
Unknown
It could be off the plan, it could be an established property. And on top of that, it could be what type of property would could it be? It could be a unit, could be a establish house, it could be a duplex. There's so many out there for you to choose. Right. But most importantly, is that asset class that you put in The SMSF needs to go up, be in line with the strategy of your SMSF.
00:23:20:06 - 00:23:48:16
Unknown
So most of the clients that I've seen, some of them say, I want to go and purchase the asset by myself, right? So they go out, go on realestate.com.au and look for a property. Easy as it gets. Raine Horne down the road. LJ Hooker down the road. Purchase it. Yes. You may not have done a wrong decision, but could that be a more optimal decision that you could have take in your purchasing process?
00:23:48:18 - 00:24:17:24
Unknown
So he had ZG We do have property experts that will assist you to purchase the correct property, right? That is in line with your SMSF strategy. And what they do well is they purchased the property that is off the market, meaning you get say 10% of savings before you even purchased a property because it's bought at that off market property price.
00:24:18:01 - 00:24:41:01
Unknown
Right. Yeah. that's a very, very I feel because then anyone can go into real estate dot com buy your domain without providing and then just buy an asset that strategy's there but is that the optimal. I feel that's the key thing right. because you want the asset to ultimately go up in value. Isn't that right? was there any other tips?
00:24:41:01 - 00:25:01:15
Unknown
Because what I found in your seminar is really useful is you provide a lot of hints and tips, not just only in home loans. I believe last all the way to your seminar was about taxation. You mentioned about the rollover. What are some of the things that they should be preparing if they were to set up an estimate figure?
00:25:01:17 - 00:25:23:16
Unknown
So first of all, I mean, before you even decide to set up in a semester, right, is of course you have that advice and all that stuff. But once you have obtained that advice and you are ready to take the plunge to set up the SMSF, of course, before you do all that is to speak to a mortgage professional first write to determine your borrowing capacity.
00:25:23:18 - 00:25:43:20
Unknown
Because what what would happen is if you were to set up that SMSF and you found out that you could not borrow money to purchase a property, what would that mean to you? It means you would have wasted about 5 to $6000 of your own money setting up the SMSF and you could not borrow any money or you could not purchase a property.
00:25:43:22 - 00:26:16:23
Unknown
All right. So I think that's the first. But the pre set up, right? So assuming everything is done, you've got your stuff going. I think the second part is to how you actually prepare the SMSF for a tax year and how to get it ready for an audit. Right. So all this stuff would be that your ongoing maintenance of your SMSF while you have it running right so that one would be it's probably a 30 to a 45 minute separate webinar that I run probably every quarterly.
00:26:17:04 - 00:26:38:08
Unknown
Yep. So if you would like to join a link that will be sent up to all the clients, right? Yeah. Yeah. Okay. because I find it very useful because also it's a timing like in setting up. So today is where in June take a you know, would you not advise because obviously they would have seen you as a mortgage broker.
00:26:38:10 - 00:26:59:21
Unknown
What are the pros and cons in setting up your estimates that right now, given it's June 2024? Right. So just a little bit about background, the question. So why why is the SMSF setting up the SMSF important during seven months? What you set up in January, June or whatever? Right. So now obviously June is the end of the financial year, right?
00:26:59:24 - 00:27:28:02
Unknown
So what it means is when you do set up the SMSF in June, usually like what I mentioned before, it takes about 4 to 6 weeks to get himself up and running. So what that means is when you do set it up in June, it will be active probably in July, which is the new financial year. And that means your SMSF is actually ready to purchase a property as you start your investment journey right now.
00:27:28:04 - 00:27:50:03
Unknown
And now contrast this with, let's say, setting up your SMSF in May or April. So it takes 4 to 6 weeks to set up. So by the time you get get it set up, it's probably middle of June. And with the funds being rolled over a middle of June, that's when your SMSF is actually legally required to lodge tax returns.
00:27:50:05 - 00:28:12:00
Unknown
So now if you have an SMS said that is set up in middle of June, most probably you would not have enough time to purchase an asset and put it in an asset, which means you actually have to pay the accountant to lodge the tax returns and not have an asset in December. An asset. So now is actually the most optimal time to get that SMSF up and running.
00:28:12:05 - 00:28:33:19
Unknown
So you have the whole financial year next year to put an asset in there and to reap the rewards of that 12 months to July after June next year, 2025. Right. So yeah, I think this is the most suitable time not to get your estimates of what lawful months will be the least suitable right, given the rollover. Four weeks.
00:28:33:21 - 00:28:56:24
Unknown
Yeah, probably. You know anything between starting on me. Right. So you would not want to kind of set up that as himself in the month of May because 4 to 6 weeks will bring you to middle of June. Right. And that means you have two weeks to put an asset in there which is quite impossible if you are looking for a good quality asset and not just buying anything and settling it as an asset.
00:28:57:01 - 00:29:34:20
Unknown
So yeah, so if you are approaching me, usually what I say is let's hold on the process of the SMSF, do not set up, do not roll over anything but really over say middle of May so we get it in July and that's the most optimal period. So for now, again, I'm saying it's the most beneficial time to get the smart have started that process and yeah so yeah and majority I mean take do work we just mainly that people pay as you go or business people what what what sort of clientele do you work with.
00:29:34:22 - 00:29:59:09
Unknown
I work with mainly both I suppose, and self-employed. Right. So basically it's, it's quite straightforward. You know, the employer pays the super guaranteed contribution. So and also the servicing capacity in the SMSF is just calculated based on your contribution in the super fund. Right. So it's different from your personal capacity where you have income of 80, 90,000. Right.
00:29:59:11 - 00:30:34:02
Unknown
And so the challenge for most borrowing, the super fund is for people who are self-employed. So as you know, for people are self-employed, some of them don't actually contribute their own super in debt. So it could be ten years of not contributing any super. So that makes it a little bit challenging to lend money to super. However, because, you know, we have connections with different types of lenders that allow us to lend to people who have not contribute, say, for ten years, but they're still able to get a loan through the super fund, right?
00:30:34:02 - 00:30:57:19
Unknown
So there are ways that we can get that loan through. If you are self-employed and you don't have a contribution for ten, 15 years. All right. So that's why, again, you need to work with a broker that knows the massive lending process very well and very detailed. So that's no scenario that we cannot help show what would be the common rejection.
00:30:57:20 - 00:31:22:10
Unknown
And because I know from a fact like working, we sometimes like business ideas, Hey, I don't need to put in super right, You know, I then access it. So what do you say to these people or business owners that like not putting in money they're super not looking to invest. What would you say to them? I think first thing would be to understand, first of all, the tax benefits of putting money in the super fun, right?
00:31:22:11 - 00:31:48:18
Unknown
So it might not be a self-managed super fund. It could just be the normal industry retail fund. Right? So the key thing is to understand the taxation part of it. When you put money in the super, your super fund is taxing you at 15%. And that's also the concept of the concessional contribution where if you contribute for this financial year 27 500 into your super fund, you are able to get some tax benefits, right?
00:31:48:18 - 00:32:13:20
Unknown
For next year you'll be 30,000 for next financial year. So I think for those who have not contributed to their super A really to to assess what benefits that you can get when you contribute money either into your own retail fund or into your own self-managed super fund if you have one set up. So it's 50,000. Normally if you were to pour it, I'm just using factual numbers.
00:32:13:20 - 00:32:34:13
Unknown
Yeah. And of course if it's a try uses it's not like at that percentage but just 50% is not great right. You need to pay tax. So if you were to say that's an expense 30,000 in your super and at 15% what would that tax saving be. Right. You only get how much tax. So for 500 right. Yeah.
00:32:34:13 - 00:33:02:08
Unknown
So therefore it's a saving by just changing the strategy. Right. Yes. You will not access that money later on. Is building your retirement is one of your certificates right. You say just by doing this method. How much. 4005. That's right. Yes. This today. So hopefully you're not saying, hey, consult your planners and experts to make sure you have the right strategy for you.
00:33:02:10 - 00:33:22:15
Unknown
But what else? I just want to do a bit of Mythbusters, right? It's hard to do myself. What would you say to that? Yeah, I think it depends on when you say it, But if you're going to do it by yourself. Yes, no doubt it's I think hot would be an understatement. You'd be you'd be probably, you know, impossible to get it done correctly.
00:33:22:15 - 00:33:46:21
Unknown
Yes. You may know you may think that you've got it done properly. Right. But everything will be unfolded when you do the lending, when you purchase property and when you go on the legal side of things. Right. That's where your your what would actually seem like nothing, because you would have not done it properly. All right. So A, the key thing is to get the experts and it would be easy for you, right?
00:33:46:21 - 00:34:15:12
Unknown
Because all you need to do is sit back, relax and let the experts handle that process for you, whether it's the financial planning part, the lending part, the legal part, or even the property purchasing process. Right. So I think that's the most one of the important key things. Right. It's hot. That's why they don't do it. Yeah. And I feel like it correct me if I'm not wrong with your clients and my as well as like you know, probably over 50% don't even know how that super that they have.
00:34:15:12 - 00:34:36:06
Unknown
Right. you know, that's the first that. But secondly, in terms of you know, what to do with that, right? So I think that's the key thing. Can you share a little bit what is an asset? Why no property is mainly a focus because what you did in those loans, what can you invest in your asset, not advice, but what what investments can you buy like that?
00:34:36:07 - 00:35:02:07
Unknown
So I think besides property, some of the clients also do investment in managed funds, right? So how that can be done is usually the main asset class that they invest in would be property for us. Right? And whatever that is left behind in that self-managed super fund is then used to invest in a different asset class. So that is on the advice of the financial planner.
00:35:02:07 - 00:35:35:13
Unknown
So you could use it to purchase shares, manage funds, maybe crypto, I don't know, but sought advice. Right. So seek that advice from a qualified finance financial planner to decide on what you can do with the remaining funds in the self-managed super fund. If you have any left right. The alternative is, of course, to leave it in in the self-managed super fund itself and build up that self-managed super fund balance and you probably can purchase a second property in time to come, right?
00:35:35:15 - 00:35:59:16
Unknown
Yeah. And just for those of you as our listeners, sorry, in in terms of like estimates there, so maybe highlight bit because it's different to like borrowing in your own name and then during the equity maybe can you highlight a little bit because sometimes the audience might think all the property is gone to a million, right? That example that would talk about maybe we can refinance it, get the cash out and go again.
00:35:59:17 - 00:36:25:08
Unknown
Now can you do that in the submissive? Yeah. So obviously in the SMSF, the intent of owning a property in the SMSF is to pay down the property so that you will own the property without any debt when you retired. So obviously that that helps you with the rental income and you get when you retire, Right. So refinancing and cashing out on a property in a SMSF is not allowed under the superannuation industry.
00:36:25:13 - 00:36:52:09
Unknown
Right. Because again, the intent is to pay down and own the property outright in the super fund. All right. So again, with with the property selection, if you're going to pay down that property in the super fund, again, not advice again, it's always good to assess the value of the property that you put in there. You do I mean, you do not want to necessarily purchase a $1 million or $2 million property and take on a huge debt.
00:36:52:11 - 00:37:13:05
Unknown
All right. So what we usually do is restructure the debt in a in a good proportion with the amount of SMSF you have in your funds. Right. And pay off that property within a reasonable timeframe, not not three or four years. Ideally, it should be before you retire that the property is paid off because you can extract equity.
00:37:13:05 - 00:37:33:00
Unknown
So that's important. You have to pay the property down. Yeah. So another question is, hey, I love that house and land, you know, down the road. I want to buy land and construct. So can we do that in a semester? Okay, yeah. We can purchase the vacant land and then buy and put a house on it as a massive.
00:37:33:02 - 00:37:54:24
Unknown
But because we've been borrowing. You have been borrowing, correct. Right. With borrowing. What we can do is we can purchase a completed product. Right. So but we have partners who have that as well that they have the land they put the build on and we purchase the complete product in the semester, which means it's a single, single contract.
00:37:54:24 - 00:38:14:02
Unknown
Yeah. Okay. Yeah. So it's a one contract kind of thing. But in the background is actually purchasing land and building the property, but it's not done within the same as if the SMSF acquires the complete product and that's it. Yeah. Yeah. How about like, have you seen lenders and this is for my knowledge as well, just funding on the lane.
00:38:14:02 - 00:38:36:00
Unknown
Have you seen like lending or some vacant land. It's a well I don't think like lenders, any lender would land on a vacant land piece of land in the as an city mainly because there's no income being generated from the vacant land. Right. Yeah. Okay. But if they did, then, you know, you have your own funds, you can be like on using your own, but then you submit that.
00:38:36:00 - 00:39:16:03
Unknown
Yeah. Yeah. Okay, great. how about commercial properties? Can we buy and submit it? Yes, definitely. We can also find a commercial property in the SMSF. The difference being the interest rates on a commercial loan is slightly higher, maybe 0.5% higher than a normal residential SMSF. Right. So again, the property selection is important if you choose to buy a commercial property in the SMSF, you need to make sure that your return on investment on that commercial property is in line with the interest that you're paying on your commercial property loan in the same asset.
00:39:16:05 - 00:39:36:07
Unknown
Yeah, but no doubt. Yes, I've done a few loans in the commercial property in the semester before. Okay. Yeah, sure. maybe open to the flow of like, is there any questions that anyone want to ask? Because I know it's very new life. I mean, I've asked many questions. How about you guys? Actually, that was the question I was going to ask.
00:39:36:07 - 00:40:02:04
Unknown
Have you purchased commercial property? Yeah. Yeah. So maybe highlight it. You can buy even businesses in your MSA and share artworks or anything, Right. But be mindful that you need to work with your accountant because it's whole self-managed super five or reason. It's self-managing, right? So you need to articulate what your investment strategies in the right fit, right?
00:40:02:04 - 00:40:27:04
Unknown
Yeah. because we don't just do property, as you can probably tell, right? It's about diversification as well, but the property allows you to leverage your right. Yes. Let's touch on a few. yeah, I know it's a massive you've done great and it's just going back reasons to investing in property. Do you remember the 300. Okay. So ID number one is of course you want cash flow right?
00:40:27:06 - 00:40:58:24
Unknown
When you invest in property, the top reason is you need money coming into your bank account. So that's cash flow. Number two is to enjoy that appreciation in the property or equity in the property. Number three would be to re the ability to reallocate your capital from one asset class to another. If your property is appreciated, you might want to sell realized at a profit and then reallocate it to another asset class.
00:40:59:01 - 00:41:18:01
Unknown
Let's go a bit a detail. You're you're robbing the audience. It's very simple. So I want to go a bit in there. So cash flow. So let's go to the details of those audience that, you know, starting to invest in their first investment. What do you mean by a cash flow? Right? I mean, there's total flight quality, cash flow, neutral, negative.
00:41:18:03 - 00:41:40:21
Unknown
What does it mean to you? Okay, well, you share with your audience. Okay. So so cash flow is actually a large concept, right? So cash flow, Yeah, it can be positive cash flow. It could be positive cash flow before negative gearing, Positive cash flow after negative gearing. Right. So when you mean. Yeah, yeah, yeah. So after deductions. Right.
00:41:40:22 - 00:42:10:22
Unknown
So the concept of cash flow also involves structuring the loan itself correctly. So for example, if you were to purchase an investment property, the structuring of the loan would ideally be an interest only alone. Right? Because that means your outgoing on your property is much less and your rental income would cover or you actually make some extra money from paying off the loan.
00:42:10:22 - 00:42:42:17
Unknown
If the structure is an interest only loan like over later episodes. I feel like as a business owner or any one right, that either really wanting to enhance their financial literacy is the record that income minus the expenses. So what's he referring to? The income for an investment property is the rental income, right. And then minus expenses. So I mean if it's a house, it could be like a is that in fees and charges there's an invisible charge.
00:42:42:18 - 00:43:08:04
Unknown
All accountants call it depreciation. Right. We're not going to that applies. But as the income minus expenses is still positive, it means it's a positive cash flow property, right. That the property expenses that giving you ten grand above your magic number, I think from this episode was 60,000. How many properties. So we need we need six properties that are doing that right now, negative gearing.
00:43:08:04 - 00:43:31:00
Unknown
It just means that after the expenses, right where it's feasible or invisible, right, it's going to be negative, right? So it means you're losing money now. It's not good or bad because it certain advantages in setting investing in investment classes, but you're losing money so it's a negative cash flow. Right. But let's delve into the second piece, right?
00:43:31:02 - 00:43:52:03
Unknown
Or is there anything else to add me? The first one, right. So very important because when when people will come to us is energy is like, hey, I want to invest in property. Always has that concept. You can buy any property in real estate, the value or, you know, domain value, but doesn't mean it's going to be positively like cash flow or neutral or negative liquid.
00:43:52:05 - 00:44:18:10
Unknown
So make sure you're clear on that. Second thing. You talked about equity. So what do we do? What why is it that we need to. Okay. Yeah. So the concept concept of equity is if you purchase an asset, right, and your asset has increased in value, what do you gain from the asset, Right. So that it's the appreciation all in finance terms, we call it equity.
00:44:18:10 - 00:44:52:20
Unknown
And why is equity actually an important part in your investing? Right? So and what we can do with that equity. All right. So as mortgage professionals, what we always suggest is when there is equity in the property right, we always suggest extracting that equity out, not when you need it, but when it's available. Extract it, put it in your offset account because the key thing is you will not know when you need that equity.
00:44:52:23 - 00:45:16:01
Unknown
And it's always the case that when you need it, you're not able to extract that equity because for whatever reason it could be your own personal reason. You you've lost your job or you would have been 50, 55 or 60. And the banks do not want to give you that equity anymore. Right. So most important, due to everyone listening, when there is equity in the property, extract it as soon as possible.
00:45:16:01 - 00:45:41:16
Unknown
Don't wait until you need it. Right. And what do I call it? I have an acronym for OPM, which stands for other people's money. Right? You've got to love life. Your journey began, right? We identify OPM for yourself, and that's where open the possibility because you had the resources or again, resource for this to action and accumulate these properties.
00:45:41:16 - 00:46:03:10
Unknown
Now is that through I always say to yourself like do we save you way to really build this? Do we use OPM and invest that way? $2 million. Now how you choose the assets different, right? We always talk about the first bit closet aid, mutual negative. If you buy any property, you may lose money. If your option and overpay you back, you lose money.
00:46:03:10 - 00:46:25:14
Unknown
Right? There's a risk. Right. But let's not look into that because we've got experts that can help you find the correct one, not us. But then the second piece is, to be honest, the most important piece is using OPM. yeah. And why is it that I mean, you talk about opportunity, but say for business owner, it's like, why do we need to get money out as well for business owners?
00:46:25:18 - 00:46:52:14
Unknown
Because of what? I mean, if you're a business owner, that that extra equity could help you, you know, could come in handy if you wanted to expand your business, purchase assets or. Yeah, do anything that could increase your business profitability. All right. And the equity is actually probably the cheapest form of debt that you could ever find by extracting that equity.
00:46:52:14 - 00:47:13:01
Unknown
So if you have any equity in your property, best to speak to a good mortgage broker and extract that equity out as soon as it's debt, do not wait when you need it or do not wait. I'm looking for that property, so I'll extract it when I find that property. All right. When that equity is available, extract it and leave it there.
00:47:13:03 - 00:47:34:05
Unknown
Right. So more so for business owners, right? Because you don't know when you need that money. So let's talk about the true story. And this is for myself, if it's okay. So we had COVID right recently. True story. What are my clients? You you probably know who it is. So I mentioned the name before COVID extracted OPM, $1,000,000,000 in equity.
00:47:34:07 - 00:47:53:03
Unknown
Right. What happened in COVID? He lost his job, right? Not only he, his wife lost his job, they both lost their job. But then were they scared or were they able to manage that still, because COVID is not forever? The answer is yes, because they had billion dollars of cash out. Now, yes, it's through the debt to equity.
00:47:53:03 - 00:48:12:16
Unknown
But you know, their circumstances may be change, right? At least we got that money and they need the need to sell the home versus if we didn't get the cash out, what would the future look like? Take some of your clients. We have some clients that didn't do the cash out. They lost all reduced hours. What happened to their life?
00:48:12:18 - 00:48:36:23
Unknown
Yeah. So some of us, some of these clients, the loan went into a hardship because they didn't have basically no more income from from work to pay off the loan. So and that reflects badly on your credit profile as well when the loan goes through the hardship, Right. Yeah. So yeah, back down to the point that when there is money to be extracted or equity to extract it, do it straight away.
00:48:36:23 - 00:48:59:05
Unknown
Don't sit on it. Right. Because debt is variable to you any time of your life stage because you do not know what is going to happen to you, you know, in the next 510 years or one or two years or whatever. Right. Yeah. So yeah. So equity is variable. Yeah. And one thing from I don't know if the audience have listened to a guy called Robert Case, he reached out for that.
00:48:59:05 - 00:49:22:11
Unknown
Right. So why does he love OPM? Do you know the reason you don't need to say yes or no? Because when you extract equity through debt, do you need to pay tax on the equity that you extract? Even your income and your position, you can take that money out? Yeah. Their answer is no. Up to 80% right if you were to sell, which is the third option and we'll touch on that.
00:49:22:13 - 00:49:53:02
Unknown
Right. You to realize the gain your capital gains pay the ATO. But second idea as a business owner and again I want to touch on some points why business up with OPM, right? I don't care if it's eight per 9%. As a business owner, you should know your profit margin, right? If you're running a business right, and you're returning, what, 30, 40 and some a 50%, and then you're expanding your business using debt at what, eight, even 10%?
00:49:53:04 - 00:50:21:02
Unknown
What's wrong with that? You're you're making the difference, which is 20%, if it's that 30% budget, it's true. So therefore you need money to grow. And sometimes I'm not saying how you need to love that, but you need to understand it. It's a double edged sword. But if you're borrowing and your ROIC or your return on investment, your business is 3% and your high cost of, you know, 10% of course, is not ideal, right?
00:50:21:02 - 00:50:49:09
Unknown
Yeah. I mean, this is secure for your house. I'm not promoting that to get like loans that are I don't want to mention names that are double digits. Right. Because if it's I would say 20% you better have a return on investment for business at 40 50% to make it worthwhile actually seeing that they're true. Yes. So therefore understanding that and equity because this is also different documents that we have because business owners may not have completed their full tax returns.
00:50:49:11 - 00:51:17:16
Unknown
Well, I have it right because we haven't finished the financial year, but even in 2024 is finished. What is the latest on your experience that you can lodge a tax year? I do know as a business, yeah. Next, next May financial year, if you're using an account then right. So therefore if you're making a profit, why do you have the luxury to now be which is different and I need to lodge it before or be around September, October, I'm not sure the exact date, but that would be earlier this year for your delaying your cash flow.
00:51:17:16 - 00:51:46:08
Unknown
So therefore you don't have financials for us. We can work with one year's financials. Buzz's right statements a lot of flexibility. People as business owners out there, which obviously markets may change is accessing be. And lastly, we want to sell the asset and it's that concept of our why now? Why would people sell taking on. They are reallocating the funds that they have in their current asset, right?
00:51:46:09 - 00:52:06:02
Unknown
So for example, if they bought a property that's going up 500,000, that means from hundred thousand it's gone up to a million. They would have made 100% on the return on investment. Right? So they would some of them may want to do that 500,000. I wouldn't want to reallocate that 500,000 to a different asset class. Could be shares, could be whatever.
00:52:06:04 - 00:52:27:17
Unknown
But I could be buying into a property in a different suburb that's growing or whatever. Right? So that that's probably what it is. Yeah, I kind of like I have that example, you know, the how you the you know, the Disney the old man from up right there, he's got his little house, right? So I'm just assuming that the house is being bought by worth $3 billion.
00:52:27:17 - 00:52:49:15
Unknown
There's a saying that, hey he's asset rich but cash poor right because yeah he's retired now, doesn't have a job. You can't do that strategy too which is the equity of. Yeah. Because he's got the income right now then that's where you're saying he needs to look at downsizing from that $3 billion bond that house into just buy something, $1,000,000.
00:52:49:15 - 00:53:11:21
Unknown
And then he's got to really build those right. That owner occupied basement. I'm not talking about the tax position but reallocating that asset because therefore he's got $2 million. And hopefully, like your strategy at 5% buys at least he's getting 100 K right today because of passive income. So therefore I think in assets it's, you know, it's great we have these three strategies.
00:53:11:22 - 00:53:39:10
Unknown
If depending on certain stages you will do different things. So that's why you need to speak to us, right. And understand your life journey, your life cycle in your finances. So if you in the beginning, buying your first time is very different to what we will advise if you're like towards retirement and no income. But I think even before that we should be extracting equity if that up guy right was, you know, he's still working, what would you do?
00:53:39:10 - 00:54:00:05
Unknown
Right. Okay. What would you advise the client to think to cash out? At least if you sell, you have an option. At least you can access the equity as well as to benefit. Is it a So hindsight's always great, but if you don't act on advice, this is what you're going to regret. So of eight out of the three strategies, is there anything else you want to add?
00:54:00:08 - 00:54:17:13
Unknown
Okay. Yeah. Yeah. So very important when it comes to investing, Right? I know in your return because I was just going back. I want to finish up with that. Is that the bond property? Like he's living in it or if he's rented it out? It's very low in terms of you. It may be 2% in fact, he's not going to survive on that.
00:54:17:13 - 00:54:46:05
Unknown
Right. So that's why we need to look at the right strategy depending on the life stage. A Yeah, that didn't get cut off before. Okay, any questions? Are you guys as it be useful? Yeah, Super, super. Yeah. Because Right. Okay they want to have you need to sell yourself right because this is your okay maybe it's a message seven.
00:54:46:11 - 00:55:09:04
Unknown
Okay. Right. Well those that want to learn or find out more what will be the things that stick. Yeah I think look for the notification we sent to all our clients on our quarterly as a massive webinars. So we do that every quarterly with a financial planner as well. I and we do also how to prepare you as a message for a text.
00:55:09:04 - 00:55:29:21
Unknown
Yep. So we also have that every quarterly. So look out for the Eventbrite links that we're going to send off to the client. Yeah, right. Yeah. So because I feel like. And who is that for Who The audience for ladies for so long. Because sometimes in itself I say, well I forgot to ask. It's like, you know, you stop, we won't be able to write the answers, but we know what would be ideal.
00:55:29:21 - 00:55:50:22
Unknown
Like, you know, buttons combined or, you know, probably, you know, around minimum be a 180,000 to start off. Right. So it makes the investment easier and you are able to purchase a better quality asset in the same is it all right so anything hundred 80 that I've done one which is as low as about 120,000 to purchase an asset.
00:55:51:01 - 00:56:10:18
Unknown
Right. So probably anything between one to any you know we are happy to, you know, to look at it and yeah this is an individual or a buy. Yeah. Combined. Yeah. It also it's just a curiosity it's an asset is sitting like a company having members have you have because people often have that belief there's going to be me and my wife.
00:56:10:20 - 00:56:35:21
Unknown
But yeah, six members I think that they've changed it from five previously to six members in the self-managed super fund. Yeah. Again, if you're going to have more than two, usually the partner in your as a massive right as a member and if you're going to have more than two of like three or four, better off to seek financial planning advice right When you start adding different people in the self-managed super fund.
00:56:35:23 - 00:57:01:04
Unknown
Yeah, right. Yeah. And also, you know, what's the benefit in having more members? What does that mean to them? Firstly, of course you have more members usually means your balance would be more that to you you want to find the members that have got existing self-managed super funds, so you have got a bigger pool of money to start office, right?
00:57:01:04 - 00:57:28:17
Unknown
Means you can probably purchase a a bit more expensive asset. And secondly, also the borrowing capacity in the self-managed super fund will increase because you've got more income to service the borrowing, right? Yeah. It allows you to accumulate all the secure an asset value that is to be a commercial property a million or a few million. Right. Depending on members in the in the funds that you did it individually.
00:57:28:19 - 00:57:51:24
Unknown
But the type of assets are limited Right. To what you can borrow or deposit access to, Right. Yeah. Yeah. Okay, great. So yeah, for those that interest interested, like anyone over 120. Super. Yeah. Listen to us because the energy's about growing with you. So what we mean is providing the right education in the right context. That team experts.
00:57:51:24 - 00:58:18:09
Unknown
Because growing your wealth requires a group of expert, trusted experts. Right. So, yeah, Love to see you in the next seminar. Cool. Right? You control something. You control by the phone. No, I'm writing notes. is writing notes that you can tell if I'm writing notes for like, okay, what are the good little like, but can you help?
00:58:18:24 - 00:58:23:13
Unknown
okay. That's a good. Yeah. let's go down for lunch. Let's go.
