Hello and welcome to the Australians Money Becuzzle podcast.
James Kurty here with the editor at The Australian.
Welcome aboard everybody, and I have mister week.
Thank you very much.
James Girard who handled and ran the show. Two episodes last week, very good. I've listened to them both, very very interesting. I want to pick up something actually that we've been talking about on the show for some time. And look, this could be on the show. We talked this time last year and for a long time about how Perth, for instance, as a property investor, if you were prepared to invest.
Interstate Perth was the market to be in.
And you know, it really has been an exceptional market for anyone who did that, to the point actually that this week they're talking about parts of the market in overheating. It's a small market in relation to the bigger market I'm going to talk about today, which is Melbourne. So Melbourne's the second biggest market in the country. It's five million people. It's going to be bigger than Sydney relatively soon.
It's a sort of inexorable march of the housing estates at the edges of the city, which can't happen in Sydney because of national forests.
But what it means.
Is that it should be a hot property market.
It's not.
It's the opposite. It's the weakest market in Australia. And the question from an investor point of view is now, is this the bargain not just of the year, but is this one of the real bargains perhaps of the decade in property for investors in Australia or actually is the state sinking as some would suggest and searching the numbers in property are pretty bad. It's the weakest price market increases, is the weakest in Australia. It is the
weakest investment market. And beyond investors are leaving the state. And we see that right across all the news media reporting there quite faithfully in recent times.
So I thought, well, let's have a look at that.
Let's also have a look at immigration cuts, what they might do for property or do against property, and a few other issues that I want to pick up on with our guest today who is a regular on the show, Bruce Brammel of Bruce Brammel, Financial Financial Advisor, author and operator extraordinaire.
How are you, Bruce, Well, thanks James yourself.
Good, thank you. Well, you should know you've written books on this area. You're in the thick of it and you are in Melbourne based property and financial advisor. So Bruce Brammel, I put you on the hot season. I say, is this market just slowly thinking or is it actually an opportunity for investors all around Australia. It's the second biggest city and it's it's hanging behind everybody. Is it going to catch up?
Look?
I think inevitably it will. I'm probably a straw hats in winter sort of guy. It go to investment. I think in a relative sense Melbourne is probably undervalued at the moment from an investment Since James, I've only ever believed that there are three markets worthwhile pursuing because they've got economies that are big enough. When they are Sydney, Melbourne, Brisbane.
At the moment the property prices are Sydney.
What probably prices should be is Sydney big gap, Melbourne reasonable gap, Brisbane, followed by I don't really care too much after that but Adelaide. But there are the three property markets that I speak to clients about and that we are assist clients.
Buying in.
At the moment, the gap is Sydney big gap Brisbane and Melbourne is sitting third. Now in my opinion, that is a pricing error that's against the natural order of the.
Natural order of things.
Is Sydney big gap Melbourne gap reason gap to Brisbane. Now, back in about twenty fourteen, following the state government up there and they closing schools and they're shutting hospitals and sacking teachers and nurses, the same as Canada done in Melbourne. In the early mid nineties, Brisbane's property price fell to about fifth or six That was Sydney Melbourne. I think at the time it was sort of Perth, Camera Adelaide wherever. But Brisbane was sitting about fifth or sixth, and we said, well,
there's a pricing are going on here. So through twenty fourteen, fifteen, sixteen seventeen, I think into eighteen, we've brought a lot of property with clients in Brisbane and that's proved to be corrects. Brisbane suddenly subsequently post twenty twenty and twenty twenty one started moving back into sort of third spot where it should and has now overtaken Melbourne in the last six months.
Or so it is now sitting second.
The natural order of things is out of Melbourne's Probably prices are being impacted by a bunch of things, including the land tax increases which have come through in recent time. It's only in the last few weeks or a month or so I think that the people started being started to hit with their bills. But obviously people been known have known that this was coming for some time and have been reacting to that.
But you're getting basically you're getting higher interest rates and you're getting higher taxes combining the same time.
I think for a lot of you know, there's a lot of people who have been hit with land tax for the first time in Melbourne. If you're an investor, when they dropped it from land tax from thresholder three hundred thousand to fifty thousand, it's just going to pick up anybody who has anybody. Yeah, but a lot of people who might have were already paying land tax multiple properties or something like that. You know, they're probably saying a doubling of the land tax that they are paying.
And land tax is a tax deduction, so the state government receives the money, but you get back a portion of it from the from the federal government, so you know, but it's still it's an extra increase at the time of fire, inflation and higher interstrates or normal interest rates or.
So if you were a marginal, if you were only hanging on, it could push you out.
Yeah.
Absolutely, I think that's what we're saying in Melbourne at the moment, in particular. You know, people who are seeing those those higher costs of things. It starts having, it's having more. Is it part of having an impact that Your question is is it a bargain of our time or people who are buying are they are they loss?
I think sort of medium to long term. I think Melbourne is probably underpriced in a relative sense compared to the other term markets which we would invest in, which is Sydney in Britain.
Okay, so but you don't TechEd in the way that you detected and encouraged investors who were open to investing anywhere in the country into Brisbane. Are you at the start of that process now or has it even begune investing in Brisbane investing in Melbourne? Melbourne on the basis that the natural order will restore itself.
Yeah, yep, that's that's one of the reasons. So there was a period back I think it was two.
Thousand and one, two three, somewhere around there where.
The city or might have been the late nineties. I think it was early noughties where where Melbourne got within three thousand dollars of Sydney. Yeah, I think it was three hundred and six versus surrounding and three or maybe thro round and three versus three hundred for median property price.
And that was another signal that the natural order things should be Sydney big gap, Melbourne reasonable gap to And that was probably a screaming buy time for Sydney property prices because in a relative all, in a relative sense, so relative sense they had to pick up and sure enough for data wasn't a financial law.
It's almost still still a journalist.
But there there are times where you just say the natural order of things fall out of place, and I think we're probably in one of those situations now with Melbourne.
That's really interesting.
It's like it's like the property version of the of the share market. Isn't this where they have the reversion to the mean, and that that can be a very reliable way through for value investors and the other thing, of course, is that interstate investing is so much easier now. I mean, you really had to be quite a sophisticated operator once upon time to do that, but these days, with everything online and digital, et cetera, it is not
difficult at all. I have done it, and the difference in fact it was Brisbane, and the difference between having a properly investment properly in Melbourne and Brisbane was very very very little. When I sold that properly, there was it was. There was some particular state differences, but they were not significant at all. And I think more and more people are are doing that and that notion I think we can be in the active investor in property books. I'm sure a lot of our listeners are of this.
Frame of mind that they are.
Agnostic if you like, as to where the property is, and if you take that strict investment criteria and that approach, then I think it is definitely worth having a look at the Melbourne market now in the way that we were talking about looking at Earth a year a year
and a half ago. Okay, one other thing I suppose on the big picture, Bruce for property, if you take it that the prices how home prices in particular, and the entire and the entire economy, if you like, have been underpinned by immigration and immigration numbers, and it does explain to a significant degree the the one percent vacancy rates and the relatively strong price increases in homes, even
though rates were going up all through that process. Then if there's immigration cuts and they are starting now with two things, an attempt to bring the broad number back to traditional sort of levels rather than from the exceptional levels they were at post COVID, and a big cutback, big cutback in international students, which is already hitting share market. For instance, IDP, the big, the big private education down by a third or so, about two thousand jobs already
lost in that sector of private education. But for a property investor, do you think it will hit property prices? And where might it hit property prices?
Immigration reduction?
Yeah, so you started off this question was talking about the big picture, So there's no direct correlation between.
One thing moving on the next.
But at the moment, the biggest problem is supply can't be increased. They're struggling to increase supply. There there are restrictions on supply. Getting you properly on board so what can they control asing governments, as in federal government, they can control demand, and part of that demand comes from bringing in how many hundreds of thousands of people that we bring into the country each year.
So.
Reducing the number by whatever it is, tens of thousands but one hundred thousand, whatever the case may be, will slow down the increase in demand for the property. That's sort of basic.
Economics one O one, and that should we should have an impact.
Doesn't mean the properly prices are going to fall, No, it doesn't mean that that's going to happen normally. You've got to have a couple of things line up to forth property prices to fall. But it certainly takes upward pressure some of the upward pressure. You take out one hundred thousand people a year for the next two years, five years, or whatever, then there's you've got an extra two thousand and five hundred thousand fewer people needing to
find a place to live. So it should have an impact. It might just slow the rate of growth of probably prices, It might make them stagnate, it might make them go backwards, But does it hit property prices. It will have an impact on property prices. It doesn't mean it's going to make it go backwards. It might just having an impact on property prices and just slow the what might have happened from nine percent growth per year down to six percent growth per year, or it might have been negative.
So yes, you know, you take away some demands. It has to have an impact on property prices, but it doesn't mean it's going to fall.
Okay, Now, as an advisor, tell me about your clients, do they do they if they're looking at the numbers, they see that the property prices are running broadly similar to sub prices. At the moment, the ASX is going to come in at about nine percent for the year. Any chucking dividends and there's you're certainly on thirteen percent. So better than property again for the second here in a row. But property doing better than most people would have fought with the rates and not falling though that
people had expected that they would. So when you get when you get the glance in the door and there are active investors, they have a broad portfolio.
Are they what's the mood?
Are they inmfessed the fact that property is still is still going up onto these conditions, and what did they is there any sense of bout outcut they have.
Yeah, sort of a fewer conversations about I guess about new money but going into investment markets than there might have been in times gone past or but it seems to be picking up again, as in it was quite.
More about managing what you had and making adjustments to what you had.
Certainly, you know during COVID there was a period there with the same don't that's obviously three four what are we four years ago now? And coming out of that there seem to be some opportunities and there were.
The same thing straw hats in winter.
You try to buy assets when they're undervalued rather than when they might be a reasonable valuation or even a full valuation. And you know, that's what you're constantly trying to do as an investor. If you're making active investment decisions, which property residential property has to be an active decision.
You can't index. You can't index it.
So I think in recent times people are sort of okay, you know, I will manage to get through the higher industrates for those people that have I'm not saying this is everybody by any stretch of the imagination. There's more pain out there than there is people seeing things very positively. But for those people who are seeing it positively and they're looking to to do some investing, property is not
right for everybody. It scares a lot of people off to talking about death and tenants and all the things that necessarily.
Come with property.
But for those people who are comfortable with the debts with dealing with tenants, with constant changes to the laws and in regards to what landlords are going to provide, then there's the potential to get into property. But anybody who's getting into property needs to understand that you really have to have a mindset of buying a property for forever, or at least having your head ten years.
Why because the costs of getting into and out of property are in Australia fairly obsaane.
You're talking years ten years as your benchmark.
Ten years, yeah, percent rough lyag you will take to get into a property, particularly in Victoria, South Australia. Surprise the other day to time at certain places more expensive than Victoria, but get somewhere between sort of four and four and six percent stamp.
Duty is to get in to get out of the property.
You've got about three percent in agencies and marketing, advertised and all those other things there. So the cost you're getting into an out of a property is seven to ten percent, so you're very difficult back money on that in the short term. Property needs to be a medium term investment. Well long term it needs to be a
long term investment. It depends on how you say made him a long term But anybody that's going on to properly, I say, you've got to have a minimum of ten years, but the preferable hole in time for properties forever.
Okay, we'll hold that thought right there.
We'll take short break and we'll come back pick up on that issue. Hello and welcome back to the Australians Money Puzzle podcast. I'm James Kirkby, the Wealth editor at The Australian. I'm talking to Bruce Bramble, who is a financial advisor and author and regular contributor to news Corps in the area of investment and wealth, and we were just talking just repeat the number of you would Bruce.
It was really interesting about buying proper five your costs, whatever the cost of the property is, five percent of that cost is going to be you need five percent of that cost going in and you need about three percent going out of the far side, is that what you were saying?
Yeah, roughly, Yeah, somewhere we're going four and six probably north about north of five, largely five five and a half percent to get in the sand duty's and potentially if you're using advis advocate another two percent on top of that roughly some of them flat feet, but around that five to six percent mark.
And to get out.
You know, the cost of selling advertising agents charged about one point five.
To two percent plus JC, so it's a good portion of it.
But then you've got advertising and marketing and some other costs and conveyancing and whatever.
Else on top of that.
Tope, yes, you you're to get out, you're probably around that three somewhere between two and a half and three and a half percent most of the time to get out of to get out of a property.
So yeah, that's very very interesting.
As you said, you can't index it. You it's a it's a big ticket acquisition and you have to go in boots and all the bass day every time. You can't buy a bit of a property as to say,
or unfortunately it's not a bit of one. So one thing that's come up on the show before we go to questions is several people who who I do admire and respect on the show making the point that the units the house prices overshot through COVID and post COVID because of that whole thing of space being so exceptionally valued, personal space being so exceptionally valued when we were all locked in our homes, but that the units fell behind,
way behind. And in that same theme of reversion to the mean that we're talking about, how the sort of natural order of things, the units haven't been doing as well as units normally do for some years, and there's a strong sense that they may catch up looking forward. If someone was coming to you and said I can buy a property anywhere in the country, I don't mind where I'm ready to go. The only thing I want to make a decision on is a unit over a house.
I know the basics. I know that a unit is easier, it is costs less to buys is simply because they costs less, nothing to do with value. I know that they're less maintenance. I know homes are a standard on home is a lot more maintenance, and I have been hearing that units are set to do better per annum for a while than houses. In catching up post called but what would you say to that person?
First of all times, we're going to ask you some definitional questions here if you don't mind. So your house is pretty simple, ass is a is a you know, a property or a building on land. There's no touching dale or whatever. Are you suggesting that a unit is more like medium density high than city where walls are touching and all that sort of stuff, because there's.
I know that definite definition of units is very messy. It includes townhouses. It shouldn't. Let's just talk about apartments. Make it sense them.
Yeah, okay, So I'd separate them into three so houses at the other end, apartments or flats, and in the middle is what I call units, which might be you know, the old quarter acre block that got split in.
There's three sort of townhouse unity sort.
Of things on it that might have a bit of common common area, but there's no real you know, they've got their own yard and they're not.
They're not. So i'd sort of call those three.
So from an investment perspective, again, I split property into two sorts of property, into a residential property to two short one is a home. Home is going to meet an emotional need that needs to be where you want to live, which might be you know, a lifestyle or near schools or near family or your work or something like that. That's homes need to meet need to meet
emotional needs. An investment is about one thing and one thing only, and that is making money, and you want to maximize new chances of doing that.
Now, I'm a very strong believer that the single one of the.
Main ways that property appreciates in value is.
Via land content.
So minute we have one of the rules that we use for purchasing helping clients purchase property is minimum land content of thirty percent. That's specifically designed to knock out what we're just referring to as flats and apartments. Yes, because it is land that appreciates. Buildings depreciate. Buildings literally fall apart from the moment that you since before they're built, So you've got to spend an ever increasing amount of time.
So from an.
Investment perspective, if in a relative sense, if units have done poorly or not as well as houses in the past, my.
Belief is that they will always be the case.
However, you can a get to a stage where our units have underperformed more than they should have under before versus house and lane. There might be some relative value there. But again, as we're just sort of talking about area of the cost of getting into an out property and trying to get that coal rights is very diffult.
So you're skeptical. You're skeptical about whether it's really changed. It's interesting just for what it's worth.
There was two there were two theories.
You'd be like about why units will outpace standard on properties in the immediate future. One was the catch up basically reversion to the mean. But the other one was that the theory always had been, you know, they don't buy apartment because if you buy an apartment doesn't investor. The problem is that they can always build more. And but the argument this year and next year was they can't do more. That the building is approval process in
Australia's basically ground to a hold. There's less been approved this year than last year nationally, and that was an interesting argument which I'm sure the listeners will make up their own minds about just but just to finish off on that one, okay, I why don't we take the first question of the day from Ramnish or a M n I s h Ti Ramnish, My wife and I own an investment property inter state. There you are, you see in another state. Agnostic as to where Ramnish bought
his land with development potential five townhouses. He thinks, by the way, any answer here is never advised. Okay, this is information only. But here's the killer, he says, we don't have development experience. Have you come across arrangements or joint ventures between landowners and builders where the landowner contributes the land and the developer builds the townhouses. I expect that goes on all the time, but I don't know the mechanics of it.
Would could you be familiar with that pose?
Look, I have sparkled to a few organizations. I guess I have a time where.
They whether they've targeted, you know, the older strivings. Who might have you an old house on a big court acre block possibly bigger, where the house is built at the front of the back, and there's the opportunity to release some capital by getting a developer come in and develop a second unit or something like that. Or the property and the sort of personal owns the land, it gets gets paid out so I have no doubt that there would be developers out there who would consider doing that.
They're talking about the actual example that you've given here.
I don't know any groups that do that, but I'm sure somebody would assive warning sign or red flag. If you're considering doing this, you need really good legal advice to make sure that it's watertight. You're dealing with developers and a whole bunch of risks that you wouldn't otherwise face if you were doing it yourself, or you would still face, but even higher risk I guess in this sort of situation here, So make sure you get really
strong legal advice before entering into any agreement. So, off the top of my head, I can't think of any that I know that they do this, but there's bound to be. There's bound to be.
So Step one is get your setup a top class property lawyer, and no doubt the property lawyer will know who's to in the game if.
They are potentially Yeah, but i'd probably put some feelers out. We'll probably put some feelers out and go and speak to a few developers who might.
Want to do it, But do not sign anything without having your lawyer do it. Properly.
Yeah, I'd find somebody who prepent you, potentially prepare to do it for you, and then and then get legal advice.
Really seriously lost signing you.
Very good information there, and ramnish neither option is easy, so another option is easy, and obviously both options can be a rewarding long term.
I hope that was helpful. Okay, we'll take a short break.
We'll be up with the last two questions in one moment. Hello, Welcome back to The Australian's Money Puzzle podcast.
James Kirby Here, it's Tuesday. We're talking property.
I'm talking to Bruce Brammel, comncial advisor. Andrew asks if I had a mortgage. This is one of these We get these sort of ques questions all the time. We have awfully clever listeners who are always doing computations. Andrew says, if I have the mortgage for a thousand a week and interest rates went up so that my payments were fifteen hundred per week, what is the end journey of my extra five hundred. I don't believe it goes to
bank profits, but maybe it goes to treasury bonds. In other words, is the extra interest that mortgage owners are paying off simply going to restore the money printing done during COVID. Is it a tax without being called a tax? Well, Andrew, I don't see how the banks should give you a loan that they don't make any money off, or they'd have to close down. So your interest farmers are going to have to be bigger than cash. And that's only fair that the RBA official rate is there and then
the rates go from there. But I don't think it's avoidable really. I think you just have to take that on the chain. The question is which bank I suppose is screwing you worth?
It's much more transparent than it used to be.
You can go on any of these compare sites. We often talk to people in that area, where you can simply just take a look at the different rates that are out there and either cash or mortgages, and once you digest what bells may be attached to bills and business are attached to particular deals on both sides, whether you have the cash on deposit or whether you're borrowing. It's much more transparent than it used to be, isn't
it Blues? I mean, we used to have no idea whatever people used to phone one bank after or another. Now you can just go on a site and compare.
Yeah.
Well, and the other side of it is the amount of business that is written or the proportion of business that is written by our mortgage brokers, has increased steadily and is now sitting a bit under seventy five percent mortgage.
There are three quarters, three quarters of the wall banks are going through mortgage brokers.
Wow.
Yeah, my colleague he called that the normally the other diet sort of seventy one and a half percent.
Of something of all of all lines.
To deal with sort of Andrew's question in a little bit or just on top of what you've said, James, is that banks sort of tend to make a reasonably concert They're competing.
And always trying to lift it there.
But the margin that they make is fairly similar through through economic cycles. Goes up a bit and down a bit, but they're trying to make let's call it one hundred and eighty two hundred basis points.
Yep is what they need to make known as a net interest margin them.
It doesn't really change an awful lot, does it.
It's interesting interest rates are three and they've got to make you know two percent on it or two hundred basis points on it. Then the depositors and bond holders, they're not they're not treasury bonds. But there are other fixed interest investments where where people who have got money to to buy fixing interest securities and essentially lend them money to corporates and governments and banks and insurers, but are chasing sort of a return there.
But if they're charging three percent for mortgage, then.
They're probably paying out about one one percent to fixed interest investors.
If indust rates go from three to.
Seven, then the generally those fixed interest investors are going to be demanding an extra four percent for their money. So no, it's not it's not a tax on the know on people with mortgages. The return doesn't go to the banks, it doesn't go to the government. It tends to go to either depositors or fixed interests investors who are putting up the money which are fixed interests essentially loans to governments and corporates and insurance companies and infrastructure
projects and all that sort of stuff. So they're the ones who tend to be picking up the tends to be somebody on the other side. People people need to borrow and people have got they need to invest, and that's the tent.
There's very good answer.
Yeah, all kinds back around a strength dividends, doesn't it really? On the banks there was periods for their payout ratio.
Was unbelievably high.
There was periits for they were paying out certain eighty percent on on that. So so that if you wonder what keeps the self the self funded investors taking along in Australia, it's there are frank dividends which invariably, I might say, and most and most reliably does actually come from the banks.
Okay, I hope that was useful to you. Andrew.
Similarly, another another colorful, another colorful question from Dave. This is this question is funny. I'm a loyal listener since inception. Thank you, Dave. Often on my tractors, he said, iPods on his tractor, and I don't think I've missed one.
Good. Seems to me.
Interest rates are a dumb ass way to reign in inflation. That's his first point. We'll take that on board, and then and then we'll take his second point, which is somewhat idiosyncratic, but he yes, yes, it's generally seeing that interest rates are a very crude, rough way to reign in inflation, but it's how they do it.
And I would say to you, Dave, once upon a time.
A year old enough to remember, they used to do in a much more brutal way. And famously the US Fed reserve under whole Vulker in the Vulkra regime, I think was the seventies, inflation was really out of control. He managed to get inflation under control by a brutal on signaled interest rate rises where basically the America woke up one day in interest rates were like much higher and it forced the country intro recession. And yes, it worked.
But these days banks don't do that. They signal. Do you notice they call it what they called it jaw boning, and they signal continually, and.
He noticed it increases in rates. So we had many of them.
Each one was only a quarter of a percent. So they don't do that anymore. So it's not as bad as it used to be, but it's it's one of the least worst options I think available to the bankers, to the central bankers. Now, the question, he says, is why not leverage supersystem to whack another ten on high earners and keep it aside and available when the next downturn comes. This protect the heavy lifting from wage earners. I start people like me spending with Gay abandon when
I should be putting my head in. I'm an olive producer, though olives are not my main game. That's why he's that a tractor obviously right. Well, yes, yes, so Dave's suggestion not unusual now in the future or in the past. Is PA's the rich somehow yet at them again that never stops. The three million super plan is very much the latest example of that, Dave. I don't know what your particular, your particular idea, Dave is like really on the on the far end of the spectrum, I think
for this sort of thing. But while we're on it, and why we have Bruce on the show, Bruce, you might just could you explain why there's such a rumpus over this new super tax that kicks in a three million You would have thold there's not a lot of people that have three million and super But have you a sense of why the tax is so controversial, what your clients think it's.
I think the legislation came out in recent weeks and I haven't. I haven't read it, and I haven't read enough about it to make to do it. But the reason that there was a lot of consternation about it was, well, how exactly is this going to work? You know, is a tax only on income of capital above three million dollars or that you're going to be paying the thirty percent on?
Exactly?
How was this going to be done? And the usual way of writing new laws and bills is to put something out there, go back to industry to find out what they think about it, poke holes in it, et cetera. And you know, I think that's sort of that will continue to happen on this occasion. I'm not sure exactly
where it's gone. But the reason, yeah, there was so much consternation is that it was sort of an announcement of this new extra fifteen percent tax going from fifteen and thirty percent above three million dollars, but the rules were sort of, yeah, we'll fige out the rules later.
You know, the rules. And what they're.
Enraged people was the notion that unlike other taxes all across the system, even inside super this one would be on what they called paper profits, on on realized games. Yeah, and if you have unrealized losses, you don't get them back. It carries forward like like CGT and I think that's but it looks like it's coming down the line.
It looks to me like nothing's going to stop it.
I don't I don't think so.
No, they'll find a way of making it work. They generally do, so, Yeah, it's not it's not something that is likely to be stopped. The history of super innovation and rule changes and law changes over the years is you know, something that I've covered.
At nauseam in various ways over over a long period of time. But they're constantly juggling around a little bit in order to try to make it fairer. And you know, when this particular rule came out.
Was announced that they're going to be moving towards it, it's probably only impacting one or two percent of the population, was I think roughly the number. And even the people who were in that situation were you were understanding, Okay, well you know, I probably nobody's going to cry for me about this.
So no one's going to march to the streets for you.
Yeah, no one's going to march the stratos. You sort of got to move it and deal deal with it. I do remember this, James, back in in another time in place when you and I were doing some things together. There was when they announced the transfer balance cap at one point six billion dollars the time, who had he and his wife about thirty million dollars in a.
Self manage super fun in a pension.
So they were earning, you know, they had thirty million dollars, probably more than that a little bit later on that was earning let's say seven to ten percent a year. It was sort of, you know, a a very large amount of money that they were earning off this two to three million dollars a year on which absolutely zero tax was being paid, and reduced the transfer balance cap.
They had to roll back all but one point six million each, so three point two million, so about twenty seven million that had to go back, and it was then taxed to ten or fifteen percent, and that so that that two to three million roughly that they were earning, they were going to start paying ten or fifteen cent. I had a chat chats with him about it at the time, and it was just sort of, you know, look, we had a pretty good run there for for a
long time. We paid no tax on a very Chancela said, And I think I think ultimately most of the people who were in that band of having more than three million dollars, which can be six million for a couple, it's three million dollars each for a couple of Super time, I sort of understand that, Yeah, okay, well there's there's We.
Probably had a pretty good run for a pretty good period of time.
And I don't see many people sort of mining heavily about us.
Yes they are, it's interesting, you say, and it's it's actually what I've poked a lots of top advisers about this, and they generally say what you're saying, Bruce, that that people who are lucky enough to have that level of money, and remember for a couple of effectively, once you're over six million and super, that's when when the new tax comes in. But what they say is, we knew there
was every chance that taxes have drives on Super. We just didn't know that we're going to do it on on realize games, on paper games, which does you know you could really be caught very very badly if you were, especially if you're.
An earnest investor in startups and all that sort of thing, and.
You certainly you know you don't have them, you don't have the mind that you have in your pocket, but you're paying tax on it before you get it. That you can see how that would actually plain people on that. I think is the residual argument and is not over yet.
Okay, terrific, Bruce Pick you very much, great to have your honors.
Thanks Chimes, And that was Bruce Brammell of course of Bruce Brammel Financial h and he is an advisor regularly on the show and contribuser as well to the finance pages. All right, folks, thank you, and let's have some more questions, you know, the email and money puzzle at the Australian dot com dot au.
Talk to you very soon.