610 | Livevesting: Could Buying a Better Home Be Smarter Than Another Investment Property? - Chat with Stuart Wemyss

What if the “safe” property decision you make today is the one you regret in 20 years? 🤔 

With the rules around property investing changing, these are the decisions investors are being forced to rethink. 

Joining Ben Kingsley and Luke Oxenham is Stuart Wemyss, founder of ProSolution Private Clients, host of the Investopoly podcast and author of Wealth by Design. 

Together, they challenge some long-held assumptions about building wealth: Is diversification always a good thing? Has the family home become the ultimate tax haven? Can property still stack up without negative gearing? And was your first property ever really meant to be held forever? 

Plus, Stuart reveals what investors should be focusing on if negative gearing never returns, and why the best financial decision might not be the one that feels safest today. 

Because when you’re building wealth, Stuart argues there’s one perspective that changes everything: 

⏳ Think decades, not days. 

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Transcript

Introduction

SPEAKER_00 0:00

Now the rules of the game.

SPEAKER_03 0:02

Particularly the way that the Melbourne market is, should we be taking advantage of the current slump and maybe purchasing that higher quality asset?

SPEAKER_02 0:10

I think it's probably one of the common mistakes people commit with live investing investing.

SPEAKER_01 0:17

You're tuning in to the Property Couch, Australia's number one property, finance, and money podcast. Featuring the titans of the industry since 2015. We're trusted by tens of thousands of investors on their journey to financial peace. This show is powered by more.

SPEAKER_00 0:35

Thanks, Bobby, and yes, we have a magical show again today for you. We have a very, very special guest who I'll introduce you to in a minute. Obviously, I'll also have Luke Oxenham, who's one of our couch crew. Welcome back, mate. And I'm going to hold on introducing our special guest for a moment. I want to get through a little bit of housekeeping first. Number one, our case studies from our latest book. We have updated those seven case studies and added a bonus case study. So if you want to join the wait list to get access to those updated case studies, post the changes to negative gearing and capital gains tax, all you need to do is go to the propertycouch.com.au forward slash case study and you can join that waste list. That will be out really soon. We also have a couple of other important announcements. The PIPA, so the property investment professionals of Australia do an annual survey. It's up, I think, to the 12th year, and it's the annual investor sentiment survey. There is a link in the show notes. We've talked about it every year because uh when I was the the the chair of that association, I instigated this survey, and it's the annual survey where we attempt to get over 1,000 property investors insights into what's happening in the market. And there is obviously been an enormous amount of change. So there's a special section in there in terms of the reactions and the intended behaviors that we want to see in terms of helping us prosecute a case in terms of whether this is a good attack on asset wealth or aspiration in this country. So that's an important one. So please, I know it's gonna take about 20 minutes to fill it in, but it's vital data. Um, so please take a moment to do that because with that data, we can prosecute a case to potentially get it repealed. And we're gonna talk about that with our special guest in a minute. And then finally, um, next week is our mid-year property market outlook.

Stuart Weems Returns 3

SPEAKER_00 2:28

Well, the market we, you know, talk about coming into winter. It is a very challenging market out there at the moment. So I've got a very special guest joining me next week, someone who might be familiar to you who might be also joining. So you may have worked that out. But anyway, um, that's on next week's show. Anyway, today's show is all about unpacking a couple of important things that have been happening around the market post the tax changes. And I have brought back Stuart Williams. Welcome back, mate.

SPEAKER_02 2:56

Thank you. Thanks for having me. I'm glad I've got the shirt and jumper uniform going. It's a good thing you got the text. Just a little bit of background.

SPEAKER_00 3:03

And if you don't know who Stuart Williams is, well, I don't know where you've been living, you may be living under a rock. He is the founder of Pro Solutions Private Office. He's also the author of Rules of the Lending Game, Investopoly, and his latest book, which we're going to be talking about today, is Wealth by Design. So we'll be talking about that later in the show. And obviously, he's become one of Australia's leading commentators when it comes to all things around investing and wealth building. We had him on episode 81. We had him on episode 172, where we talked about the five rules of mastering building out wealth. And then episode 2000, I'm sorry, 2212, 212, uh, in 2019, where we talked post-royal commission, and we actually talked about labor and negative gear. Oh, right. Okay, there you go. We've got exactly that area. So, Stu, obviously the first question to you, mate, is what's what's what have been what have been some of the questions you've been getting from your clients and also from obviously people

What Investors Are Asking Right Now 4

SPEAKER_00 4:03

who follow you on your very successful podcast, Investopoly. What have you been sort of fielding those questions around?

SPEAKER_02 4:09

Well, I mean, people just want to know how does it change their strategy? How does it change their approach? Um, and should it change their approach? And to what extent, uh, you know, what timing do they need to change? So, I mean, there's a lot of questions out there. Of course, uh, you know, the tax settings have been around for a long time. And anyone that starts educating themselves in property understands the benefits of negative gearing and compounding capital growth and holding on to a growth asset longer term. So, you know, we've been hammered with these themes for many decades, and and now they're the the landscape's changed. So, of course, people are now thinking, does it change and and how should I accommodate it?

SPEAKER_00 4:53

And so off the back of that, um, are they thinking around some of those behavioural things? Are they asking more questions about upgrading the family home as opposed to classical investing? Because obviously, you know, we got to meet over 10 years ago, maybe 15 years ago, where you were writing for uh in one of the property magazines, um, and we were obviously, you know, debating around um the different types of asset selection that you and I liked, um, which was the fundamental ones, the investment grade stuff. And of course, you've evolved in terms of not only doing property but also more broader wealth, and you've also evolved into helping, you know, sort of high net worth individuals or or or business owners sort of build out the you know their mastery of wealth creation and frameworks around that. So, you know, what are some of the the questions you've been fielding from you know from them around you know what should they do?

SPEAKER_02 5:49

Yeah, and I guess I mean the the starting point to some extent, and it sounds kind of crazy to say on this podcast, but you know, property is not the only game in town. Yes. So, you know, we should sort of start from that context to understand that you know that the attraction to property, that there's a fundamental attraction to property, which we will talk about. And that could be from an asset class perspective, it could be from a personal comfort perspective, but also um property decisions and decisions, you know, on how I buy my home are intrinsically interlinked with wealth creation, which I don't think accountants and traditional financial planners really understand well enough. Um, you know, it's it's a goals-based approach, really. I mean, okay, yes, we want to have a comfortable, enjoy enjoyable retirement, but also we need to enjoy life along the way, which means living in an area that serves us, you know, a location where it's close to amenities and family and schools and these sorts of things, right? So I think that I think that's always been there in terms of really making sure that we take a holistic view and um understanding that a property strategy, a property investment strategy, can one of its um big components can be helping lifestyle goals like buying a home, you know, whether it's upgrading a home or getting into the home market, whatever it might be.

Why Live Vesting Matters More Than Ever

SPEAKER_03 7:13

And that's one of those things that's I'm currently going through at the moment. So, you know, that live vesting that you talk about is really something that kind of hit home when I started doing my research for this episode.

SPEAKER_00 7:22

So and and so let's let's jump to that and we'll come back to property investing. Sure. So um the principal place of residence now is a tax haven, yep, in in some respects. And so there is a there's debate certainly in terms of the work that Luke and and our team are doing. Um the stuff that's surfacing itself is obviously the grandfathering and negative gearing, um, has then uh people might be in their forever home, but their dream home now might be a possibility. And so we're we're you know, we're seeing conversations around interest-only lending to preserve uh some of that uh higher debt levels if we want to turn our current home into an investment property. And then, of course, if we are going to upgrade the value of those offset accounts is also quite critical as part of that story.

SPEAKER_02 8:12

Yeah. And I think it goes to building a long-term strategy, yeah, you know, and having a long-term aim. So what is it? Okay, we own this home now. We know our forever home is in this location, this value. Um, and we also know that we want to, you know, the flexibility to reduce working hours at in our mid-50s or retire and fall by 60, whatever it might be. But you want those broad goals. Yeah. And it it starts there. It's always sort of started there. Yep. Uh, and we've got to have a firm understanding of then how do we use property to help us achieve those goals? How do we use super? How do we use uh the share market? But certainly the two things that have come out of the changes, the two, the two opportunities that look most attractive from a taxation perspective is the family home and super. Super's been relatively untouched as well.

SPEAKER_03 9:01

I'm seeing a pretty big uh sort of shift over to that own, particularly that upgrade sort of space, which is timely for me because I'm trying to do the same thing.

SPEAKER_00 9:09

So yeah, or I I think it's gonna happen, but I but I think it's also let's let's dig a little deeper into some of the the modeling you've done. Um,

Is Property Investing Still Worth It? 6

SPEAKER_00 9:18

so just obviously on this podcast, yes, we've always been proactive in terms of a couple of properties in concert with super, and now that the super guarantees 12%, um, if you've got 20, 30 or so years, that in itself is going to build up a significant nest egg. So one or two supplementary properties is part of that story, and that's what we wanted to dig in a little around today, because the reality is that um investment grade property with gearing um is still a viable option in terms of residential. But you've you've also, you know, with these changes, right? It does challenge some of that thinking. So take us through some of the work you've done around the internal rates of return and and what you've observed in regards to those tax changes, the genuine headwinds um that might be in play.

SPEAKER_02 10:06

Yeah, so I mean, there's obviously two sides to the coin here. You it with and we've sort of break it down to fundamentals, is I go and buy a property, I borrow to buy a property. I don't put any of my own capital into it because I'm borrowing 100% typically. Uh, and so the only capital I need to contribute is towards its holding costs. Yeah. So that's what I'm contributing. Now, what am I receiving? I'm receiving capital growth. In the in the long run, we hope the property might double every 10 to 12 years. I hold it for, you know, 30

The Negative Gearing Reality Check 7

SPEAKER_02 10:37

years, I sell it for six times what I pay for it. That's done all the heavy lifting, and you know, I'm off to the races. The problem with negative or the quarantining of negative gearing is that now I've got to previously I I obtained a tax deduction. Yes. And if I was entitled to that tax deduction, I was on the second highest marginal rate, 39% of that outflow was being paid essentially by the federal government. Um, if that's quarantined and I don't get to use that, say, 10 years down the track, then that's equivalent of 21 cents. Or if it's 15 years down the track, which is probably more likely, it's about 15 cents, right? So it really dramatically reduces the benefit of negative gearing. But the problem is uh I don't get more capital growth in return just because my property, I don't get a tax deduction for the property. Of course, I don't get that capital growth in return. So that's what um pulls the mathematically the return equation, you know, out of my favor. And I worked out about an after-tax internal rate of return reduced about 11% to about 8.5%. So it's a significant reduction, 8.5% after tax still isn't bad. It's not a terrible outcome, but of course it's not as good as 11%. The the two elements that we can then play with are are rental yield and capital growth. Obviously, rental yield and particularly our starting, our purchasing rental yield is so important because it dictates the cash flow of the property over the holding period, pretty much, as long as rentals don't go backwards, of course. Now, of course, the big variable, one of the big variables is interest rates over time, so that's going to go up and down. We know that. But if we look at a sort of a long-term average, so I think structurally, in some parts of Australia, rental yields are historically very attractive. And if we think that, you know, what is the implications of the removal of negative gearing, does it push rents higher uh on a uh on a both a percentage and and uh actual dollar value. Over a dollar value. Yeah. I think most of us agree, yes, there's gonna be to what extent? No one really knows, but there's gonna be upward pressure. Yeah, agreed. And then the the next element then is capital growth. So how do I, and I I sort of uh I spoke about this in um Wealth by Design as well, in terms of really understanding property cycles and something that I didn't really cover in Investopoly, the previous book. So um, if you can then buy into a market that might benefit from some mean reversion at a time when rental yields are quite elevated, uh then it sort of certainly helps that internal rate of return calculation. Because yes, I'm not getting negative gearing, but I'm getting a much higher rental yield. So that's going to mean the holding costs are a little bit lower. Hopefully, interest rates are on the way down in the next couple of years. Yeah. Look, that's temporary, interest rates are gonna change, but but my holding costs will maybe get better, like in terms of more affordable. And then if I'm buying into a market that's sort of primed for some growth, then at least in the first 10 years, I'm gonna get above average capital growth. In uh, and that's important because my property is um probably gonna cost me the most in the first 10 years. Of course, as we know, yeah, uh rents rise and inflation eats away at at the uh loan repayments, really, in um in

Is Melbourne Australia's Biggest Opportunity? 8

SPEAKER_02 13:51

real terms. So, you know, that first 10 years is is really difficult. So I've done some work on particularly Melbourne and looked at the sort of log linear relationship over sort of 45 years of data, and that's a lot of words. But essentially what I've try to do is say if we believe that property grows on average six to seven percent per annum over a very long period of time.

SPEAKER_00 14:14

Historically, that's been the historically that's been time.

SPEAKER_02 14:17

And my view would be yes, in the early 80s, maybe 7% was a reasonable average. I think it's coming down. And so in my analysis, I've said starting point is seven is is normal growth today at six. Um, and then what we try and do is work out what should the median house price, what should the median apartment price be in Melbourne given those growth rates? Yes. And those numbers tell us that uh the median house price should be 20% higher than what it is today, the median apartment price should be 30% higher. That's not saying that houses are undervalued by 20% or apartments by 30%. It's just saying if growth was normal, um, that's where they would be. And the thing is that if we have a look over history, you know, going back 10, 13 years ago, the Melbourne market just finished a 20-year growth cycle. So a lot of people are saying, what's happened to Melbourne? There's been no growth, it's a basket case, you know, relative to the other capital cities. Yes. And look, we we talk about the Victorian government there, it's a bit of a basket. I'm not defending that, but a big contribution to the underperformance more recently is a 20-year growth cycle, which is it hasn't happened in any other market.

SPEAKER_03 15:31

Yeah, yeah. And I had a few questions around, well, particularly again, because I'm looking for that in that Melbourne market. So yes. Um, but also I just wanted to touch back a little bit around the the live vesting piece around there because I think that ties in a little bit for what I'm seeing when I'm out there every weekend trying to look for property.

Should You Upgrade Your Home Instead? 9

SPEAKER_03 15:49

Um, so just to give you a quick little bit of backstory. So uh my wife and I, we have an apartment at the moment that we're looking to upgrade. Um, we were previously trying to work out if we want to try and keep some of our borrowing capacity to kind of then sort of move into investing because obviously work we've been every day. Um so but we're now thinking potentially, particularly with the way that the Melbourne market is, should we be taking advantage of the current slump and maybe purchasing that higher quality asset? Uh maybe not stretching ourselves, but maybe just kind of pushing a little bit to try and get in there. Um so my thought was okay, well, are we better looking for something that's potentially going to be good enough for us for the next, say, five years, or should we be thinking maybe longer term for purchasing something for that longer hold?

SPEAKER_02 16:36

Yeah. I think um, and I talk about it in the book as well, uh quality first, then price, then diversification is third. In terms of building out a strategy and asset allocation, and that applies whether we're building up a property portfolio or both a share and property portfolio, whatever you're looking at, whatever asset classes. Obviously, quality is fundamental. You talk about it a lot on this show. But price, the it's not quality at any price, it's quality at a good price, at an attractive price, because capital growth is going to be driven potentially by two contributions. Firstly, the underlying asset of the value is improving, which is fundamentally what's quality is driving, and then it's asset repricing. So if I'm buying a really good quality asset for a cheap price, if I can go and buy some CBA shares for 50 bucks, you know, it's it's it's it's a no-brainer, right? My returns over the next 10 years are going to be great because my entry price was good, but also it's a quality stock. So I bought, well, same same with property. And then diversification is third. So I would rather put all my money in a high-quality asset and buy that asset for an attractive price and be all in and have all my eggs in one basket than just notionally diversify. And we see it all the time in property. People go and I've got a two million dollar budget, and they go and buy four properties. Yeah, yeah.

SPEAKER_03 17:58

You know, I mean, that was actually my next question as well, because my concern was thinking about like concentration

The Most Common Live Vesting Mistake 10

SPEAKER_03 18:04

risk, right? So using all of my capacity for the one asset as opposed to trying to keep options on the table.

SPEAKER_02 18:11

Yep. Um it's uh, you know, I think it's probably one of the common mistakes people uh um commit with with live investing. Live vesting. People tend to think, okay, I'm buying a home, and yes, we don't buy a home predominantly to build wealth, although it can accidentally become many Australians best investment.

SPEAKER_00 18:34

So it it's it's a meaningful thing.

SPEAKER_02 18:37

Yeah, so I think we can take an investment lens uh towards that decision. Yep. And so it's I think it's erroneous quite often to approach it and say, well, I need to minimize how much I'm spending on my home because it's a personal use asset. Yeah. To do live vesting properly or well or or to you know to the greatest effect, you've got to be all in. And so really it's about, you know, if I've got an existing asset that's gonna have quarantine negative gearing, um, like you, Luke, yeah, the the temptation is to hang on to it. And that's and if you can, that's fantastic. Of course you should. Yep. Um, but quite often we have these conversations where we've got these existing assets, they're good assets. But the whole point of buying that asset was to help you to get to the next step, right? So sometimes you've just got to go, well, I've got to sell everything. I'm gonna put all my borrowing capacity towards buying this one asset. So quite often we counsel clients about, you know, they come to us and say, okay, I want to do live vesting, I've set a budget of one and a half. Okay, that's great. But could you go to one eight? And I'm not saying just more is always better.

SPEAKER_04 19:44

Yeah.

SPEAKER_02 19:45

It's not always appropriate, right? But if it gets us into a better price point, a better asset, an asset that's going to last longer than five years, an asset that has more land that we can then improve the dwelling later on, um, that's going to serve them much better than trying to, you know, um play at the fringes and minimize the budget a little bit, but then sort of only get 80% of the strategy impact.

SPEAKER_03 20:09

And that's that's exactly what I'm going through at the moment. Between do we buy something that's kind of, you know, well within budget that would be comfortable, or whether it's a case of okay, well, we should be buying that asset that's you know, both in the the right area, but you know, this one has potential for us to say when we do build a family and expand and renovate and everything from there, but it's just that next bracket. Yes.

SPEAKER_00 20:31

Success leaves clues, right? I mean, if you think about some of the most sage advice from Auron Buffett as a value investor was you know, I look for value, but when I'm looking for value, I'm looking for quality. And I wanna I want to own these businesses for decades, not necessarily just for the short term. So he's very patient, which comes back to your point. I mean, obviously, prior to the negative gear and capital gain tax changes, we were very steadfast in regards to um buy whenever you can afford to buy and hold for the long term. And and the cyclical nature, we were like, we can look through that. Yep. Because ultimately, now, again, strong convictions for the for the rules of the game then. Now, the rules of the game has changed.

Why Timing Matters Again 11

SPEAKER_00 21:19

And now we've got a different set of rules, which brings you to your point, Stu, which is around this whole idea that the cycle timing now becomes even more important, right? You know, we've always said if you own a property in Sydney or if you own a property in Melbourne, you've you've got an insurance policy in terms of being in an agglomeration economy and ultimately places where people want to live, higher income happens from there, greater scarcity, greater wealth transfer, all of those things bode well for future long term scarcity and land value as part of that. But now, to the point, you you've you've made an enhancement in your book around this whole concept of um looking at um timing of the market as opposed to time.

SPEAKER_02 22:00

Yeah, and it's it's it's really value aware asset allocation as I've described in in the book. So, you know, I I don't want to get too I mean the entry and exit costs with property are substantial. You don't have that same situation in the share market. So it still very much is a long-term play. And also the the mathematics around compounding capital growth and holding an asset for 30 years versus 10 years haven't changed either. But it's really a question of if I'm putting more capital into a market at the time, I need to find the best place for that capital. Where are the best returns? So if I buy Melbourne today because I think it's it's intrinsically undervalued on a on an absolute basis and relative basis, which I do, that's great. But that doesn't necessarily mean I sell Melbourne in 10 years' time. No. If there's a growth cycle, right? The compounding capital growth still works. What helps me is that I get higher than average capital growth in the initial period of ownership when my cash flow is the worst. And that's gonna help the asset allocation, that's gonna help the internal rate of return. That's actually gonna help me build wealth in actual dollars. And it's it's good to look at internal rate of return, but you've got to also look at the dollars because that's how we're funding wealth, of

Should You Cash Out Or Hold? 12

SPEAKER_02 23:16

course. That's how we're funding retirement.

SPEAKER_00 23:18

Give me a five or a five and a half percent on two million dollars, yes, as opposed to a you know, a seven or an eight percent on $2,500. You know, it's just not gonna, it's just not gonna be the same. What's also interesting, um, Stuart, that we've also um observed a little bit of is um a lot of our clients who have bought in Perth or in Queensland in the last six or seven years have done incredibly well. Yeah. Right? Obviously, the ones who we bought in Melbourne for are patiently waiting. And, you know, we've we've we've said, you know, like at the end of the day, we didn't think uh the economic activity in the government would be that that prone to stuffing the economy down here. And we think that that will improve over time. But um, they're now debating, they're having household debates around cashing in, you know, right? And then uh I'm gonna be debt-free on the principal place of residence. And it's it's you know, so it's this debate that's going on right now between um the bird in the hand now and sort of taking that money and and sort of feeling safe about that and and maybe fast-forwarding some of our um goals and activities, like you know, travel with the kids or whatever it might be, but they're still forgetting about the you know, what did we start this journey in the first place? I mean, ultimately, this is only one cycle, people. You know, there's two or three other cycles. And so here you go, look.

SPEAKER_03 24:36

Oh, I was just gonna say it can be like very powerful, I think, that thought process of having your own orc with no debt against it.

SPEAKER_00 24:42

Oh, it's incredibly, I mean, it it feels very and that's why some people do it, right? It's not they move away from the delayed gratification because it's like, I'm gonna bank my gains, I'm gonna put it in here. Stu, when you when you are talking to clients like that, I mean it's always case by case, but what's your general view when people start to lower the lens and just think about the here and now versus what's what's gonna happen over the decades?

Think Decades, Not Days 13

SPEAKER_02 25:07

I don't want to beat you to death with it, but rule number one in the book is uh think decades, not days. So it's always, I mean, the best thing we can always do is ask ourselves in 20 or 30 years' time, what will I look back and say, what was the best decision I made in 2026? Right. And how many times have we all heard clients say, I used to own a property in that street, I sold it 20 years ago or 10 years ago, whatever it is, that property would be worth X today. You hear it all the time. Now, that's not that doesn't necessarily mean, as I said, never sell anything. Sometimes you need to as a stepping stone. But the way I would look at it is if I'm selling, what am I doing with that equity? And is is that compelling? So if um to loot situation, if he's got an apartment and he's selling that and taking that equity and putting in a better quality asset, a house somewhere that's and he's buying that attractively, uh that that can have merit. Yes. But if it's really just I've made some good gains, yeah, you know, let's take them out, let's run.

SPEAKER_00 26:07

It's the simplest decision.

SPEAKER_03 26:09

Trying to hold it for the sake of negative gearing for the well, I mean, negative gearing helps, right? But if it's the difference between getting the home for my family or having an investment property, but then having a similar kind of step sideways, then I think Yeah, well, but but again, it's that it's that simple notion of um it's an easier decision to make because it's a known quantity.

SPEAKER_00 26:31

The the future is an unknown quantity for me. And so, and I and I I don't play in this space like you guys do. And so we're sitting down, husband and wife, sitting about going, there's it's you know, three or four hundred thousand dollars, maybe we've got to pay a hundred thousand in tax or whatever. But like that's that's real money, and that's gonna make a difference in in how we live our lives today without looking in the decades in the future. So we would we would remind people, um, if you are having that debate, is go back to your professional advisor who can just be that guide and that level head in that conversation. Because we all agree that if it is about, okay, well, what are we gonna do with that money? Are we gonna we're gonna land that into something that is um upgrading the asset into a better, you know, and we're gonna have and we create better memories. But if we're going to uh crystallize that gain and then spend that on discretionary and and experiences just now, just be mindful of of what that trade-off can look like because it makes it it kills the momentum into the story of what you're trying to build out. So I so we we we just sort of say, please, we understand it, it feels good and it feels like you know you've you've locked away some of the, but I don't think necessarily that's gonna be, you know, to to Stuart's point before, is like if I look back in the decades, it's not necessarily gonna play itself out.

SPEAKER_02 27:51

And tax changes, right? We we're gonna probably talk about it a little bit later. Like, okay, we've got these tax settings today. Yeah, and nothing tells us they're gonna be set in stone. Yeah. We had GST introduced in 2000. A lot of people I shouldn't even mention these things. I just may point out how old I am. But you know, though we that was introduced in 2000. Like these things are happening, lots of taxation changes, um, different governments, different policies, different risks, wars, different interest rate cycles. Property's seen it all before. Like, yes, we've had a growth cycle in Adelaide and Brisbane and Perth, and maybe they'll have a flatter cycle, who knows, coming up. Um, probability is that is the case. But we also know that you've got to hold for multiple cycles to really get that compounding capital growth. That's the problem. That's the evidence. That's the evidence. You can't argue with the evidence.

SPEAKER_00 28:38

Now, speaking of evidence, so obviously, you know, we've got strongly held convictions uh until the rules change and the rules have changed. New versus established. Um,

New vs Established Property 14

SPEAKER_00 28:49

you've had time now to digest what that looks like. Um, what sort of views are you forming around the new versus established side of the market? Does does new move you into uh a different thought process and execution? Or are you still sitting back saying, no, no, take me back to the fundamentals?

SPEAKER_02 29:08

It's quality first. Yep. Quality first, then price, then diversification, as I mentioned. So um it falls over on the quality front. I'm buying a property probably where land is abundant rather than scarce. Yep. I'm buying an asset that doesn't have proven performance, doesn't have runs on the board, it's selling for the first time. So I don't really know what it's really worth until it transacts in the secondary market. Um, uh the tax benefits are unique to the first owner, which is not ideal because to what extent will they be capitalized in the price? And then when I go and sell that asset, of course, the next buyer's not going to get negative gearing. So I don't really want to prepay uh for that. Um, so I definitely steer clear of um uh a new build. I mean, if you can't get yourself all if your strategy doesn't suit investing in established property, then look broader beyond the the asset classes.

Don't Chase Tax Benefits 15

SPEAKER_02 30:03

You know, there's always other things to invest in and to do with your money. The the worst thing you can do is, you know, just try and chase tax benefits. And that's true. I mean, I remember doing uh talking about that at seminars 20 years ago. Yeah, yeah, yeah, yeah. You know, because a lot of people used to bang on about negative gear cases and all these sorts of interest capitalization and yep, yeah, all these sorts of things. And uh, you know, never buy or never enter into an investment strategy or buy an investment primarily because of tax benefits. Uh you've got to buy it because it it's gonna build you wealth. Yep.

SPEAKER_03 30:36

You know, it's the way of construction as well, like you know, it's just mortgage broker brainware thinking about like you've got borrowing capacity getting harder, you've got the cost of construction getting more expensive, and it's very, very common for clients to suddenly need more money as the bank's telling them every six weeks that that that's decreasing. Um so it's just not something that I would personally be like, I want to get in there and look to do construction, not even not even thinking about the the tax implications on the side.

SPEAKER_00 31:32

We've we've formed a view that um that if you can find a new build in an established area, so whether that's the inner s you know, sort of very, very nice high scarcity or the middle ring, then it's worth considering. But that the price to play, yeah. We're we're you know, we're studying that deeply in respect of um how much premium have they put on the new build. So all of a sudden you're actually you've just paid your or you've paid a price that's actually just gonna give you your cash flow refund. And so all of a sudden it's like, well, all you've done is really you know, you paid a too much of a premium and and ultimately you don't have that land value that's gonna deliver you that ultimate return.

SPEAKER_02 32:15

And new builds in established areas tend to be not always, but tend to be in impaired locations, busy main road. Yes. Just because the land, the land cost is more economical for the developer rather than in a quiet, you know, quiet, nice street. So but but um theoretically, yeah, it could work in an established.

SPEAKER_00 32:35

We're keeping an eye on it, and it's certainly from a buyer's agency point of view, if we can find where we're getting fair price on the new build, so we can analyse that because obviously it's very easy to analyze the cost best cost per square meter of dirt. So we're just obviously looking at that overlay and and we're looking at sort of getting you know independent assessment in terms of how much of a premium is being charged by the developer. Because obviously it's usually gonna be one into two or one into three. Like we don't we don't want to play if it's 17 of the same townhouse. Yeah. So there's no there's no local scarcity in in respect of that. So that's gonna be an interesting.

SPEAKER_02 33:11

And a big a big um issue will be for investors to extrapolate previous growth, you know, because we've got to understand that certainly during that from the start of COVID to today, building costs have increased substantially. Substantially. We normally they increase four to five percent over the long run. So that and that'll be imputed into prices. So it's gonna be easy for people or for agents to sell new builds to say, look, this townhouse would have sold for 500,000 six years ago, and today it's selling for 900. Look at the growth. Now that, yes, for that someone, whoever bought that in yeah five years ago, great, but a lot of that has been uh cost. Well, that's right.

SPEAKER_00 33:49

I mean I mean, there's two ways in which um you can technically value, you know, the property. It's obviously the land plus the replacement cost, which is the classic way we do it in Resi, or it's it's a premium that's being paid for the privilege to access that land and that location and the amenity around that, right? And that's what that's what we call investment grade, you know, land and investment grade locations as part of that particular story. Um, I

Structuring Under The New Rules 16

SPEAKER_00 34:13

do want to uh double click, you know, we've got a unique um situation here, Stuart. You're you're obviously uh a tax advisor, um, so you're qualified in tax, you're qualified as a financial planner, and also mortgage broking and the like. Um, and so you sit in this area where you're looking at structures. So obviously we can buy in our individual names, we can buy in companies, unit trusts, self-managed super funds. So we're seeing a lot of change in that area. Um, what are some of the areas that you're thinking about when it comes to outside of the individual? Or let's no, let's start with the individual. Let's start with uh the individual and couples. How are you thinking about how they may be able to structure their borrowings to accommodate for what you were referring to before, which is the carried for loss and or the quarantine of those, which is the cash flow hit, isn't it?

SPEAKER_02 35:06

Yes, yeah, it is. Um look, uh the first thing we thought about was are there any ownership structures that we could utilize to sort of navigate some of these tax changes? And the conclusion we reach is no. Um we we felt that would be too aggressive. And um, and if people started to do it, they'd shut it down anyway, they just change the the laws. So um I think you know, sometimes you get these very creative um propositions or sales spill for some people. I'd just be really cautious about that and get a second opinion if someone came to you and said, Oh, buying a company because you're gonna get the negative gearing. I'd just be very cautious.

SPEAKER_00 35:46

I think that is gonna surface. I think there's gonna be um on social media we're already seeing it now. And we saw that with borrowing capacity for trust landing over the last few years. Exactly right. Yeah, so so we're gonna see we're gonna see an increase amount of uh sprukers, let's call them that, yep, who we're gonna talk about in the county's letter. We ought to give you access to that through a company structure, they're gonna be claiming that I I will be able to um uh claim the the negative gearing against the borrowings that I give to the company. Yep. Um, and the company's receiving the dividend uh money coming through to the individuals, the owners, the shareholders of the company. And so that's one strategy that we'll see play out. And I reckon over the next sort of three to six months we'll see whether it's got legs, but to the point, what's the dominant purpose test? Does it, you know, does it meet the part four A tax avoidance laws in there? So that's just something that we'll just put out there as a warning for everyone. We, you know, we're running the ruler over it. We've got our you know chief tax advisor and Julie Hartman looking at that as at the moment. And we think maybe for for certain cases, but not mainstream. You know, this is what happened in the Hart case where interest capitalization was promoted as a tax scheme. Yes. And so if anyone's promoting it as a tax scheme, then ultimately, to your point, it's going to be scrutinized and potentially changed. So let's go back to the individuals then, Stu. Like unit trusts, uh no. Um, any type of um, you know, and obviously self-managed super funds, we're now starting to see that also play itself. We're seeing some creative thinking around self-managed super funds in terms of setting up a unit trust and lending money to the unit trust from the super. And but please, again, be careful. Um, it's you know, some of that is highly sophisticated, and again, it shouldn't be done for tax purposes only. So we'll see a couple of those things. So let's circle back to the mum and dad investor, and let's and let's, you know, the aspiring Australian and see how we might be able to contemplate the possibility of structuring for them.

SPEAKER_02 37:43

So let's use some sort of broad numbers. I won't be perfectly correct, but just like very broad. Yeah, very illustration purpose. Yeah. This is not advice. So let's say you've got an investment property, it produces

A Smarter Cash Flow Strategy

SPEAKER_02 37:54

$20,000 a year after expenses, net rental income, after property management, insurance, these sorts of things. The loan costs you $50,000 a year in interest. So there's a $30,000 sort of cost or negative gearing. Yeah. Yep. Previously, you might have been able to, if you're on the second highest or uh, you know, not in the highest marginal tax rate, you might have got a $10,000 negative gearing benefit. So really, then the property costs you $20,000. But we know now that that negative gearing benefit is quarantined carried forward, you'll get a benefit, um, but sometime in the future. So one way that we can look for a cash flow strategy is say, okay, well, we'll pay the $20,000 from our cash flow because that's what we're always going to do, but we'll borrow the $10,000. And uh the rationale behind that is I just want to match my cash flow with my tax deduction. You know, I'm not getting a tax deduction today. Yeah. I'll get it in 10 or 15 years' time when the property starts turning positive or I sell it. Uh, and then that's when I'll repay the loan. And you might not use that strategy, you know, forever, like for the whole ownership period, but it might get you through that. I mean, the the most difficult time to hold a property typically is the first few years, right? You've got some maintenance requests because you've got some new tenants in there. You know, the the market might not move perfectly straight lines. So the first couple of years you might not see much growth. Um, so you're you're paying out a lot of cash flow and getting nothing in return. It's really challenging. But one way we can get our way through that is maybe by capitalizing or borrowing some of those holding costs. I'm not saying that's a way to make it more affordable.

SPEAKER_00 39:30

Uh, you know, because you're going to be paying, yep. Yeah, don't you want to credit it?

SPEAKER_02 39:34

I think you'd want to be in a situation if I absolutely had to, I could still pay the $30,000. But you might use it as a way of keeping more optionality. So this is only going to cost me $20,000 my cash flow. So I can still make additional super contributions, extra home loan repayments. You know, that I'm I don't have I'm minimizing the opportunity cost associated with not getting the immediate negative gearing better.

SPEAKER_03 39:56

That first year or so, like that's the biggest that loan's ever going to be, right? So and I think you know, thinking back at my own personal case as well, where having that buffer up front, I think is really, really critical because it's much better to have it have it sit there and then help your cash flow than it is to then have to go back to the bank and ask, hey, can we have some more? Which sometimes might not be a case if you know using a guarantor or you know, you've already used the LMI that's on there as well.

SPEAKER_00 40:22

Well, we we used to model these, you know, years ago, we always used to put a buffer in, you know, for those types of situations, especially, you know, if you've uh you're a young couple, um, you bought your first home, um, it's appreciated by $80,000 or whatever. Now, these days, if it's appreciated by $150 or so thousand dollars, we would get that buffer out because we know that you know we might be going down to one income whilst we start our family. So we just wanted to carry that. Now, again, we would spend a lot of time in that modeling and coaching the clients to understand that this is not your money. Um, you can't use this for, you know, for personal use. Yep. Um, it's just there as a buffer and emergency. But in this particular case, what you're saying, Stuart, is yes, we'll we'll basically buffer in. So we can do, let's say, we do the first five years, right? So we're sort of saying here's the shortfall. So that shortfall over that first five years might equate to say $55,000. Yep. And then we're so we're borrowing that and we're just going to park that there and it's going to be available. And ultimately any interest associated with that, because rent is still coming into that. So it's still covering that sort of, it's not interest capitalizing in the heart case sense, which was, and for those people who don't know, we're talking about a case where um these uh accountants and property sprookers were were writing schemes around interest capitalize from that equity on your investment property and don't pay any repayments on that. Take all of the income that you got from the property and put that on your principal home and pay down your personal debt. And the and the ATO did not like that. Um and they won on the grounds not of interest capitalization, that was fine, but they won on the grounds it was a scheme, um, which obviously uh you know was in breach of part four A of the tax act, which is tax avoidance. And so there's a few nuances in there. But it does come to the point where this is going to be available for some players because the reality is, and and I'm sure you'll see this as well, it's what what these new laws have done is they've really impacted first-timers, first-time investors trying to get into the game. For for people like myself and for people who've got one or two properties and they've been using offset accounts really well, those offset funds can now be moved around. And so if I want to buy one more property, I can potentially dump all of that money into that offset. And so what

What Existing Investors Can Do Now

SPEAKER_00 42:48

was going to be a negatively geared property is now going to be neutral or positively geared. And now I've got, because remember, it's quarantined to rental income. So ultimately, my aggregate rental income, I've now got a negatively good property and now I've got a neutral or slightly put. So I'm getting that benefit today. So there for existing property investors, this is where you absolutely need to talk to a qualified property investment advisor or you know, an investment savvy broker to explain to you what's going to be happening here. Because once you see those models, once you understand that the movement and the strategy and structure around that lending is going to be really powerful, isn't it? Sure.

SPEAKER_02 43:26

Loan structure is, you know, always been important. And every time we come across something every few years, it just reinforces that. So, you know, whether you're live vesting and giving yourself the flexibility to do that down the track, you know, whether it's sort of managing cash flow, getting into the property market, utilizing offset accounts. Um, I've always said the best time to borrow is when you don't need it. Like I'd much rather take my clients to the bank and go, let's lock in this equity. What are they going to use it for? Well, we have no idea. There's no plans. Um, I've always done that myself personally. I'm sure you're the same bank.

SPEAKER_00 43:58

Oh, yeah, it's the top of the cycle too. You know, we've been calling that out for yeah, yeah. We've been calling this out for the last three months. And if it hasn't landed, we're at the top of the cycle in some of those Queensland markets, in the Perth market, in the Adelaide market, in a lot of regional towns. If you're not selling, get your equity out. Oh, yeah. It's absolutely critical right now to get that equity out and just park it there for the next opportunity that comes that way.

SPEAKER_03 44:24

Off the back of that, in terms of negative gearing. Do we think changes are potentially going to be reversed in the near future? Do we sort of

Could Negative Gearing Be Reversed? 19

SPEAKER_03 44:33

see sentiment supporting that? Or what are your thoughts around what's going to be happening for negative carrying?

SPEAKER_02 44:37

Look, I think it's really interesting because as a second time I'll say uh you know, uh think decades, not not days. Which is and I think that's going to be uh um something to really think carefully about for investors for everyone really thinking 10 years from now if I look back to 2026 was there an opportunity that I didn't see and I don't want to say that there is I'm I don't know no one knows no one can crystal ballgates but I just think that these settings will become more and more unpopular I mean they're unpopular now right but they get more unpopular and the reason they'll get more unpopular is we'll see the negative consequences of it. But like in the UK and New Zealand different markets different settings all those sorts of things but still they didn't have any impact on home ownership rates. No. So and if I'm so then I think about in kind of two cohorts you've got people that are say mid 30s and older that are probably put a lot of their wealth income attention into the property market on the assumption that you know settings are pretty accommodative for them to to do that and now that's changed well they're 75% of voters. And then if you think people that are younger than 35 maybe some of them aren't in the property market. So they might be attracted to lower prices but if prices drop 10% does it really make it it's okay yes more affordable but if there's another interest rate hike well that knocks the 10% out is just as unaffordable right so there's a lot of things that go to affordability price is one but you've got to move price substantially for it to really move the dial for those people and I don't think it's popular to get in front of TV today and say I want house prices to rise right that's not but I think most people and particularly people that have put a lot of their wealth into property absolutely do want their property prices to rise. Well put it this way they don't want them to fall no well there there's there's all of the consequences.

SPEAKER_00 46:39

So let's let's say hypothetically we

Would Cheaper Homes Really Help?

SPEAKER_00 46:41

we through these policy changes we wipe one trillion dollars of overall wealth in residential property off. That's one trillion dollars of personal wealth that's no longer in the hands of all of those Australians so the 70% who own their property or or are buying their property that has a material economic activity and flywheel impact because the reality is if I if my property goes up over time and if I downsize that creates you know that money to flow in the economy. Obviously debt makes the economy flow so there's going to be there'll be less transactions there's going to be less tax revenue but I think the two things that to your point Stu that will um move the dial politically because anything above 10% that's material and I think you know people are like well yeah I didn't mind it but now now you're crashing the property market and you know or well let's call let's call the 10% a cor a correction a proper correction. A crash is usually 20% or or above um so so if we see that type of change but here's the other the the the the ones that are going to sort of hit mainstream and that is how much rents are going to go up and how much supply is going to be delivered from this. Because if supply doesn't come then ultimately rents will go higher and they'll go

Why Rents Could Rise Further

SPEAKER_00 48:04

significantly higher and I think even even that that that is the that's the consequence the unintended consequence so I think if we see um a material lift in rents and we've been telling all property investors who own property at the moment the cost of running your private rental accommodation business has increased substantially insurance costs compliance costs so the governments are getting you on all areas so if you're not raising rents by 5% per annum as a minimum just to to your point stay in the game because otherwise you've then got to look at the risk adjusted return that you're getting on your and if it's not if it's not delivering then you've got to move on and you've got to potentially redeploy that money into another in you know another market to to be able to get that return.

SPEAKER_02 48:51

Yeah yeah and so I think they'll just become more and more unpopular for no actual policy benefit.

SPEAKER_03 48:57

And my gut feeling is and I'm one person I have no idea of course but uh the I reckon both parties will will bring that uh a policy reversal into the next election in 2020 I think there was a lot of talk and a lot of sort of focus to think that negative gearing was going to be the be all the end all in terms of that would fix the housing shortage which I don't think that that's necessarily and we're probably realistically going to say that that that's you know negative gearing isn't going to have that material shift that I think a lot of people were the general public can only uh consume things in bite sizes and they're looking to blame someone and the and the politicians are looking to blame someone so they turn the blame on the property investor driving up the property prices.

SPEAKER_00 49:40

Now in reality in some markets I don't dispute that like you give investors access to credit easy credit they'll they'll push property prices up in all markets right so so so we weren't you know like I'll I'll put my picker hat on as the chair of picker and I'll say we did need to make some changes. The animal spirits in the property markets and certainly regional town everyone was driving up property prices to unsustainable levels or or past their fair market value. And so we needed to change some settings and the settings we needed to change was access to credit in these vehicles, you know, these tax accountants letters and the trusts and all of these if you did that and then you would have taken a bit of that time away because what you did is is people getting access to easy credit and then you gave a 5% deposit guarantee for the first home buyers. So they went at each other into those regional markets and drove the value high. Now the tide's going out we're still going to see who's swimming naked in terms of what happens to that. So you can do some settings and then to your point Luke you can also then start to think about regulation and start to think about construction. And not everyone needs to have you know sixth grade energy efficiency. Some people would be happy to live in a house that that's going to stand for 30 years, not stand for 80 years. So I think there are some other things you can do there.

SPEAKER_02 50:53

Yeah so the reason I mention is in terms of is not to encourage people to believe that they're going to change and and make all their decisions based on that premise but then just invite people think, okay, maybe they won't be permanent what can I do over the next couple of years if we're saying that they change in 2028 the next federal election what can I do or what do I need

Investing In A Post-Negative-Gearing World 22

SPEAKER_02 51:13

to look for over the next couple of years to make investing in good quality established property attractive again? And so the things that I would think about are you starting rental yield. So there's some sectors of the market now particularly Melbourne you can buy for four, four and a half percent gross rental yield my numbers if they go to five, five and a half, which means that rents rise values come down both of those things are probably going to happen. If they go to five, five and a half percent you're getting the same internal rate of return there bang. Yeah off AI and then you think about mean reversion so that was really my commentary around where property prices so don't buy into an overinflated market or a market just had a growth cycle buy one that can and then maybe use some uh financing strategy cash flow strategies that also extends or improves your internal rate of return because you're putting less capital into the property borrowing structures it does mean you you generate less wealth we can't move away from that if you're borrowing more money to fund some of the cash flow of course you've got more and more debt now it doesn't move even if you do it for 30 years it doesn't change the LVR by more than 10% right so you still end up building a lot of equity in that property but we we have to admit yes you will actually build less wealth but it can be used something as temporarily so you might go well rental years start to look attractive I think that there's certain sectors or geographical markets that attract me and I'm going to use this cash flow strategy for the next couple of years and if negative gearing comes back I'll just turn it off.

SPEAKER_00 52:41

Some absolute goal there from Stuart in terms of that. And I would say to you make the invisible visible by getting that modeled. So if you go and see a business like Stuart's or you go and see a business like ours, we can show you what those numbers look like because we're talking about interest um capitaling capitalizing in some respects. So we're seeing that the cost to run your investments are going to be a little bit higher in the short term but again you're playing the long-term capital gain and compounding game as part of that which is also one of the key rules in wealth by design.

SPEAKER_02 53:11

So we're going to pivot to talk about your book now mate now obviously you know when I think we last saw you said kill me if I overwrite another book that was I think two books ago but this one here is obviously the uh updated version of Investopoly it's now wealth by design the eight rules for smarter

Wealth By Design 23

SPEAKER_02 53:28

investing and financial freedom now tell us about what the upgrades are so there's what uh several let's call there's four major upgrades that you have uh upgraded your thinking on in the book uh let's talk through though the first one was you know from diversification at any price to quality at an attractive price and we did we did touch on it we did touch on the let's talk about certainly touched on the first two and like a complete idiot I I threw out Investopoly I just started completely from scratch so it's a complete uh complete rewrite uh and I guess fundamentally and some of the rules have changed substantially and some have sort of just changed at the margins but I think you know hopefully hopefully we get better as we go along and if if I do write it again in another eight to ten years uh you know it'll be better again but yeah we we spoke about a value aware asset allocation so and this is true whether you're investing in super the share market or or property so quality price and then diversification in that order um and again you can apply that whether you're buying ETF or whether you're buying uh property um the second major change in InvestOpolar really talked about the uh investment grade property and really the fundamentals of property yeah what I didn't appreciate as much back then is cycles cycle timing and you know the the impact of mean reversion and it's not about trying to time the market perfectly or find the next growth area it's still about buying something very high quality fundamentally sound long track record but buying it when the price is attractive and you know I don't think there's any argument uh amongst anyone in property that you know Melbourne's prices look attractive well yeah I mean yeah let's talk to quickly of the Melbourne story because as we came out of COVID um everything else was the settings were right in other states and territories and we were seeing growth in the Melbourne property market as well.

SPEAKER_00 55:24

So something happened in our Melbourne market that didn't allow for that growth to occur and that was the level of debt that we took on as a state and ultimately that then says right higher land taxes and the sentiment shifted around you know coming into the Melbourne market and looking all Victorian market more generally. So we hope that through some settings and and we know that the Labour Party said we'll look at it in terms of land tax which I think they need to do and and they know they've cooked the property market. Yep. And so they are robbing uh Victorians of hundreds of thousands of dollars in unrealised value.

SPEAKER_02 55:58

So hopefully we'll see that come through so and I'd uh counter argue that that there Ben I would say it's a 20 year growth cycle. So you bought property 10 years ago in Melbourne you bought it after a 20 year growth cycle that's the thing that you you've been fighting against certainly sentiment is negative and that doesn't help. But the growth cycle you can't fight against you know and I think that's a a big contribute I think that's in a way that's kind of good news to investors today because it gives us a reason we don't necessarily I mean great for Victorian politics to improve but don't necessarily need that I think the other observation in Victoria is we're certainly not creating enough new jobs that's but we've got the population growth. Yes and we've got the population growth the highest participation rate yeah uh relative to New South Wales which is the other comparable economy. Yeah good point so that's that's the really difficult thing for a government uh to turn around is get get pa attract people to the location and get them interested in work. We've already got that. So it's going to be a I would say an easy switch for a new government to then um promote you know if we if we get the economy moving and lift that level of productivity because you're right we've got the we've got the highest number of small business job failures we've got the highest unemployment rate of every other state we get the economy moving and I think we move into that uh that cycle let's move on to major change number three which is around income focus uh to liquidity focus yes let's talk through that yeah it's a great one for property investors because traditionally financial advisors would

Liquidity Beats Income 24

SPEAKER_02 57:27

talk about uh having growth assets and as you get closer to retirement and introducing more defensive style assets income style assets bonds yeah um term deposits those sorts of things what I how I like to think about it is just look at absolute return so because what I'm if I'm uh going to retire at 60 how long am I going to live for well a lot longer than yes it was 20 years ago plus also I want to have an enjoyable retirement and I want to utilize the those healthy years as much as I possibly can I don't want to be personally I don't want to be 85 sitting home with lots of money in the bank yeah ridiculous money in the bank thinking oh I should have done more when I was 60. So the way to combat that is then to say as long as I've got a lot of liquidity in my portfolio so I've got two or three years worth of living expenses I can draw upon. So that could be money in offset accounts for example then I'm going to invest for absolute return for total total highest return. So remain investing growth assets property and shares just make sure you introduce more liquidity into the portfolio so you don't need to sell assets uh if you do need to sell

The Wealth Equation Explained 25

SPEAKER_02 58:31

assets you can sell it when the time suits you and when it suits the market not not necessarily under compulsion yeah yeah cool and then we've got the fourth one which is from willpower to automation. Yeah so that's really around cash flow management. I know um it's something close to your heart Ben but or nothing no wealth gets started if it can't trap surplus. Yeah so I talk about the wealth uh equation in the book which is your surplus your surplus investable cash flow multiplied by investment efficiency which is really how much of that what is that return how much are you keeping so compounding capital growth is good for that because there's no tax drag multiplied by time. And so that first part of the equation is the amount of money I'm putting into the investment strategy if that's zero doesn't matter how good my investment efficiency is or how long I I uh I hang on to that strategy for it's still going to be zero. So um very much more into automating cash flow management which I know is uh exactly what you guys sort of teach and talk about but you know pay yourself first you know get that direct deposit straight into a particular offset account or into additional super contributions whatever you might be doing.

SPEAKER_00 59:38

I mean I think I you know like I I love chatting with you we we we we're really cut from the same cloth in a lot of the ways and we think and I think the way in which you educate uh people on your podcast and also people who come to sit down with you and your team there's there's a lot of frameworks and fundamentals as part of that particular story and and you build it out into a nice sort of overall um arching framework and we'll put that in the show notes so people with your permission of course we'll put that very similar in terms of our lifestyle by design yes in terms of trapping that story and and taking it through. So everyone if you haven't already checked it out it's available now in all the good book stores and and online through Amazon and so forth. So check it out wealth by design eight rules for smarter investing and financial freedom and it's mate it's great to have you on

Stuart's Final Investing Lessons

SPEAKER_00 1:00:28

for the fourth time. Yeah thank you this you know I can't believe it was 2019 that we last got you on so we're gonna see COVID we're gonna we're gonna have to get you on on a little bit more regular basis for for obviously all the guys the story beats were still the same though wasn't it for you know decision labor borrowing capacity being harder you know yeah well all of the stories that we talked about five fundamental rule master five rules of mastery in terms of building wealth and then the Royal Commission negative gearing in 2019. So we've we've had a lot of great conversations and and obviously we get to catch up uh for the odd lunch or two um to chat about you know all things uh investing and property and and wealth building and so a credit to you um and thank you for sharing this uh amazing knowledge to uh to our community thanks guys thanks for helping me so thanks again Stu for coming onto the show check it out wealth by design excellent framework some really proven theories backed backed by data and investigation by Stuart and his team of expert advisors in terms of the team that we work for. So thanks again for coming on and remember everyone acknowledge the theory can be here.

SPEAKER_01 1:01:34

Hey folks Epty here it's Mont Money SolidKick InsideMore just one quick thing before we start off if you're new to the property catch community welcome. One quick tip to help you get the most value from the show the first 20 episodes cover the foundations we build every week. And yes listening on one and a half speed is totally acceptable. If you're short on time download our free binge guide. It distills those episodes into one easy read with heaps of visual diagrams alongside free tools inside more, your all-in-one financial home to help you organize your money and plan your next best move. Check out all the links in our show description. And just a quick reminder before you go anything we cover on this podcast is general in nature. It's not considered to be financial advice and we certainly recommend that you seek out professional advice before making any financial decisions. Once again everything mentioned is linked in the show description ready when you catch you next week