Hello, and welcome to The Australian's Money Puzzle podcast. I'm James Kirby, who was editor at The Australian. Welcome aboard everybody, all investors, I expect feeding just a little bit nervous this week. It's not every day we have share market session to kick off the week where we have the worst session in four years, which we had this week on Monday, three and a half percent off the market, definitely rocky times. We see the NASDAC is already in correction.
The S and P that's the main US market is down about seven and a half percent as we speak on Tuesday, and we will see what it does this evening, whether it goes into a full blown correction or not. Very hard to say. We can see just middle of the day Tuesday that the Australian market is stabilizing a little. But I can tell you that the slightest answering, I should say, in the US features and we will fall
with them, faithfully, we will fold. Don't you worry. We fall lemming like every time we did three and a half percent on Monday, and that is barely what happened on the US overnight Monday. Perhaps on our market. But more broadly, I want to talk about for the diversified investor, For the investor who is like most of you, I'm sure has shares, probably has property in some fashion, has other assets. Then you might have gold, you might have cash,
you might have alternative assets. How do we handle a period of instability which we've seen some of, which we may see much more of because the conditions that have triggered this selloff are unclear. There is no single trigger, and on that basis, it could happen again at any time. I was thinking, who could we have as a guest on the show to talk about the broader situation. It needed someone who was a diversified investor themselves. I thought, Hey,
Anthony Keane, who has been on the show before. He is, of course the personal finance guru and news corporation. He operates out of Adelaide. In the end of We're all in the same big, happy family, and we finally met in person. Irl. Great to have you on board today. Tell me we'll talk about all things, not just the market downturn, but how that could affect everything, How it could affect, for instance, interest rates, how that could in
turn affect property. I was entertained by the fact that you had a piece awfully well timed where you mentioned that you had sold all your shares recently. Now that's not quite a Warren Buffett like move where you sold all your shares just before the downturn. You have lots of shares. You just sold all your ordinary shares and you've switched entirely to ETFs to exchange traded funds. That's a big call, right, tell me? Is that forever? And why did you do it?
Yeah? And I absolutely I have sold every direct share that I've built up and owned, but that's been a gradual thing over that it started buying maybe twenty five years ago. But this is the first time in a quarter of a century I do not have one individual share to my name. And I'd like to say it was timed the share market were out perfectly, but no, it
was purely a strategic and getting old decision. And unlike you, I don't have a self managed super fun but as I've got older, my superbalance has grown as everyone's done, and that is through a lot of index funds. So I invest in a lot of Australian overseas as you said, diversified investments through a lot of index funds through super but not yet self managed. But that is something I am considering for both shares and property in the next
sort of five to ten years purely. And so the reason I've looked to sell out of the direct share ownership is purely because if you're holding it this stuff in super, the tax benefits that you get from it when you do retire from work and switch your money to several times about that, I'd like to I've investment properties outside of cheaper, but would like to own one in the future as well, purely for that capital gains tax benefit. It's just you're talking tens of thousands of
dollars of savings by doing that. So I do love shares, I write about shares every day, and I do plan to get more in the future. But it's just a matter of strategy, age timing. Moving that direct share ownership withinside throppernuation. As I get closer to my mid eight fifties and sixties, it will work better.
You don't have to think anymore. You have vtfs. There's an element of truth on that, isn't it. You can put them. You can say, okay, I've got my sessings. Really, I don't really care if come bank ors of fifty percent for PHP fours fifty percent anymore? Is am I simplifying it?
I think you're right. I think the one thing that will hold me back from going direct shares again in the future, through a self managed fund or just through a retail or what other the fund that opposite direct share investment is do I want do you want the headache? Do you just want to trust what the markets are doing? Because I've been burnt. I heard you talking, I think last week on your podcast about Goodman Group how to the star and the market as a real estate investment trust.
Now I bought them in the GFC and lost ninety percent of my money before I sold out and then and they've gone gangbusters since. Had I held them, which I didn't for various reasons, would have gone great. But it's just the damage and that the damage it does to your confidence as an investor when you have those sorts of losses. I don't know. I'm not sure that
I want to go through all that again. And it's like with the fall we've had in recent days, everyone super is going to take a hit, but that's everyone super pretty much all those that are invested in share markets.
So you're comforted by the fact that you won't do any worse than everyone else's basicity than the index from here on or better.
That's exactly right. But shares are great and a lot of people love that watching it, and I have loved it in the past, But is it right for my stage of life? And I know you've also spoken about as people. Do you get older, it's do you want to spend your time watching the moves of individual stocks every day? Or do you want to spend your time enjoying sort of life and retirement and not having to worry about the self managed super fun compliance and all that sort of stuff.
Does your attitude towards property and how much property you have? Does it change when you see one of these shock share market selloffs?
You don't see We saw a fifty five percent fall in the ASX during the global financial crisis. I've never seen anything like that in any of the property markets. Makes me relieve that I'm more exposed to real estate. But the property market in Australia is sort of a real variation in what you get. I'm running a column this week. In the past twelve months we've had Perpose done plus twenty five percent and Melbourne which is down a couple of percent. So that's a massive variation in
proper as well. But you don't tend to check your prices every day. You see it as a long term investment. But different people have different preferences as to what they like. And I've got a bit of trouble with readers in the past writing that I prefer property over shares any day, but very happy to own shares and index funds through superannuation and have that exposure to the market.
It's interesting on the share you've gone for the you've gone for the indexing and got away from the sort of details and the individual variation of shares property. You don't really have that choice. I'm just thinking of the point you're making that I can stand here and tell everyone the property prices are up four percent across Australia
this year so far. You're laughing at that. If you're in Perth, you're saying, hey, we're up twenty percent, and if you're in Melbourne you're saying, hang on a second, that's not true. In this city, we're down one percent. And you live in Adelaide. Adelaide is doing well. If Adelette keeps going the way, it's going to have a higher average than Melbourne within a matter of weeks. They're absolutely light. The average dwelling value is in the high
seven so maybe seven eighty thereabouts. Its neck and neck right now, Do you, as a property investor seek to diversey to diversify your risk as you've done with the shares? Do you try and basically not have all your eggit and basket and have a property that isn't that are in different places?
Yes, most definitely two states. At the moment. I always thought that there's no way I would ever be able to afford property in Melbourne because of the price is there. But having watched that difference, that sort of difference just narrow. Looked at Hobart a few years ago, was like soaring the prices there, and now that now their medium price is one hundred thousand sort of less than any other
state capital city. So there are cycles in each city and diversifying works great as a direct property investor, but also great as a property investor from our land tax point of view as well, because of the different land tax raisings in the different states, so you'll often find investors trying to diversify to a different state. So I had planned for Perth, but I've missed the boat on
that one. But Melbourne would potentially be on the radar in the next year or two, and you've spoken recently about over supply there, so I'll be keeping an eye on that, but definitely diversify.
Okay, very interesting. I want to talk to you about a couple of quite topical issues how this market proversivet could affect why they're investing. Will be back in a moment. Hello and welcome back to the Australians Money Puzzitive podcast. I'm James Kirby talking to Anthony Keene today, my Colie in News Corporation on the finance section of all the papers and digital assets that we have guest on the
show before. Always happy to have him back, Anthony. I was just thinking that one of the things we have at the moment is there's a fairly line boble market. We've got some softening in the property market, and traditionally, if you've got a share market, a serious share market diversity, people will move to property. I can give you instances
back over the years very clear instances where that happened. Now, we don't know how bad this will get, but it's been a pretty bad week so far on the market. That the worst week for four years, And you could argue it wouldn't take much more to knock more off global markets, particularly the US, because there are always risks in the market, but there are distinct risks emerging just now. They're geopolitically, particularly US presidency, particularly wars in different parts
of the world. These are things that can knock a market out very easily. It's fragile. I think we could say that, and we had a sharp sell off, which could extend What I want to draw out from you, as someone who invests right across the board in all classes, what might happen? What can a share market downturn do
for broad investments? Apart from the fact that your shares have lost value, it takes some energy out of the market, right, What might happen with interest rates for all investors if we have an extended share market sell off.
Yeah, that's a really good question, James, because I think you're right. If this market sell off continues, and Stephens, we saw it during COVID, we saw it before that in the GFC when interest rates just drop really sharply, that's going to obviously not be good news for the people that have been in loving their five percent plus returns on cash in the last couple of years, because if the Reserve Bank cuts rates quickly, obviously those rates will fall. But I think in the past as well,
it could be great for bonds. Now I've never invested directly in bonds. Most people have probably never invested directly in bonds, but you might have a portion in your super But I remember because as high interest rates, you can get great returns from bonds when they're sharp falls in central bank interest rates because of that inverse way
that they work. So might be great for that. Falling rates might be beneficial for property if it becomes easier to borrow to invest in real estate as well, So there's potential there.
It could be actually easier to finance investments.
Could be yes, but there's also going to be a lot of gloom and a lot of people losing a lot of confidence and stuff. And let's hope we don't have anywhere near the falls we had in that sort of flash crashing COVID. All the huge falls we had back at around two thousand and eight, two thousand and nine.
You with your move to ETFs, if you saw a flash crash, a harder crash than we've had. Let's say we're down. Let's say that the US market is down approximately seven and a half percent is to drop so far, but let's say it dropped really sharply and we did twenty percent drop or so in the US market. Would that disturb your plan about ETFs forever? Would you say, gosh, this is there are bargains here. I can't resist it.
Yeah, it's right, and a lot of them. A lot of the brokers and the ches specialists I've been speaking to you have literally been waiting for a fall, for a breather, whether it's ten or twenty percent. And I've had this money sitting on the sidelines. Because market drops twenty percent, you're effectively buying at a discount. I've still
got scars from the GFC. James. I listened to all of that and bought it a ten or twenty percent discount heavily, very heavily, and then we'll lost another thirty five percent on my money and took years and years to get That was nice.
You sound like someone who's been through the war, Anthony, that you were you forever. Look, I'm so glad you've brought this up because I know a lot of our listeners have not really experienced the grueling experience of a share market fold. When I say a share market fold, what you're talking about was worse. It was much worse than the COVID dropped. The GFC was. It rattled confidence
in the deepest possible way. Banks folks, banks were being saved in the UK and the US here and then on top of that you had the worst type of market. They says, it felt fifty five percent, but it took two years to do that. It peaked in late two o seven. It was the middle of March two oh nine when we hit the bottom, and of course we didn't know we'd hit the bottom because it seemed to
have been going down forever. So it's one thing to be an investor goes through the COVID crash, which was short and sharp, and the stock markets were flying back up within months of the initial downturn. Much harder to go through something like the GFC, where there's two solid years for people, where the stocks just slowly sink. Child child down by fifty percent. That's really difficult. So that'd you both, Anthony, and I bet it does shape you.
Did it push you more towards property investing than it might have? Than you might have?
I think it did. And look there's been I've been fortunate being from Adelaide that Adelaide tends not to have the heavy downturns in real estate prices that the big Eastern capitals do. But that said, before these did, I went about eight or nine years before these recent sort of run up since around the sort of COVID period of zero growth, holding onto a property and getting zero growth but still having to pay all the holding costs
and the fees and things. So but you hold My view is if all you've got to do with your whole real estate, if you go through two price cycles, two price booms, then you're set up for life. Because of the magnitude and the size of the money that invested in one individual property. Most people would not put five one hundred and six seven hundred thousand dollars just into one individual share or even a portfolio. A lot of people don't do that. Property gives you that leverage.
So I think you're right they did. I've still owned shares for all through the recovery, and Jesus was a long recovery as well. We only to the all odds in the ASX two hundred only a few years ago. It took over ten or twelve years just to get back to where they were in November two thousand and seven. Whereas steady issue goes, property market just kept plotting higher and as I said, flat for a long period while I was watching other states go higher. But it's been
says Tener. Look, I'd be nervous about investing in SA or Wa at the moment, even Queensland to a degree because of the size of the gains that they've had. Nothing keeps going up forever. But you've got that argument. You've got various arguments for the under supply of a state national aid, the huge population growth. I just think
the fundamentals are still there. And a roof over your head is the best investment you can make, whether it's your own home or whether it's an investment property or two. I really believe that for a long time because of the security that it gives you.
Okay, terrific, We've take sure break. We're going to have some great questions from Alex and Christopher and Margaret and if we get to it, orpheus back in a moment. Hello, Welcome back to the Australians Money Puzzle podcast. I'm James Kirby. I'm talking to Anthony Keene. We have some great questions here. Alex says, I'm in my early thirties. I've been contributing into super with the goal of starting a SMA super
fund to buy a house in Sydney. The thirty year long price growth for capital cities it's five percent, assuming I can even find a house in Sydney. This asset with the priests did three million in thirty years time, at which point on realize gains and earnings would be taxed to thirty percent war Boardly, it seems like the two tax hacks of super and negative gearing will be phased out in the not too distant future. How is this fair? Okay atleast Alex at least has packed an
awful lot into that question. A couple of things. He says. First of all, that negative gearing could go in the near future. I don't know about that. Actually, there's absolutely no evidence about that, Alex at all. This is never advised. This is only information. But you could argue quite strongly that the ALP lost the election they might have won on the basis that they went near negative gearing and
had a plan to reform it. Certainly, that and the Frank dividend reforms combined was an expensive exercise for them, and I don't think there's the political will to go near negative gearing for some time. It's not even been discussed,
not by either party. However, on Super, you make the point that he's making the point folks that the new supertax which kicks in a three million and then you pay fifteen percent new tax over on any earnings over three million, that that is going to be it's going to hit his property plans in Super over the long period of time because it's not indexed, there's no plan to index it. I would say to you, Alex, yes, it's not fair that that new tax isn't indexed. It
should be indexed. It also shouldn't be on unrealized gains. It should be on realized gains, and if they count that it should be deemed. But I would just say it's a long you're talking about a long period of time and whether a particular supertax was or wasn't indexed in thirty years time is unlikely to make a major impact on your property returns, he says bravely. But that's my view. What do you think, Anthony, I.
Agree with you on the negative gearing side. I think that once bit and twice shy with with the Labor Party, but also with these new unfair sort of tax plans. I'm a bit of an optimist on that, and I figure we are going to have a coalition government at some time in the next ten or twenty years, and I think that they're going to fight back against some of the most unfair parts of that those rules. I
really think that it's not going to last. So thinking of what government's saying today is probably going to be completely different sort of ten twenty thirty years from now, and I think it eventually everything does revert back to fairness as well. It just might take time. And if you get your own you're go unlucky enough to get caught out at the period where it is unfair. And we might see that next year with some several horror
stories that unfold in the next year or two. Once that new tax comes in people being forced to sell stuff.
Yeah, exactly. I think you might have some farmers that go brook or something or have terrible stories, and that will be enough to turn the public to actually, first of all, have a look at it, see what is actually wrong with it. It's hard to feel sorry for people who have three millions, super I take that on board in two seconds. But also taxes, taxes should have a certain shape and they should be broadly equitable, as
you say, across the board. Okay, do you want to read the question from Christopher?
Yes, So Christopher is wondering what we think will be the impact of a Trump presidency on the Australian dollar. That's the easier or decent US ATF that focuses on US energy stocks because he expects that they're about to go gang busters if it's Trump gets in. John may to have a thought. Yes, sure, yes, I was. It was Yeah, I think he might be on the money
as far as demand for US energy stock. So I heard that Donald Trump and his frenzied crowd chanting at one of his rallies or speeches Drill baby drill, Drill baby drill. That was what that was calling for. And
so that does. But as far as the impact on the Aussie dollar, some of the stuff that I've read, I'm not a currency specialist, but obviously, like you, I get a lot of stuff comes across my desk all the time, and there seems to be talk that may not be very good for the Aussie dollar or global exports overall for anybody, because of the talk of heavy trap tariffs in that Trump might bring in, particularly the
wards China. And I do know that the Aussie dollar is one I think it's the fifth most traded currency in the world, largely because it's a proxy for investing in global trade and investing in China in particular. They'll buy the Aussie dollar based on the sort of China. So if we have this massive trade war with US and China and huge tariffs and things, I don't think that's going to be good for the Aussie dollar.
Okay, very good, all right. I hope that's used for to you, Christopher, it's I think it's beyond out that if Trump won, and this will get placed since the market instantly. But if Trump wins, it's beyond doubt it's good for EID and plus a few stocks. And it's also doubt that it's not good for ESG related investments, especially where ESG investments have been packaged up into some sort of a thunder and ETF. But that's a flip side, Okay, Margaret, Mr GA or e T. I'm a new listener to
your podcast and I wonder if you can offer me information. Recently, my super fund had a data outage that was caused by a third party. It took more than a week to resolve. Give me time to ponder how safe is my super What if there was a malicious attack and my super disappeared. I completely understand this question how somebody would ask this, And she also says, I understand the banks have some kind of insurance known as the Financial Claim Scheme which will cover up to fifty k Okay,
two different things there, Margaret. Yes, old cash in Australia held in banks or to be precise, approved positive taking institutions, which is more than just banks, is guaranteed by the government explicitly to the tune of two hundred and fifty thousand per person per bank. Okay, So that's there, But that to one side. Nice thing to know now about how safe is your super I think we'll just focus on how safe is your super in relation to malicious
attacks shall we say it attacks or scams. The reality is that this is wide open and the funds have had problems. I had a piece in the paper in the section which I used this week, which was actually a guest piece by Heather Gray Afka the Austrian Financial Complaints Authority, and she makes the point that this is very in super in the big super in the industry
super funds or the other funds. It's a small issue numerically, but that small number of people who have been unfortunate enough, whether there has been some scams or it issue, whether they were malicious or not, it has been a problem inside and for the people who were for the handful of people who have been exposed to the it's danger
inside super fund, that's been the problem. So she makes the point that it's a small number of people that have had any issues in super with it or it scams, but those people it's big news for them because she mentions figures. She actually puts some figures on at eighty thousand dollars I think was the precise nuver she put
on one of the issues inside Super. I don't think anyone knows, Anthony that I don't think anyone can stand in front of your super fund and say, listen, this fund is immune from it attacks because it's they're always coming, they're always breaking through.
Yes, and I agree, it is really hard to say it. We haven't been really tested with a major attack like we saw with health insurance details a year or so ago. That wouldn't have thought that that would happen, but it did. It. Supers always that risks to markets and things, and this is just another potential risk. But I think that the bigger risk might be just people being scammed from people
I know. They have been reported scheme of shading people out of the money by getting them to transfer to an early relay scheme or fan or some other thing and then stealing it that way.
Yes, and that's money coming out of super but while the money is safely inside super. Just for what it's worth. This piece from Heather Gray Margaret said that AFKAR received eleven thousand complaints in relation to scams last year. Only twenty twenty out of eleven thousand came from superannuation fund members, and she says why these complaints are smaller number the average loss claimed in them was eighty eight thousand and ranged as high as three hundred and forty four thousand.
So it's been struck by lightning. Right, It's very unlikely, but if it happens, it's trouble for the people involved. I think we'll come back to this another time. I think this is worth a deeper dive. Thank you very much for the questions. That's about as far I think as we could go on that one today. All right, Orpheus, do you want to try Orpheus's question, Anthony?
Yes. Orpheus says that a lot of your guests and discussions are about how to make money through investing, but he asked, what about protecting your final wealth and standard of living if a health event or death cuts your working life short. He's talking about life insurance or protecting your ability to end an income and pay down debt if you do become sick or injured and can no longer work, or if you pass away. Wants to talk
about life TPD, trauma and income protection. Insurance cover both inside and outside of super and would like to sort of this.
You're a diversified investor, Anthony, do you have all those insurances?
Yes? And Orpheus is right because he says it's an unsexy but essential need to protect wealth. And you're right, and there are arguments of having it both within and outside of Super.
Do you your Do you have your insurances? Are they inside super or outside?
Mostly inside Super? And that's purely from apart from some trauma cover which you cannot have inside Super, but death covered TPD and in protection you can have that withinside Super.
And it's yes, my children are getting older and finishing school now, but I've been in the process in the last couple of years of winding down some of that cover within Super because you've always got Some people can waste a lot of money with huge insurance cover through Super because obviously the cover school fees and the like if you do pass away. But when those or big mortgage is the same sort of thing you gotta cover. But people can get get caught being over insured later
in life. That said, the vast majority of ossies are underinsured and don't have enough and think that maybe the default one hundred and something thousand dollars of cover they might have in their industry super fund or whatever, it's going to be enough, and it's not. If anything happens, so yet definitely worth looking at, definitely worth speaking to a specialist about that.
Okay, terrific. And I would say, as you see, very true, the vast majority of people are under insured. However, I would say to our audience, who I instinctively feel would be across the basics of this anyway, watch out that you're not over insured. As Anthony says, as you get older and you have all these insurance settings, particularly if you have income protection insurance or even life insurance, and if you've got a substantial amount in SUPER, then you
to ask yourself, why did I get this? Once upon a time, fifteen twenty years ago, I got all these insurances because I really needed to cover things because I was really exposed, right I didn't fully own my house, or I didn't have much in Super, et cetera, et cetera. Is that still the case? An insurance BROKERA, I'm afraid it will never tell you to have less SUPER, to have less insurance, not in my experience anyway. They don't actually suggest you buy less. And if you say to them,
maybe I should have less. If the doctor says that they shouldn't smoke, and you said could I if I had one a year, would it make a difference. They say, just don't smoke at all. An insurance broker will say the same thing. They will say. If you say, should I still have all this insurance? They say, why not? Just in case? But that's not an argument. That's not a powerful argument, that's not a proper argument. I would review your individual circumstance each year and be very careful
that you don't overensure. It's an oddly seductive thing when they say, listen, you're insured for two billion or one million, and the figures get high and it sounds great, and you say, gosh, yes, I suppose I'm worth that. But you pay through the nose for that. As Anthony says, keep an eye on it, and keep an eye on it as your life changes. If you've got a house full of kids, that's one thing. If you don't, it's
a completely different set of circumstances. I have an advisor on this show who says, basically, once you're in your early sixties, if you have a substantial amount in super you don't need life insurance at all because your super fund can cover it, and you can save yourself thousands a year which you could invest in your super fund. There's a plan that we might think about for another day, but we will leave that one hanging out there for
everyone to kick around until we talk again. Hey, Anthony, thank you very much, lovely to have you on the show.
Thanks for having me. James been great.
That's Anthony Keenfolks. He's the Person of Finance writer on News Corporation, colleague of mine. Do keep the emails coming. If you want to support the show, just mention it to one of the person. Just mention it to one person this week. That's what we would really appreciate and thank you very much if you do. If you'd like to correspond, ask a question, complain, whatever you want. The email is there the Money Puzzle at the Australian dot com dot au and I will talk to you soon.