Welcome to the Money Puzzle. I'm your host Julianne Sprague, wealth editor at The Australian, filling in for James Kirby. He's on a well deserved break. He will return next week, but for now I get to sit in the chair and host this episode for you. Our guest today is a Melbourne based financial advisor, James Wrigley. He's from First Financial. You might know him more from social media. He has won plenty of fans for his plane speaking financial advice.
He's got more than twenty years experience and he's seen the good, the bad and the ugly. And for his sins, he's decided to write down his top tips and his pen a new book. It is called Retire Life Ready. It will be available on October twenty nine. It's a bit of a framework to help you make better money decisions and map your job. I need to retire and now the book isn't out until October twenty nine. But
we are very lucky here at the Money Puzzle. We've been able to grab James and get a first peek. I'll look inside the book and we're gonna have a chat to James about some of his top tips, James, really, thanks for joining us on the money puzzle.
Julyanne, thank you for having me here, pleasure.
Congratulations on the book. That's a bit of an epic thing to do.
Yeah, it's like I think it was probably about a year ago now, would about October last year that I started having conversations with the publisher and I had never even considered writing a book, never even crossed my mind. And they reached out and said, hey, James, if you thought of writing a book. I said, no, is that we think you could write one? I said, all right, let's give it a go. And anyway, yeah, a year later, we're just about to be on shelves.
It will be on shelves now. I've been able to have a little bit of a sneak peek inside this, and it is typical the plane speaking will get you on your way. But it's called retire life. Ready now, babe, you could explain to us why you've called it that, and perhaps maybe if you could. Obviously people could go
read the book. But there was this lovely anecdote in there from your fortieth birthday were you told your family you were going to write this book and your aunt told you something I don't know if you can recall what that story was.
Yeah, yeah, So I think it's like in the intro part to the book, she said to me, She's like, James, make sure you tell people that if they don't have any money in retirement or something to that effect, that retirement's really boring. Like if she was kind of trying to emphasize this point of if you're just stuck at home watching the clock tick down, it's not a terribly great retirement. And I think she was kind of re very to her own retirement. But she's been on plenty
of trips and she's done plenty of things. So from an outsider looking in on her own retirement, I would I wouldn't say it's anything likely like it's boring, but that's kind of what she was trying to get at.
So with that in mind, then that idea of it would be good to have money in retirement. And I think also the retirement stage of life is lengthening. It's great that we all live longer where working out how to become healthier for longer, but that also extends retirement. When do you reckon most people get around to actually planning retirement to really sitting there and thinking about, Oh, I've got this other stage to think about.
I think in the past it was probably fifty five plus, late fifties, early sixties, possibly because of the social media stuff that I do, and I interact with a lot of people and there's a lot of questions and comments
and things. I tend to see that aging down. I know, if it's just a general increase in education levels around money and finances and retirement and super and so forth, because it's so easy to get access to some of these things now, like you can google things, you can go on Instagram and YouTube and all the rest of it. So if you have any interest in any of this stuff, there's plenty of information out there, whereas maybe ten or fifteen years ago it wasn't quite so readily available for you.
There was plenty of books and things that you could read, but sitting down and committing to reading a finance book is a bit more of a bigger undertaking than watching a few videos on Instagram might be. So, look, we're seeing a lot of people around the age of forty something, probably mid forties, where they're starting to think about it really seriously. Whereas I reckon if I go back to my earlier.
Days, maybe it's a point in the career where they're starting to think this working things have been getting a bit old.
That's probably it, and they're likely to peak in their career, you know, demanding work schedule and a demanding home life is like how much longer does this go on for? And what can I do to get out of here sooner? Maybe that's what's driving it.
If the boss is listening, very happy love the Australian. I love doing the money Puzzle podcast. Everything's great, but also wouldn't it be nice to be able to choose to do it rather than you have to do it to pay the mortgage. So with that in mind, if that age is coming down, starting to think about retirement,
where do people then need to start? So, say you are in your forties, or perhaps people listening to this might be in their fifties, or if they're in the sixties, but at some point you're thinking to yourself, I want to plan for my retirement. Where do you need to sa start?
You reference the title of the book Retire Life Ready and the reason why we've kind of called it that and a lot of the financial advice that we do is centered around this idea, at least in the very beginning of the engagement that we might have with new clients. Is because it's all about trying to design the lifestyle that you're aspiring to in retirement. Let's park the numbers for a moment that they're obviously completely relevant and will be the ones that support that retirement. But what is
it that you want to do? Where do you want to live, who do you want to surround yourself with? What are you going to do with your time? And I comment on in the book and it's an odd colleague of minding financial advice, he used to talk about this idea of what do you do with your time in retirement when all of your time is leisure time? Whereas at the moment, leisure time is a break from work, a break from the routine. But what do you do when all of your time is leisure time? What do
you do for a break from the leisure time? And so trying to design this lifestyle that you want And as I said, where do you want to live, who do you want to surround yourself with? How are you going to occupy your time? Do you want to work part time? Do you want to work casually or do you want to just stop completely and spend thirty years sitting on a beach. That's up to you, and then we can start to look at the numbers that you need to support that life that you want.
So, if you're looking at a break in the leisure time, is that indicating that you might want to do some part time work or casual work or what are the other strategy? What are the other strategies?
That's it? So it's part time work, it's casual work, it's volunteering work. I had a conversation with a new client just earlier this morning, and she'd had quite a demanding career in the particular field that she's in. Fortunately for her, that particular industry has quite a big casual workforce, and so she's given up the big kind of corporate leading, a big team type job that she had for a
large part of her working life. And she's in her mid sixties now and she just picks up casual shifts in the particular industry that she's in, and they'll plan a holiday and they'll go away for three weeks or four weeks or six weeks, and obviously doesn't work and then she'll come back and she'll pick up a couple of shifts here and there, And she says she really loves kind of not having the responsibility of all of the other stuff that with that big career, as she
can show up to the workplace, do her job, and then go home and doesn't have to worry about it. But that then keeps her mind occupied and keeps it stimulated. You commented before about retirement lasting a very long time, like a lot of people will live into their nineties and beyond. Now, if you're retiring at sixty something, you know that's thirty forty years of your life. That there's a lot of books that you're going to read or that other sitting on a beach, and so you need
something to keep your mind going. And so whether it's volunteering, getting involved with the sporting club or the church, or the kids' school or the grandkids school, or in the case that I was talking about, and doing some actual paid casual work. We see those people that involve themselves in something more than just sitting at home that actually have the most enjoyment through their retirement.
So how do I sit down and think from mapping it out The difficulty is trying to work out how much I might need to sustain that lifestyle. I could write you a fantastic list. I want first class travel, I want to go around Europe every year and do all these sorts of things. Is it a matter of having there's your ultimate goal, there's a mid rank of that, and then there's the if you don't do something now, this is how bleak it's just going to be you, yeah, watching Free to Wear TV.
But look, there are different levels to it, absolutely, but by and large, we see people generally wanting to continue to live the current life that they're living now. So people will be earning a certain amount of money, maybe it's a lot of money, maybe it's not a lot of money, or somewhere in between, and they're earning whatever they're earning now, and they're living a particular life now. Very rarely do we come across people that are really
unhappy with the life that they're leading now. Whatever they're doing, wherever they're living, whatever they're doing with their time, they're generally reasonably happy with that, and kind of the starting point tends to be we'd really love to be able to continue doing what we're doing today through our retirement. So there's some exercises in the book where I talk to and you can kind of get into the nitty gritty of try and work get what you're spending today
on all of the things that your life costs. Your mortgage, you know, school fees if you're having to deal with that, holidays, grow throes, all of these kind of things, and then you can cross off the bits and pieces that will stop by the time you're retired. So hopefully you've paid off your mortgage. For example, by the time you're retired.
Very much looking forward to putting a line through that line, and.
So you cross off. For a lot of people, there's some work to do in getting the mortgage done, but hopefully by the time you're retired, the mortgage is paid off in some way, shape or formance. So you can kind of cross a line through these different things and say, okay, well, today I go to work and I earn a particular amount it's being spent in these different areas, but by the time I retire one, two, three, and four, I won't need to pay for so I'm only left with
whatever's left over. And then you can work on how much do you need to fund retirement.
But also if I think about it, that my health costs I'm going to imagine will be higher. I'm doing my level best, James, So I'm trying to do weight training now three times a week. I don't care about needing to be slim. I just want to be strong so I can get up and downstairs and not need to be assisted. All that sort of stuff is in my mind now. But presumably my health costs are going to go up, or my private health and premiums will rise.
Do you sort of is there sort of a way where you just have to sort of factor that in you just have a stab at it and say, okay, well let's just put twenty or thirty percent on that, Or how do you advise people to work out.
You're going to have some ups and downs through the different elements that you're spending money on through retirement. So the common way that people address this all bit as changing as retirement lasts longer. You have an active period of your retirement in the earlier years where you may be traveling and you're getting out and about and you're doing things and you're taking off those bucket list items.
Eventually you're going to get to a stage where you've seen and done all of the big things that you wanted to do, and that starts to slow down. Maybe it's because you've seen all done all the things. Maybe it's because your health starts to limit what you can do. But at a point in time that starts to slow down,
and so you have this more active phase. You have this period of time where you've done all the big things that you want to do, you slow down a little bit, and then we tend to see the period where the health starts to rise. But you've got and it's horrible to think about it like this, but the activity start to slow down, but then the health costs start to go up. So you're spending less on one area but maybe more on another if you've got these rising health costs as you age.
One seat, so you've got a sort of rough mudmap of what you think you would like to be spending to have an enjoyable retirement. So then you're sort of looking at that, what's the next step, What do I need to do if I suddenly go okay? That looks like a fairly large number.
The starting point and the whole kind of Australian retirement system and help from Center Lincon Services Australia and so forth, is all geared towards you owning your own home. So in order of priority, if we try and keep this as simple as possible, you want to own your own home or wherever that may be, and whatever that looks like, and different people will have different aspirations there owning your own home and then enough money to support that retirement.
The target that we like to try and encourage people to get to as much as they possibly can. Now, not a whole lot of people will eventually end up getting there. Is you've got this income target, multiply that by twenty times, call it the rule of twenty times.
So if you wanted to live off one hundred thousand dollars a year of spending money in retirement, multip apply that by twenty which is two million, and so you don't want to have your house paid off and two million dollars worth of other assets to support that retirement. At that level, now, not a whole lot of people get there. Certainly plenty of people do, but not a huge portion of the population. If you get to that level, you're at a level where it's highly unlikely you'll spend
your money through retirement. You'll mostly be just living off the earnings of your money, and then it goes in inheritance. Now, if you're at fifteen times or less than twenty times, you get this kind of slowly, you get this curve of your slowly yeating into your capital, which is fine that that's the reality for most people in retirement, and then eventually laid it down the track you qualify for some age pension factor into the equation.
It is tricky, though, isn't it? Because I understand the here, but there is an awful lot of people who are leaving money to future generations and every person's situation is different. But I sort of think, if you've done so much hard work, you've really sacrificed and made decisions in your life to build up this wealth, and then all of a sudden, maybe you're not spending the way that you thought you would in retirement, And I guess, I mean, look, I look at it. My mum didn't get to retire.
She was diagnosed with terminal cancer three months out from her retirement, and that on it iyo yo, between let's do the good things that's paid down the mortgage and we're going to go on a family holiday this year, because you never know what's going to happen in retirement. What is your advice to your clients when they're talking to you about they want to have these goals, but you need to sort of factor in lifestyle while you're a bit younger.
You're absolutely right. So it's kind of one of the questions that we ask people in the earlier stages of getting to know them, is what is their view on leaving an inheritance to whoever it might be. Some people have this view that we want to try and maintain everything and leave as much as possible to the next generation, maybe because they want to, maybe because they need to. You know, certain kids might have some need some extra support for whatever reason, and so they need to leave
a lot of money behind. Most of the time, though we actually see people saying, look, we're happy to just kind of live off the money over time, and if there's less than what we started with, fine, that was the whole intent of it. So people say that in the beginning, but the reality of working with a lot of retiree is over quite a length of time, rightly, so everyone's petrified of running out of money, And so we find some people are stricter on this than others.
They try to only spend the earnings of what they've got rather than spending the capital because they're petrified of running out of money. And so we spend a lot of time with these people saying, look, if you continue on this particular trajectory, you're going to die with one and a half million dollars in your super fund plus the value of your house, Like, do your kids really need that much money? What are you forging now versus
what extra would you like to do? And some people are doing all that they want to do, and that might mean that they're living on a relatively low retirement income. Fantastic. It's not up to me to tell them they need to spend a whole lot more money. If they're doing all the things, it's my job to help them try and identify are they holding back on things that they would really want to do. The other part to that is is then looking at for people that have the means.
Would your children or whoever may inherit from you in time, would they be better off receiving some money from you now? And then, as a consequence, a whole lot less when you're gone, versus receiving this great big pile of money when they're maybe sixty years old and retired themselves and they don't really need it anymore. And so we kind of have that conversation around when is the appropriate time to actually start to leave this money.
It is an interesting conversation. We might pick up some of that when we come back from this break. I also want to have a chat to you, James, about the common mistakes that you see. There must be a few of them over the journey in twenty years or so in financial advice, the common mistakes people are making and if you could just give people one little bit of advice on how to manage their money better. We'll have that chat when we come back from this break.
Welcome back to the Money Puzzle. I'm your host, Julianne Sprague, wealth editor at The Australian, filling in for James Kirby and our guest today, Melbourne based financial advisor from First Financial, James Wrigley, a bit of a social media star at his pend to book it is out on October twenty nine, called Retire Life Ready. We've been having a chat about what you need to do to make sure you can have the retirement that you actually want, rather than being
completely bored and wondering when it all ends. There is a better way to do it. James, thanks very much for the top tips. I would have thought that part of planning for a retirement is actually just getting your house in order and being better with your money from the get go. You've been a financial advisor for a while now, is there a common mistake you see and you just want to bash your head against the wall and just wish people would up doing it.
You're probably the one that, yeah, that I'll finish meetings with people say oh I wish I just had done this and done that. Is is generally people trying to make things too complicated, Like it doesn't need to be that hard. There's paying off your house and trying to have as much money and other things to kind of
pay off that retirement. But people come to us and say, oh, do I need this trust or this company, or do I buy a fourth investment property a fifth investment property and negative gearing, and like there's so many different things out there when we need to just take a step back and say, let's just look at where you're at it, What are the things that we need to do to
help you to help you get there. On various occasions, we've had meetings with people that in the last couple of years of their working life they've decided to go and buy another investment property, and so, well, how are you ever going to pay off the debt associated with this property when you've only got another couple of years to work? How are you ever possibly going to afford
to pay off this property? They've bought it just because of the negative gearing benefits to try and save some tax without actually thinking that step further to say, how can I retire when I have all of this debt associated with the property? It ends up needing to be sold, and so they got all the transaction costs to buy and sell.
I would have thought that someone thinks, well, what tenants and they'll pay the rent and we'll just make a dent into it first couple of years and then we'll be right. But you're saying that, actually, you've overextended yourself at the wrong period of time, and now that's it, because.
You end up in this position where yet, yes, the tenant's paying your rent and that can go towards the mortgage, but there's all this kind of value tied up in the property that the money's coming in for the mortgage, but then there's nothing left over to spend. It's trying to get people around to this mindset of when it comes to retirement, it doesn't matter quite so much what the value of all of these assets are that you own.
What matters more is your ability to get your hands on some cash to spend when the fortnightly or the monthly pay stops being dropped into your bank account. So you might have this great, big pool of assets, but if you've got too much debt associated with it, any income you're generating from those investments just goes to pay off the debt and there's nothing left over for you to spend, and so you can't retire.
Well again, it goes to this inheritance pool too, So then you're going to be keeping working to pay for an asset that you don't have to have access to, but it will go to your kids.
And your grandkids something else will get it later on.
Lucky them. Does this then feed into that idea of you shouldn't really be making financial decisions for the tax purposes. So if the tax benefit is your primary motivator, probably step away.
That's it. So the tax benefit needs to be the kind of the secondary consideration that if you're whatever investing that you're doing, you're generally going to be doing that with a view to try and build your assets in one way, shape or form. And then yes, whenever you're buying something, whatever it is that you're buying, then you want to consider how do I own that? How do I fund it? Is there some way that I can optimize my tax situation here? Yes, but that shouldn't be
step one. That should be step two. It should be I'm buying this thing for some other wealth creation reason.
Is there something you think most people should be able to do and it would improve their financial position almost overnight if they started to do this one thing. So I've just thrown sort of a lot at you, But.
I think the one the one thing that we see time and time again is potentially leaving it too late to actually start the investing side of the equation. When we get this question all the time about should I pay off my mortgage fast, or should I put money in my super fund or should I do something else with this extra dollar I've got. Where should I put this dollar that I've got? The maths says you should
probably put it into your superannuation. But then people are worried about rules changing and taxes and bits.
And pieces, so you can blame them when the result the rade going on. Now, I appreciate three million dollar super balance seems like a lot to a lot of people, but it won't be indexed, and everyone's thinking, well, why would I pull more into that? Because who knows at what point will that impact me? I understand white people. That's it.
That's it. And so you've got this idea or what do I do with this dollar in a mortgage or not? And maths is one thing. Reality is a different story. But the maths suggests that you should probably pay off your mortgage a little bit slower and instead invest a little bit of money in shares or property or suprawl or whatever it might be. That the growth return and the compounding that you get on investing that dollar is
generally better than the interest saved on the mortgage. Now it's not all of one or all of the other, but for most people it's a balance of both. But we see a lot of people that have just paid off their mortgage and done nothing else.
That used to be the gold standard advice. Pay off your mortgage, do nothing else, throw it all at that, paid off as fast and as quick as you can, and then do the rest. Has that now shifted because property prices have galloped away. And if you spend all of your time and money and effort paying down that mortgage, but you'll pay it off by the time you retire, but they won't. You won't, like you said, there won't be time in market for the other investments.
Won't be much else. Yeah, And so then people are left with this decision. All of this money's tied up in my house. I haven't done much of anything else in the way of investing. Maybe I could have afforded to, Maybe I couldn't have afforded to. Who knows. It depends on someone's situation. And then they're kind of faced with
this downsizing scenario. Just say, okay, well, do I now need to sell my expensive house that I've paid off over the last twenty five years and it's grown exponentially in value to then move into something cheaper to release some money, and that can work. We kind of rather see people doing a bit of both, and depending on an individual, it might be more mortgage and less investing, and others it might be more investing and less and more gadgets about getting the.
Balance right and what about the investing piece? Should it just be go try something? It doesn't. You don't have to sit there and have this huge pool of cash sitting there. You could. It's pretty easy to get into some different investments these days. You know, maybe it's five hundred bucks for an eat. I'm not sure what you would recommend to people. But does it just get started?
It is actually just get started. Whatever it is that you do, just get started. It's so easy to just kind of put it off and put it off and put it off. And as you said, you know, if a share market investing in particular in some way, shape or form, there's so many means out there to actually start that with a really low amount of money. And then it's kind of it's the habits that you're getting into. Are you starting to put some money in, You're like, oh wow, look it's going up or it's going and
it might go down from time to time. And then as you get a pay rise, maybe you add a little bit of extra into it when you get a pay rise, and so you just kind of start slowly. Obviously with all of these things, the earlier that you can start, the better. But it's putting a few dollars in learning about it, feeling and touching it, see how
it goes. And then with confidence you then start to add more, and you add more, and you add more, and then if you do it for long enough, it works out well for you over time.
And hopefully you can write out the downturns, because they do happen, don't they. James, I feel like we're in a miraculous time. Markets are booming, property markets are going up. But I tell you what, as the financial listen me is just IM just sitting here watching it, thinking it's a matter of time. That's a matter of time, and.
Look at it happens that that's the thing. From time to time you have these downturns. If you're in the building up stage. As I say to a number of people that I talk to, the crazy thing is if you're still working and earning a salary, and you've got plenty of years of that working life ahead of you.
As crazy as this might sound, the best thing that can actually open to you is there is a downturn in the property market or the share market or whatever it is, and gives you that opportunity to buy whatever you're buying at lower prices than what you could then to get the recovery heading to retirement. That's the ideal scenario now those but the right time. Yeah, if you're retired at the other end, living off your money, then you clearly don't want it to go down, do you.
No, exactly, you justify. It's the same with interest rates when we have stories at the Australian on interest rates. It depends which side of the fence you're on. If you're relatively new into the property market, have a very significant mortgage, there's so much relief. There's those who have paid off their properties and they're living on income from savings accounts and their rates are going down.
So it's just.
Depends which start of the coin you're on. We'll get to some questions from some of the listeners in just a set, but I did want to talk to you about the social media profile that you've built up. Did you have any idea that you could build this massive social media profile when you started it? How did you get into it and what did it involve?
Not at all? So I just started. It was years and years back now. I started recording some videos and putting it up on LinkedIn. I've been actively posting other things on LinkedIn as it means to try and find new clients in the financial advice business that I work in. When I was posting on LinkedIn, they ended up sending me a message saying, hey, we're going to try video on LinkedIn. Up until that point, you couldn't put a video up. We noticed you've been pretty actively posting written content.
Would your mind being like a tester of the video thing, I said, all right, sure, I'll give it a go. And at that point I hadn't recorded a video whatsoever, and so I said, yeah, I'd give it a go, as it means kind of I stood out a little bit. Anyway, that years and years went on. Of that, not a whole lot happened. But then maybe too.
Video So you're talking about you just get your your phone. You're just as simple as that. You're just talking to your phone about simple bits of financial advice up onto LinkedIn.
Yeah, yeah, like a selfie type video. And I look back if I scrolled back far enough on my LinkedIn is where as I said it, where for as the video is a whole horrible I look at it like, oh my god, this is so bad, but you know, you just do it, and like anything is just repeat, repeat, repeat,
And now I'm really comfortable doing it. And then just in the last couple of years, the way Instagram and Facebook and TikTok and the way some of these platforms work has changed dramatically in my favor, I guess is probably the way to put it. These platforms are now work on an interests basis, not how many followers did you have. So when I opened my Instagram account that
I posted my videos on, I had no followers. But because people became interested in these kind of little finance tips that I was posting, that started to gather momentum. People watch it, they share it, and it grows, and you know, here we are today and there's a lot of followers there.
It's grown quite a lot. So how much time do you have to put into this now? So if you manage, have you found a way that if you've got an AI clone that's.
Doing it, So I have to I do it all myself. I just record some videos, but I found what I've learned over time is the more raw and kind of just I don't know, spur of the moment type video that I post the better. So I used to worry about it being perfect and record and edit it down and you know, trying like I was a newsreader on Channel seven or something like that. But it doesn't matter me just walking to the gym or I don't know, sitting here in the room where I'm recording with you.
If I got some idea in my head, I just record a video O for a minute and a HALFNM, post it and forget about it. And that has just worked so much better than trying to make it perfect. The ums and the ass.
Are just normal also, probably because it's just you as opposed to being the Channel seven or Channel nine version of James Wrigley.
Right.
I mean, if you want, you could try a newsreader voice for us now if you can affect that, give it a night ago. Okay, been there, you've done that. We do have some listeners with some questions giving you a financial advisor. I thought i'd put them to you. We'll get the answers when we come back. But there is one of our listeners who is just pondering what the point of an actual advisor actually is if they can't really actively outperform the market, and they can't really
time the market, So what's the whole point. I'll get you to respond to that when we come back. We've got another one to get to too. Well. Welcome back to the Money Puzzle. I'm your host, Julianne Sprague, joined by financial advisor James Wrigley, and we've been talking about how to get retirement ready. It is for James's new book. His first book is out on October twenty nine, Retire Life Ready. It is called We've gone through some top steps. How did enjoy wat Chat James? And now we're up
to the nitty gritty part of the money Puzzle. We have listeners who love listening to, usually James Kirby, and he will be back next week. We'll have a few questions fired in and I thought, James, I've just put this one to you from Andrew. He says, I have a question about the value of financial advisors in relation
to investment performance. So I appreciate there ore aspects of up trust structures and all these other parts of financial advisors but Andrew says it's been observed on the Money Puzzle that active stock picking does not usually beat the market over time, and that timing the market is not a winning strategy. So therefore, what exactly does a financial advisor do? Why would I pay them? Andrew wants to know, what do you reckon, James? Here you are in defense of your industry.
Yeah, yeah, defense. So that kind of the investment selection and the timing of the placing of the investments and so forth is generally part of the process that people will go through. But if you're going to a financial advisor expecting them to have some type of crystal ball that's going to help them, you know, identify better investments than someone else and the perfect timing and they when
to buy and when to sell, that's not it. You would go to a financial advisor to help you kind of work through some type of complication that you might have in your life. More most of the time it's around some type of transition, like we've been talking about retirement, and so there's this work around. Okay, you look like this today, you aspire to get to this particular point in the future. How do we connect the dots what's the path for you to follow, and what are the
steps for you to do. Now, part of that may very well be about investing. Maybe it's changing the investing that someone's doing, Maybe it's getting them to start investing in the first place. And then you'd go on to conversations around what's the individual's appetite for risk and return and reward and all of these kind of things, and then you start to look at the types of investments that might be appropriate for that client. So it's not
necessarily about stock picking. And I would never claim to say I'm going to pick the best stocks and get you the best returns. If someone's coming to us or any other financial advisor and they're suggesting that, you probably want to go and find someone else to be talking to.
Now, are there some red flags that people should be aware of when it comes to financial advisors. They're not all created ecal. I mean, obviously they are sure, come see you, James, but.
So look red flags is a difficult one that promises of returns. If someone's leading the conversation with you around promises of returns, we'll help you get better returns than your current super fund or whatever else that you're doing. That's a bit of a red flag, so no one can guarantee returns. And if they're leading with that, as I said, I'd probably wanting to go and talk to.
Someone else, maybe just go and seek a second opinion. Way are at it? Okay? Fair enough?
All right?
Now Paul has written in Now it's a little bit convolated, but I think we'll get we'll get to this. So he says, I'm interested to know if I contributed my concessional contribution, so the thirty thousand dollars concessional contribution to my super on the first day of the new financial year, and then submitted the notice of intent on the last day of the financial year, so that's thirtieth of June.
Would the super fund only deduct the fifteen percent tax on the thirteenth of June, or would I be earning the growth on the full thirty thousand rather than in Paul says twenty five thousand, five hundred after tax. So you're saying it's not substantial over twelve months, but could mean five hundred dollars extra than if I submitted the notice of intent on the first of July. So I think he's saying he's going to chuck in an extra five hundred dollars. But what happened?
Yeah, I know what he's talking about. Yep, yep, Yeah. So he's talking about the concessional superannuation contribution that you can make, which is tax deductible. Now, assuming the person asking the question isn't in paid employment and then they're collecting contributions from their employer, if you could do like he's asked in the question, putting your thirty thousand dollars at some point throughout the financial year, Now, the question kind of gets to some of the nitty gritty of
how the super funds actually operate in this space. So when you're putting your thirty thousand dollars contribution, most super funds will have a certain B pay code or something like that to notify them that they call it a particular type of contribution. Even though you notify them through a particular B pay code or whatever it might be, the super funds you'll count that as what's called a non concessional contribution, so one they don't deduct tax from.
It's not until you lodge this form that then the super fund will then kind of change that overcall it the concession or contribution and therefore deduct the tax. So, as you suggested, if you put in the contribution at the beginning of the financial year and then don't lodge this notice until the end of the financial year, they won't deduct the tax. But they're they won't deduct a
tax until the end of the financial year. So it's right that you could have more money in your superfund invested in whatever it's in, potentially earning more for the year, rather than having some tax deducted that sits in a reserve with the superfund that doesn't even go to the ATO Australia.
That seems quite clever. But you just have to make sure you do the paperwork in time, right, So you put you you put the concessional and you put your thirty k in at the beginning of the financial year, and you've just got to make sure sort of. I would say not to June thirty. I'd say maybe the middle of June to get the paperwork because the super Fund's cut it off a little bit earlier.
Yeah, so the paperwork. It's interesting that the time of that paperwork you don't have to lodge. You have to lodge that notice with your superfund the earlier of before you lodge your tax return for the particular year, okay, or the end of the following financial year. So you can leave it until after the end of the year, but don't forget it. I want to add something else
to don't forget to do it. The other missing piece of the puzzle here, though, is when you lodge your tax return, you also have to claim the tax deduction in your tax return. Over the years that I've been doing this, there's plenty of people I've come across where they've made the super contribution. They've lodged the notice with the super fund, so the superfund has it recorded properly. Even then, the superfund still reports the contribution to the
ATO is what's called a non concessional contribution. It's not until you've claimed the deduction in your tax return that the whole thing all marries up and it all gets treated properly, so you can This happens from time to time. You can fall into a position where you forget to claim it in your tax return, and so then the superfund has taken tax out, but it was never a you never claim the tax deduction forward and then can
end up with excess contributions. It's a whole mess. You need to remember to claim the tax deduction at in your tax return too.
Okay, very good advice. I'm glad I got that. Not that I'm in that particular friend of mine right now, but it has made me aware that tax returns I should probably get one done, right. Yeah. Yeah, Thank you very much for joining us on the Money's Puzzle, and good luck with the launch of the book out on October twenty nine. Retire Life ready, presuming you can get it from all good bookstores and digitally.
So you can pre order it from a whole lot of online retailers, and then the physical books from the twenty ninth. There'll be the ebook version on the kind of the kindle readers and all those kind of things, and there's also an audiobook too, so all of the different.
Formats and I'm looking forward to it. Wriggly, thank you very much, Thank you for having me, James Riggly. They're joining us now, James Kirby. He will be back in the chair next week hosting the Money Puzzle. Thank you very much for letting me step in while he's been away. If you want more financial insights, you can head over to the Australian dot com dot au slash wealth. We've got plenty of money tips sitting there for you. Thanks for joining me.