Property Hub - Investment Insights & Inspiration - Get Invested: Darren Kingdon on how super is Super?

Episode Date: June 4, 2021

Is your super setting you up for retirement? Most Australians are unaware about the state of their super, and the harsh reality that it is unlikely to cover your lifestyle when you stop working. According to the most recent ABS figures, over 73% of Aussies over the age of 65 are surviving on an average of just $15,300 per year – just $295 per week.  But as you’ll hear from superannuation specialist Darren Kingdon, it’s possible to master your super fund and put yourself on the path to financial peace of mind and well being. But for many people, superannuation is just too complicated and full of rules and regulations, which makes you feel like you need a degree in super, tax, law and politics just to have a basic understanding of your super and how to play the game. Darren is on a mission to help financially educate you to take more control of your super. Because it’s your money and you’ve got a vested interest to do well - and the quality of your retirement lifestyle depends on it! Darren is a nationally recognised superannuation expert with over 25 years industry experience. He’s also the author of his new book Master Your Super … I’ve read it, it’s a very easy read on what can be a dry subject, and it’s one of the few great resources for aspiring SMSF investors. You can find out more about the book and grab yourself a copy with a 20% special Get Invested discount by going to www.masteryoursuper.com.au. And on the order summary page enter 'Bushy20' in the discount code section, click apply and the 20% discount will be applied - but get in quick as this discount is only for a limited time.  In our enlightening chat, Darren opens your ears and eyes to: The challenges and dangers of some institutional super funds. The risks of some managed funds and so called balanced funds. He tells an interesting story about Buffet’s bet. He outlines the portfolios of the masters.  He reveals the benefits of an all weather investment portfolio that covers all four economic seasons. And we have a great discussion on the ins, outs and benefits of self managed super funds or SMSFs and how best to optimise them. There’s an absolute treasure trove of information shared by Darren on the sleeping giant of super so here is your chance to get yourself up to speed. So if you want to find out how an SMSF and your property strategy can work together, or simply want to know more about what opportunities are available to you as a property investor, join me live on our unique KnowHow Property Freedom Flight program, where I’ll personally guide you through my proven process for property investment success.  To book your ticket or find out more, click here https://knowhowproperty.com.au/freedom-fighters. Or if you’re a reader, you can grab a free copy of my introductory book Get Invested by clicking here: https://knowhowproperty.com.au/get-invested-free-ebook And if you want to hear more juicy insights on all things property, join me on Australia’s longest running property investment and real estate show Realty Talk, which has just rebranded from Real Estate Talk, where you can join me on www.realty.com.au  as the new host of the show where I interview Darren and a raft of industry leaders to discuss all things property. And of course, I need to stress that nothing that we talk about here on Get Invested is intended as financial advice and we suggest you seek out independent professionals to address what is right for you and your situation.  Darren's book recommendation: The Richest Man In Babylon by George Samuel Clason Get Invested is the leading weekly podcast for Australians who want to learn how to unlock their full ‘self, health and wealth’ potential. Hosted by Bushy Martin, an award winning property investor, founder, author and media commentator who is recognised as one of Australia’s most trusted experts in property, investment and lifestyle, Get Invested reveals the secrets of the high performers who invest for success in every aspect of their lives and the world around them. Remember to subscribe on your favourite podcast player, and if you're enjoying the show please leave us a review. Find out more about Get Invested here https://bushymartin.com.au/get-invested-podcast/  Want to connect with Bushy? Get in touch here https://bushymartin.com.au/contact/  This show is produced by Apiro Media - http://apiropodcasts.comSee omnystudio.com/listener for privacy information.

with the big superannuation funds, which I've got some concerns about, looking under the bonnet and finding out, like, what are the... Look beyond the pie chart, really, and just sort of find out what's really underneath these funds, because some of it might be a little bit unsettling with what you find. The survival rate for actively managed funds, in which a lot of these things are born from America, the survival rate is something like 57%, so over a 10-year period.

So what does survival rate mean? Well, either it blew up and it's valueless or perhaps it got under distress and needed to merge with something else and that fund might not be there anymore. But in any event, it's still quite concerning and, unfortunately, A lot of those sort of funds do, you know, they dabble in the derivatives and things like that, which can exacerbate, you know, exacerbate an outcome, whether that's good or bad. So, you know, so, yes, so managed funds, I think, and I suppose even just more importantly today for Australians, I mean, what worries me is these, you know, so-called balanced funds out there in the big end of town of superannuation. So that's a big concern to me, and I'd be just encouraging, you know, your listeners just to, if they do have these big superannuation funds, just really, you know, dig deep into them just to find out what is really underneath it and get specific if there are property holdings in there. Welcome to the Get Invested Podcast, where we share great conversations with experts

from all walks of life to uncover their secret know-how and where they invest their time, their skills, and their money, and the benefits that this has created. You see, the truth is that everyone invests. Every minute of every day, we're investing our time, our skills, our energy, and our money in something. Some of us are investing consciously, some unconsciously, sometimes for good, sometimes for bad and sometimes for no impact. Get Invested will help you to start living by design, not by default. I'm going to help you to make it happen, not let it happen. You'll hear the top

tips on how you can live with conscious intent so that you can live more, work less and leave a living legacy by investing now. Listen to the show to discover the top tips on how to get started, make the most of your investment journey and ultimately to be living your dream, not someone else's. More episodes can be found on iTunes or at bushymartin.com.au forward slash get invested. Thanks for listening and now let's get invested. Hi friend of fighters. As I switched on the light, I was startled by a sudden and unexpected fried. A strange man was standing there and staring straight through me with a dull, lifeless expression on his face. There was something vaguely familiar about him, and I had a strong

feeling that I'd seen him many times before without really taking any notice. He'd always seemed a lot younger and more handsome when I'd caught fleeting glimpses of him in the past, as I rushed to pursue some other upcoming urgency. But today, it was as if I was looking at him for the first time. For once, I slowed down and I returned his gaze. As he surveyed me slowly and deliberately, he shifted his critical eyes from my head and down my face to my neck. I did the same, with neither of us acknowledging the other. The once blonde hair had faded to grey and thinned above the growing forehead, creased by years of frowning from hard work and worry. The cheeks had rutted with fields of broken capillaries from years

of stress, and the once well-defined jawline was now puttied like Play-Doh from a poor diet. Faint crow's feet had appeared in the corners of the eyes, and bruised puffy bags now cupped the yellowing whites that were laced with tiny, tired, bloodshot veins. I smiled tentatively, and the man smiled back. A somewhat half-hearted attempt tinged with sadness. The lips curled, but the eyes were deadpan. Within their depths, I could sense someone whose hopes and dreams had faded to pale. The once bright sparkle now seemed to conceal a shadow of quiet despair, and the resignation born out of years of doing what was required

rather than doing what was desired. My blink left me with an impression of a complacent contentment created from the slowly dawning acceptance that this was as good as it gets. the man seemed to be unconsciously conscious like he was sleepwalking on autopilot and with a rude awakening it finally dawned on me

that I was staring at myself in the mirror you see it all starts and ends with you and as Buddha says the trouble is we think we have time without thinking about it I had become comfortably numb and asleep with my eyes open,

going through the motions like a wind-up toy. I was living without really living. I was like a happy drunk turning to drink or, in my case, work, to avoid thinking about the cold, hard reality that the sands of time were quickly slipping through my fingers and that I was scared about how I was going to be able to maintain my lifestyle when and if I could ever afford to stop work. Like a frog in a slowly boiling pot,

I gradually and surreptitiously allowed the years to slip by while my dreams collected dust, and I focused on the immediate urgencies that life keeps throwing at us. Unfortunately, most of us are not even aware that our work hard and then retire in our super plan is going to leave us in poverty. For those few who are aware, most don't know what to do about it. For the fewer who are aware and do know what to do,

the majority just don't have the time to do anything about it. And the very select remainder who have the time don't know who to trust to help them. So what's the answer? Well, have a look in the mirror, because that's your competition. Could this also be you? Have you ever caught yourself really looking at yourself and thinking, what's happened to me?

Where have all the years gone? Are you going to continue to go through the motions and allow your growing fear of a futile future to eat away at your body and soul? Or are you going to wake up to yourself, dust off your long-forgotten dreams and get excited about the future again? For me, this moment of truth happened a bit over 20 years ago.

And from that moment on, my wife Sonia and I made a decision to change our lives, to do whatever we had to do to follow our passions, while investing to secure our financial future so that we could truly enjoy life now, safe in the knowledge that our tomorrows were looking after themselves. When will this moment of realisation be for you? for many years i've spoken to people who continue to wait for the right time to pursue their passions and then go on to protect their family's financial future but this right time just never seems to happen some other urgency always seems to come up that gets in the way and even if they do occasionally find the time to think about their future they're just too tired and buggered to do anything about it so they fall asleep in front of the tv cradling a beer or a glass of wine or scroll mindlessly through facebook now don't worry i fully appreciate how easy it is for this

to happen we all naively kid ourselves that we have lots of time and the future can wait you know remember back to when we finished high school we were all full of excitement and idealism about how we were going to change the world and enjoy all of our newfound freedom. But then we got caught up in university or our new jobs, getting a car and spending our weekends playing sport and partying. Then came the partners, getting serious, moving in with each other and getting married. Next were the house and the mortgage with the pitter-patter of tiny feet close behind. School fees and family holidays followed,

along with the need to work harder and longer to pay for the lifestyle that we believed our family deserved and expected. And then suddenly, without giving it a second thought, the kids were finishing school, starting uni or doing their own thing, and 20 years had passed by like a flash. During this time, our early carefree nature has been gradually replaced by an incessant nagging worry. In accumulating all of the outward signs of success

and life's must-have modern-day pleasures, we've become a slave to them. When we started work, we did it because we loved it and we were going to change the world. Now we have to work just to pay for our continual lifestyle inflation. The home loan, the holiday house, holidays, clothes, eating out, car loans, credit cards, and interest-free everything.

It's almost as if we've all become like Sisyphus of Greek mythology. Sisyphus was a bad king whose punishment from the gods was to ceaselessly roll an immense boulder up a steep hill, only to watch it roll back on him continuously for eternity. The only difference for most of us is that we're pushing a snowball instead of a rock. We start off pushing a small snowball up the hill when we start work, but as time slips by, that snowball just gets bigger and the slope gets steeper until eventually it requires all of our concentration, all of our energy and our might,

just to prevent the snowball from rolling back down over the top of us and crushing us in the process. We're stuck in a place of constant and growing strain and pressure just to survive. And we're forever exhausted, stressed and worried, without any sign of future relief. How long have you been trapped on the treadmill and secretly scared that to maintain your lifestyle income, you'll never be able to afford to stop working. Do you have a voice inside your head that starts whispering every time you meet someone who has invested and is getting ahead, and now that little voice is shouting to you to do something for fear of what the future holds?

How many times have you been warring with yourself and ignoring that voice? Will your future look after itself? Well, perhaps you're one of the many who's just not aware of your looming future lifestyle income crisis, and you mistakenly think that you've got years up your sleeve so you don't have to worry about the future yet or you earn a high income so you've got nothing to worry about or the perfect time to do anything about it just doesn't exist

and if it did, you don't know who to trust or where to start. It's just all too hard. Many of us keep thinking that all we need to do is work hard and play hard and the future will look after itself. So what do most of us do? the sum total of diddly squat nada and nothing sadly most of us spend much more time researching and planning our holiday our wedding or a new car purchase than we ever do planning how to improve and protect our long-term lifestyle and financial future many of us keep putting off the hard stuff

till tomorrow and avoid thinking about the future because it's just too hard and too far away for us to be able to answer the unknown questions so tomorrow never comes. We take for granted that life is pretty good in our country and in most of our middle class lifetimes we've never had to do it tough. Most of us are under the impression we have a lot of time up our sleeves

so there's no rush to do anything. So we focus on the immediate and the urgent and we put off the important. This is where our no worries, she'll be right mate Aussie mantra has been allowed to blossom and perpetuate the myth. We wear this attitude of just letting life happen and making the most of it like some sort of crazy badge of pride

while laughing off our gradual demise over a glass of grog. We live in a paper mache paradise that is here today but will be gone tomorrow when we retire or try to stop working but can't because we simply can't afford to. As a result, many of us just let life happen to us and then finally wake up one day and wonder, shit, what happened? But unfortunately, doing nothing is still making a choice. An unconscious decision to go backwards with disastrous long-term consequences for you and your family's future. This reactive outlook may prove to be a sign of future naive ignorance.

and while some may have gotten away with it in generations gone by we certainly won't in the future. Having talked to thousands of hard-working families over the years now I've become increasingly fearful and frustrated at the lack of awareness, care and action taken to live intentionally and secure the future. But the ones I feel most sorry for are the many who falsely believe that all they have to do is work hard

pay off their home and then rely on their compulsory work institutional superannuation and or pension thinking this was going to be enough to maintain their lifestyle and fund their long-awaited bucket list when and if they decide to stop work unfortunately the vast majority are in for a massive shock because once they stop working their lifestyle is going to fall off the cliff into money-pinching misery. Now there's an old quote that's relevant here and it goes like this. By my calculations, I'm going to be able to retire comfortably about five years after I die. Now this is going to be the unfortunate reality for the majority of hard-working Aussies in the years to come. While I get why this happens, none of this

sits comfortably with me and this podcast and my books get invested in the freedom formula are here to challenge you because if you don't start thinking about the future and preparing for it the future is going to happen to you before you know it and it's not going to be a pretty sight I'm challenging you to take control of your destiny now so that you can live life on your own terms over the long term and leave a legacy for your family so let's put a lot of these assumptions about the future to the test, to give you a timely wake-up call on your lifestyle trajectory. Now, how often have I heard the line, when I retire, I'm going to do this, when I retire, I'm going to do that, when I retire, I'm going to dot, dot, dot, you insert your own bucket list

here. If I'd received the dollar for every time I heard that statement, I'd be a very rich person. It seems that life is just so busy these days that a lot of us are putting off doing what we really want to do until we retire or decide to stop work so when do we want to stop work and will we ever be able to afford to now if you're already in your late 30s or older you've already used up a big chunk of your free time and you only have until you're 60 or 65 to create a nest egg big enough to allow you to comfortably live for the rest of your life So how are you spending your remaining spare time? The problem is that most of us spend our time looking backwards.

As Matthew Michalowicz, a previous special Get Invested guest back on episode 32, sums it up so well in his book, Life in Half a Second, if the scientifically established four and a half billion year old age of the world is represented as a year, then our average lifespan equates to half a second. Yet most of us tend to look at how old we are instead of how long we've got left. In his view, a simple mind shift to reverse this thinking would revolutionise and energise what we do with our lives and when. And if you look at the lives of a lot of high achievers, they all live their life as if they're going to die sometime soon. this could certainly be said of Steve Jobs

who for many years knew that he was dying of cancer so he cut all the crap out of his life and just focused on getting the big shit done he reportedly only wore blue jeans and black t-shirts and had no furniture in his house so that his brain could focus on the big things that would change the world

he had an almost feverish impatience and lived as if every day was going to be his last so what's your drop dead date and how much longer are you going to live well on the local context according to the most recent australian life tables across the 35 to 50 age range on average females are going to live until they're in about 85 while males will join the choir invisible three years earlier at an average age of 82 projecting into the future The Federal Government's Intergenerational Report, or IGR, indicates that life expectancy at birth is now projected to increase for females to 96.6 years by 2055, while males will increase to 95.1 years over the same period. The IGR also predicts over 40,000 centenarians by the year 2055.

This means we'll need to accumulate enough income-producing assets over and above the family home by the time we stop work to fund our ongoing lifestyle for another 30 to 35 years or more. So, will you outlive your retirement savings? While I'm not advocating that we all need to be clones of Steve Jobs, appreciating that we don't have much time left to set ourselves up can certainly motivate us to do what we need to do today in order to live the way we want to now and in the future. But how much is enough?

How much is enough? How much do you need to retire on totally depends on how well you want to live and for how long you want to live. A better question though is how much money do I need when I stop work to maintain or improve the lifestyle I currently have until the day I die. And for a lot of us, the question also includes, and how much do I need to leave to help my family after I've gone?

As a general starting point, research by AMP Capital shows that a typical retiree may need between 70 to 80% of their pre-retirement income to maintain the same lifestyle, assuming that they own their own home, without any debt, and they're relatively healthy. And according to the Australian Bureau of Statistics, as reported by the Business Insider, the average income of Australia's 9.3 million households was just over $145,000 in 2014.

Now, adding annual inflation of about 2.65% per annum since then, this now equates to about $157,000 for the average income. in conservative terms 80% of this figure equates to a lifestyle maintenance income of about 125 grand a year and based on an average five percent net income return from whatever you invest in this means you'll need a nest egg of 2.5 million when you retire to maintain this income and in the current low interest rate environment achieving a five percent return is going to be challenging in the medium term. So if you're relying on your current government's guaranteed 9.5%, which is rising to 10% institutional super to help you make it do it, the balance will need

to be 2.5 million when you stop work. So how's your super balance looking? That's all good, I can hear you say. I don't need to worry, Bushy, because I've got plenty of time for my superannuation to grow and the pension will cover the difference. But will it? Let's have a look at that reality. According to the most recent ABS figures, over 73% of Australians over the age of 65 are surviving on an average of just $15,300 a year. Now that's just $295 a week. That doesn't even cover our grocery bill. And a survey conducted by Westpac confirmed that three out of five retirees have spent their entire super by the time they're 70. Now I can hear you say, but this won't be me, Bushy. By the time I stop working, my

super's going to look after me. Hmm, are you sure? Compulsory institutional super ain't super, because according to the Association of Superannuation Funds of Australia, or ASFA, the average total superannuation balance for a household headed by a person aged 60 to 64 years is currently around $355,000. That's a long way short of $2.5 million. Additionally, in this run-up to the retirement age bracket, the self-employed have around half the superannuation of employees. Only 27% of the self-employed aged 60 to 64 have more than $100,000 in superannuation. Now, assuming you're looking to preserve your retirement nest egg and live off the income proceeds so that your money will last as long as you live, a super balance of $355,000 at a 5%

net return will produce a princely income of $17,750 a year, or just $341 a week. On this basis, most people's superannuation won't even touch the sides of a comfortable retirement. Now, according to the Free Dictionary, the original definition of superannuate is to set aside or discard as old-fashioned or obsolete. Now this is certainly starting to ring true. So how are you sounding now? And I can hear you think, well, perhaps I can tap into the age pension.

You reply anxiously. Well, let's paint that picture. If you can jump over the myriad hurdles required to access the age pension, the maximum full pension payments are approximately $25,000 for a single, which is about $480 a week, or approximately $37,000 for a couple, which is about $520 a week. So what sort of a lifestyle is that going to give you? Well, according to the retirement standard created by the Association of Superannuation Funds of Australia,

the age pension will afford you the following meagre lifestyle. You won't be able to afford private health insurance. Holidays will be restricted to short breaks or day trips in your city. you won't be able to afford a car or if you have one you'll struggle to afford repairs there'll be no alcohol unless you can home brew some beer you'll only be able to take part in no cost or very low cost leisure activities you'll afford basic clothes you'll have to get a friend to cut your hair and you'll only be able to eat inexpensive takeaways or eat out at club special mills on slender occasions. You won't be able to afford to run an air conditioner and you'll

be forced to reduce the amount of heating that you can run in winter and you'll have no monies left over for home repairs like a leaky roof. Now does this lifestyle sound good to you in your golden years? That time when you've been waiting to do all the things on your bucket list? On that kind of income, you'll barely be able to afford the bucket. Now the word pension is starting to sound like a fancy word for poverty. But to even get access to the age pension, you've got to satisfy both an income test and an assets test. And the test that gives you the lowest amount of age pension is the test that prevails. Adding an additional layer of difficulty, your income and assets are assessed under specified deeming rates,

that is, rates that the government decides at a point of time and not the actual rates returned that you're actually getting. So if the stock market is taking one of its regular hits, your assets may be valued by the government at a much higher value than they're actually currently worth. And at the time I published my book, The Freedom Formula, your pension payment amount starts dropping off sharply on a sliding scale when you exceed the following thresholds.

So when other income from interest, rent, dividends and so on exceeds just over $7,500 a year for a couple or just over $4,200 a year for a single, they start to go down. And when your assets excluding the family home, including bank accounts, bonds, properties, business, super funds, shares, vehicles, life insurance, renter values, collections, household contents, et cetera, exceed over $380,000 if you're a couple or just over $253,000 if you're a single. So in fact, for every $1,000 of assets that you own over these thresholds, you lose about $8,000 a year in pension funds. But there's a bigger question to ask here. Will the age pension actually still be around when we retire? The jury's out on this one, whether the age pension's even going to exist in 10 to 20 years, and industry experts provide a lot of varying opinions on this.

A recent federal government paper, Rethink Tax, advised that the pension should be taxed and completely phased out over time. Under the submission's proposal, if you had a valuable home, you should have the choice of downsizing or requesting a government pension that's paid as a loan using your home as security. So no more free rides here. Even if the age pension is still around when we retire

it's likely to be a lot less with a lot more restrictions. There's been a lot of talk in federal government circles over the last few years that the huge mass of baby boomers approaching retirement will overwhelm the government coffers. in fact according to dot id who call themselves the population experts the age pension is the single biggest line item in the federal budget at just under 40 billion dollars a year in way back in 2014 increasing at around 3 billion a year or about eight percent per annum this increasing retirement population is adding to the budget burden to the point where increasing pressure

will be applied to reduce, restrict and eventually abolish the age pension altogether. And according to .id, some of the future potential age pension changes may include things like a significant increase in the superannuation access age up to 75 or even up to 80, forcing people to continue working, the potential removal of the exemption of the family home from the assets test, imposing large penalties for elderly people living in homes that are too large for them, the closure of loopholes allowing people to claim the pension while structuring their investments to have large amounts of exempt income. Note that even in the immediate short term, the eligible age to access the pension has

already increased progressively to 67, and the access age is likely to continue to increase from here. So if I were you and you were me, I wouldn't be banking on the age pension being available when we decide to stop work. And even if it's still available, it's likely to be much harder to get a much smaller amount. So based on what I've just been talking about, relying on your work-guaranteed institutional super and or the pension if you can get it, is going to see you eking out a paltry existence of somewhere between $17,750 and $37,000 a year. And you'll have to live on this for over 25 years when you stop work.

Now that's just a meagre $340 to $710 a week. This is just between 14% and 18% or less than a fifth of the $125,000 a year or $2,400 a week that's required to maintain the current lifestyle of the average Australian household. This review of current Australian retirement stats reinforces my view that our national no worries, she'll be right attitude to the future, and our assumption that the pension and our minimal institutional super will maintain our lifestyle is about as effective as an ashtray on a motorbike. Given the high risk of change already outlined, my attitude has always been to plan for the worst and expect the best. I also believe in being self-reliant

rather than banking our future on things that are outside our control. In this case, planning for the worst means assuming that we won't be able to get or rely on the age pension, meaning we need to totally self-fund our own retirement so that we're not reliant on things that we can't control. This sentiment extends to the big institutional superannuation funds. Too many times over the years I've seen institutional super funds take huge dives in value because of their leverage into the local and overseas stock markets, only to hear the fund managers throw their hands up in the air and tell their clients, we can't do anything about it, it's just the market. Yet they're still happy to take their sizeable hidden fees and commissions

year on year without any link to performance. This is just another sign of the endemic absence of responsibility that's undermining our culture. The disease that shirks responsibility and always looks for someone else or something else to blame. But don't let me get distracted. For many years, my wife and I have had our own self-managed super fund or SMSF so that the only people we have to blame for performance are the two people staring us back in the mirror that's ourselves. So what is your actual current superannuation balance and what's the what's that projected to look like when you retire? Chances are it's going to fall a long way short of what you're going to need to live comfortably. You're likely going to have to action additional investment avenues now

if you're going to maintain your income to sustain your lifestyle long term or accept that your income and lifestyle is going to drop off the cliff when you decide to stop work. Alternatively, you may be forced to keep working for the rest of your life, but the choice is yours. It's been estimated that to fund a comfortable lifestyle when you decide to stop work, you need to be investing about 18% of your earned income a year in growth assets beginning in your 20s. Interestingly, federal politicians currently get over 15% a year in superannuation. But with the superannuation guarantee currently at just 9.5% and lifting to 10% of your income, you're going to be left a long way short. So when and how are you going

to start investing that extra 8% a year that's going to be required to live comfortably long term? And how is your current super performing? Who's your super with? And what's your current superannuation balance? What's your projected superannuation balance when you want to stop work? And where is your free kick super money being invested? And your answer is, I know exactly what my super's doing, Bushy. I know where it's invested and I know how much I'm going to retire on, said no one ever. As you'll hear from today's superannuation specialist, mastery of your superannuation fund can go a long way towards securing your financial peace of mind and well-being.

but for many people superannuation is just way too complicated and because it's compulsory we get complacent and it's full of rules and regulations which makes you feel like you need a degree in super tax law and politics just to have a basic understanding of your super and how to play the game and this is where today's guest Darren Kingdon comes to your rescue Darren's on a mission to help financially educate you to take more control of your super because it's your money and you've got a vested interest to do well and the quality of your retirement lifestyle depends on it Darren's a nationally recognized superannuation expert with over 25 years industry experience he's also the author of his new book

master your super i've read it it's a very easy read on what could be a dry subject and it's one of the few great resources for aspiring self-managed super investors now you can find out more about the book and grab yourself a copy with a 20 special get invested discount by going to www.masteryoursuper.com.au and on the order summary page just enter BUSHY20 in the discount code section click apply

and the 20% discount will be applied but get in quick as this discounts only for a limited time and Darren's also written other books on financial strategy including Super Strategies for Wealth Creation and an online self-managed super fund guide as an early adopter of strategic financial advice in australia darren's established the kingdom

financial group in 2012 to provide niche and tailored advice to small business owners and industry leaders and he regularly consults to other financial services professionals darren's also a sought-after media commentator has been sharing his insights with the australian financial review for over a decade now. Now in our enlightening chat today, Darren opens your ears and your eyes to the challenges and dangers of some institutional super funds, the risks of some managed funds and so-called balanced funds. He tells an interesting story about Buffett's bet. He outlines portfolios of the masters. He reveals the benefits of an all-weather investment portfolio that covers all four economic seasons.

We have a great discussion on the ins, outs and benefits of self-managed super funds or SMSFs in relation to investing in property, commercial property and a whole series of other opportunities and how best to optimise them. So have a good listen out for that. Now there's an absolute treasure trove of information shared by Darren on the sleeping giant of your super.

So here's your chance to get yourself up to speed. And of course, I need to stress that nothing that we talk about here on Get Invested is intended as financial advice and we suggest that you seek out independent professionals to address what's right for you and your situation. Now as Henry Ford famously said, if you always do what you've always done, you'll always get what you've always got. so if there's a safe easy and affordable way to maintain and improve your lifestyle and secure your future so that you can work less live more and regain your time and your freedom would you be interested what if you could continue to devote your time to your career and spend your nights and weekends with family and friends while investing in a way that didn't chew into your salary and savings but would create a recurring income to ensure that your

future is looking after itself. All this by simply adopting our passive aggressive approach to investment. So if you want to find out how an SMSF and your property strategy can work together or you simply want to know more about what opportunities are available to you as a property investor, join me live on our unique know-how property freedom flight program where I'll personally guide you through my proven process for property investment success. To book your ticket or to find out more, just click the link in the show notes at knowhowproperty.com.au forward slash freedom fighters, or just visit knowhowproperty.com.au. Or if you're a reader, you can grab a free copy of my introductory book, Get Invested, by going to www.knowhowproperty.com.au

forward slash get invested free ebook and if you want to hear more juicy insights on all things property join me on australia's longest running property investment and real estate show real estate talk which has just been rebranded as realty talk where you can join me on realty.com.au as the new host of the show where i interview darren and a raft of industry leaders to discuss all things property every week. But for now, enjoy my long-form chat with Darren Kingdom. Hi, Freedom Fighters. Now, for many hardworking Aussies, superannuations often undervalued, misunderstood, and unfortunately, generally a forgotten about subject, or it's an invisible, necessary and sometimes boring evil that people feel rips about nine and a half percent out of

their pay packet every week but that all changes when you hit your mid-50s and and you have your what i like to call your oh shit super moment when you suddenly realize that perhaps your super isn't going to be big enough or enough to allow you to work comfortably and let's not mince around here if used and managed properly super can be the key to sustaining your financial future and it's a sleeping giant. So to debunk, demystify and sexy up your massive opportunity with super and what you need to do about it, I'm joined by a leading super guru, Darren Kingdon.

So welcome and let's get invested, Darren. Thank you very much for having me, Bushy. Look forward to it. Yeah, mate, it's been great to have you on and thanks for reaching out. I've been reading your awesome book, Master Your Super, which we'll talk about later in the conversation. But, mate, for those listeners who don't know who you are or much about you,

can you sort of start by giving us a rundown on who you are, what you do, and most importantly, why you do what you do? Yeah, no, great. No, yeah, Darren, yeah, as I said, Darren Kingdon. I run a small financial services practice out of Brisbane, and basically we help protect and grow family balance sheets. And so we do a lot of things from estate planning through to just project managing goals and assessing them and tracking goals.

And also I'm sort of now a personal finance author. And the reason why I do it, basically, I just love goal setting with clients and being on the journey with them. Yeah, okay. Being part of that work-life balance. Yeah, and goal setting is certainly something that some Aussies are very good at and some aren't. So we might dig into that a little bit later. But, mate, before we do that, I'd love you to sort of talk through your journey so far

and share with us where you've invested your time, your energy, and your money over your life journey today and focus on what you've learnt from both the ups and the downs of that journey and how it's shaped to where you are now. yeah now i could certainly relate to that that oh shit moment that you were talking about um just in the intro there because look i guess for the first 30 years of my life um you know about a happy childhood but um my main focus probably for the first 30 years was around cricket and trying to be trying to be a cricketer um and then you get to the to the end of your cricketing sort of days and then you start to focus on, you know, probably between 30

and 40 focusing on a career and I did that with AMP during that period and was really, I guess, focusing on my income and the income column but not really paying any attention to where that money was disappearing to. and then you know and then I guess we had the sort of the GFC and then you know had to make a recalibrate lost a lot of money along the way and then basically just start to rebuild and and start my own business which is around about sort of 10 years ago and then really starting to focus maybe less on the income column and more on the assets column so certainly you know and I I guess in the beginning, you know, like, yeah,

I really didn't pay much attention. It was really a week-to-week thing, probably until I was about 30 years old, just chasing the cricket dream. Yeah, and that would have been pretty exciting at the time, mate, and it's, you know, there's a lot of guts and glory in the sports hero mentality. Yeah, there's also a lot that people see the ones who do well out of it but don't see so much of those that don't quite get there.

I mean, you've been quite successful, and I wouldn't mind you sharing that with us because I'm pretty sure you played shield cricket for Queensland at one stage from my dim distant memory. Yeah, well, that's right. I did, look, I played a lot of first grade cricket in Sydney and Brisbane, and I did play a couple of games for Queensland. and I went overseas a few times and played league cricket in England

and so forth, so it was sort of like a fabulous time. I wouldn't change anything about it. If I did change something about it, it was probably just starting to have a little bit more of an eye on the future. But at the same time, you know, look, I mean, as I said, there wouldn't be much I would change because, I mean, all my pretty much dollars and time and energy just went into being a better cricketer.

And that was how I – and obviously you're only young once as well, so that was, I guess, my mindset and approach at the time. Yeah. Tell me, because particularly at the time you were doing it, there wasn't the sort of money floating through the sport that there is now. How did you put yourself financially when you were, you know, putting a lot of your energy and time into the cricket arena? What were you doing to pay the bills?

Well, good question. Yeah, look, because there were periods there where I wasn't working because I did go back and forwards from England, and it was in a recession sort of era at that time. So, look, you know, there wasn't any money in the jar really some weeks. And so, look, I mean, I had sort of different bank. I had a couple of banking jobs. Some of those banks are no longer with us.

And, look, I did everything from picking mushrooms to working on farms to working at Festival Records, another business that's no longer with us, I don't think. So it was just an absolute mixed bag. I mean, I think my dad did count them out at one stage, and it wasn't a pretty number, but the amount of jobs that I did have. And, look, there was times there where there wasn't any money to pay the rent, and I had to sort of phone up mum and dad every now and then to get them

to lend or give me some money. Tell me, so as you sort of came towards the end of the first-class cricket career there, you mentioned that you dipped the toe in the water into AMP. What attracted you to AMP as an area that you thought might be worth spending your energy in? Well, it was just like a lot of things in life, I suppose. as it was a little bit of a fluke, I mean, I was working

at a business called National Mutual there probably right at the early 90s and I was just looking for something more and I did make an application to the AMP and I put my name in the ring for a job application on the north side of Brisbane. Anyway, I didn't hear anything for about nine months and presumably didn't get to first base. and then somebody sort of just out of the blue just called me and said, look, we noticed you had this application here.

Did anybody get in touch with you? No. Would you still want to go through the process? We've got something over here. Yes, I did. So then I basically just fell into a, you know, sort of a technical advisory role for, you know, that sort of would have been about 6,000 financial advisors

at the time advising financial advisors on more the strategic side of advice, which is more about structuring and how to try to maximise profits from a strategic point of view rather than necessarily an asset-building point of view. And hence that's where I suppose I started my deep dive into the superannuation sector and just soaked that up for that 10-year period. And so probably between 30 and 40, I did write a couple of textbooks.

I think one was through CCH, which is a sort of a, you know, a fairly well-known tax publisher, and another one through Tribeca, which is called Caplan. But, again, they were sort of always focused on the technical side of financial advice. I didn't spend any time thinking about, well, you know, okay, what is money and how does money work? and money has the habit of disappearing if you don't pay attention.

There's absolutely no doubt about that. You're dead right, mate. Okay, so you worked your way through that sort of institutional exercise, I guess, and picked up clearly a fair bit of experience along that part of the journey. Where did that go to from there that sort of led you to what you're doing now? Well, I think, yeah, so I was in technical roles for a good 10 years with AMP and, look,

probably one of my worst investments would have been in the AMP shares and I probably might get into that in a minute. So basically I had 10 years there and then started to work more in smaller businesses and there was an opportunity that came up where I was able to build up a client base and take that with me and start my own practice, which is where, I guess, Kingdom Financial Group was sort of born about 10 years ago. Was that after the GFC, mate?

That was after the GFC, yep. That was sort of, yeah, probably around that 2011. That was where that occurred. And so, look, you know, one of those things that I wished I did earlier, but at the same time, I'm glad I did it when I did. And that sort of then helped me not only just sort of keep, you know, I guess, keep the family fed and things like that, but just start to broaden my thinking in terms of, well, you know, what is money and, you know, what is it really and, you

know, what are some safe and sensible things to do with it? Yeah, I wouldn't mind you elaborating on that a little bit because, you know, people's relationship with money and their own money story is pretty interesting in terms of the impact it has. What were the changes in thinking that you had around that time and how has that affected what you do personally and what you do to help others? Yeah, well, there's quite a bit to unpack there.

But basically, I mean, I do remember I think in my cricketing days I was told, well, a mentor of mine at the cricket club said I should go and speak to a financial advisor and I had to go and put $80 a month, which was the minimum and which i didn't have my by the way um into uh an insurance bond it was called an insurance bond at the time one of those very um you know high sort of commission based products um and i did get something out of it i think i might have got over you know by my early 30s there might have been sort of 11 or 12 grand there um i took that and then i i believe i then

went and got a couple of stock tips I think and I think that might have went into two stock tips probably into AMP as well and that that's then sort of they basically all crated to the ground and basically that sort of went to nothing that type of investment and then I suppose as an employee of AMP there was lots of opportunities to buy AMP shares at extreme discounts like you can buy AMP shares for $20 or $25, which was a great deal at the time, and we probably know where those sort of shares ended up. Unfortunately, I didn't get out completely, but, you know, I think I did liquidate 75% along the way,

but that's a never-ending reminder about not hitching your wagon to one horse cart. But, you know, you need to be diversified and have a few more irons in the fire in order for the machine to work properly. Yeah, there's a few things in there, isn't there? There's stock picking, for starters, which is like going to the horse races. Yeah, yeah. And if it's based on tips from mates, then it might sound good, but it doesn't have a lot of research behind it.

and the insurance bills, I got stuck with one of those MLC things years and years ago, which, you know, I was… That's been me. That might have been me. Well, good grief. That was one of my worst investments because it was the way it's performed, the fees to change it or shift it were more than what it was going to cost to leave it there.

So, well, and it's still there, and that's about 30, nearly 40 years ago, mate. Yeah. Yeah, but if I could also add, Bushy, on top of that, I did have some, so then I thought, okay, well, that's not working, so maybe I should go and sort of throw some money at fund managers because they'll definitely, they know a lot more about it than me. Interests, so, you know, I think we did have some money at different managed funds throughout time as well.

And, you know, many of them became either insolvent or like frozen funds and things like that with not a lot of money left at the end of the day. So then that led me, after having been battle-scarred on the insurance bonds and AMP shares and whatnot, then I went to the managed funds. That didn't work for me. So then I thought, well, look, I've got to start

paying a bit more attention and start to do a bit more things for myself rather than relying on others yeah i'd love to delve into that because i i generally ask guests you know what do you consider to be your worst ever investment and uh uh you know what lessons have you learned from that experience uh and what lessons can you pass on to the listeners that uh will assist them and avoid the same thing so you've sort of touched on that a little bit already with that that sort of range of initial dipping the toe in the water dig in a little bit deeper if you you don't mind in terms of the the lessons you took away and what you're now doing differently for yourself and clients as a result yeah well look i guess just on the shares for example like um so okay look

there's there's at least 10 different sectors in the stock market and um and they don't all in unison and it's sort of often it's about knowing that there are different sectors in in the stock market and and having you know a real diversified portfolio so really you want to be having probably at least 20 25 stocks you know um you know and sometimes etfs etfs are often a good way to start as well with their properly liquid and they're well targeted um so having a real portfolio rather than just a couple of shares and looking at, I suppose, looking at a lot of clients' affairs over a long period of time, you know, a diversified, you know, you own ANZ and Westpac and NAB and so forth, but having all the banks doesn't make you

a diversified share investor. So, sort of, it's certainly about knowing that and actually getting it, you know, getting that toe in the market without necessarily exposing yourself because you don't know what the future is going to hold at the end of the day. So we always need to have something in reserve that can do well in other economic seasons. So that's probably a big thing just on the share market side of things.

And then really, I guess, on the managed fund side of things, look, I mean, I know that there are some good managed funds out there, but if you look at the statistics, especially in the hedge fund world, it, it's atrocious. Like, you know, you know, pay to put the ground and go to zero. So, you know, it's important to, even if you are in that managed fund world, whether it's sort of, you know, with the big superannuation funds, which I've got some concerns about, looking under the bonnet and finding out, like, what are the, look beyond the pie chart, really, and just sort of find out what's really underneath these funds because some of them

might be a little bit unsettling with what you find. Well, I think you've made a really good point and I think I wouldn't mind you sharing because the survival rate of some of those managed funds is a bit iffy, I understand. Can you just put a bit of light around that for the listeners because they're probably not going to be aware of that. Well, I think I did, I wrote about it in the book

in a couple of areas there and I can't remember the source but it was quoted in the book, and something like the survival rate for actively managed farms, in which a lot of these things are born from America, the survival rate is something like 57%, so over a 10-year period. So what does survival rate mean? Well, either it blew up and it's valueless or, you know, perhaps it got under distress and needed to merge with something else and it might that that fund

might not be there anymore um but in any event it's still still quite concerning and unfortunately a lot of those sort of funds do you know they dabble in the derivatives and and things like that which can which can exacerbate you know exacerbate an outcome whether that's good or bad um so you know so yes so many times i think and and i suppose even just more importantly today for australians um i mean what worries me is these you know so-called balance funds out there in the in the big big end of town of superannuation um a lot of concerns there because um you know like i know i've got had one i guess client matter that had some money in a balance fund with host plus and if you go and look up, you know, the latest information,

there was no cash in this balance fund. This is before the pandemic, just immediately before the pandemic. I, you know, invested, gated something on behalf of a client, so there was no cash in it and they, you know, there's a large unlisted component which they don't actually value the asset, so they don't, they're generally speaking reluctant to let you know what addresses are in this property portfolio or this property development portfolio because it compromises people's thinking.

And sometimes these balanced funds have up to 15%, 20% of the total assets of the big super fund in them. So what is it really worth? And, you know, it brings under the spotlight, well, what sort of, you know, okay, they might be reporting sort of thing, you know, reporting returns in one way, but what's really there? And I'm really worried about CBDs as a general rule. Like owning, you know, a big end of town usually owns CBD buildings.

And I know in Brisbane some of the iconic buildings are only 30% occupied at the moment with all the changes in behaviour that's going on. So that's a big concern to me. And I'd be just encouraging, you know, your listeners just to, if they do have these big superannuation funds, just really, you know, dig deep into them just to find out what is really underneath it and get specific if there are property holdings in there. Totally agree.

And it's, I think, a little-known fact that, you know, the big super and institutional super funds have historically been quite heavily weighted into CBD office buildings in particular. And that's an asset class that is in real strife now is only going to get worse in the short to medium term. Very interesting that, you know, you as someone in the industry found it difficult to dig in and find out

what properties are actually part of the funds and so, you know, the sort of term balance funds doesn't sound very balanced at all when you hear it that way. Well, it's a fake balance fund, Rushi, I think. And you know what they tell you. So, I mean, you'll get the authorities and you'll ask the questions, but you always get the, you get fobbed off with the commercial in confidence, you know, response, which is, you know,

in other words, they've got to protect their secret sauce in inverted commas and this is what makes them better than everybody else. But, you know, but hopefully your listeners have a bit more luck than me with finding out what's really in their superannuation funds and making these inquiries so they can make an informed decision because you do worry about, you know, it's usually the lazy investor is usually the one that foots the bill and, you know, okay,

looking a bit beyond that annual sort of member statement that you get asking lots of questions to your fund, I'd really encourage your listeners to do that. Yeah, the other thing too that sort of circling back to what you mentioned around the managed funds exercise is something that I've mentioned in the past And that is that, you know, managed funds normally means that you're paying a much bigger chunk out of your funds to pay advisors to be supposedly managing those dollars on your behalf, which, you know, those costs can have a significant impact at chewing away at your returns over the long term. What's your thought around that?

Well, great point. I mean, I did a piece on that in the book Master Your Super, which was about Warren Buffett's bet. And he famously had a bet with five of the biggest and best hedge funds in America over a 10-year period. And they stumped up an amount of money for charity. And Warren Buffett just invested in the cheapest index fund he could find just before the GFC, mind you.

and um and the and then that was sort of there was five um aggregated best of the best sort of hedge funds in america and and you know and and just that the fees absolutely well i mean the astronomical sums and i think warren buffett called them financial helpers but um but really it was sort of a lost decade for them i think that the um i think the the index over that period was around about 8%, which is roughly what you'd expect on a 10-year period in the equities market, where I think they might have been around 4%. So it was sort of quite a difference between, again, just evidencing between that passive whole-of-market sort of approach versus hedge funds.

They can get cannibalised a bit with fees, and it's important to be really across that because that is effectively a return that you're not getting. It's a return that you're paying for them. Like, it's an infinity return for the fund manager, not for the investor. Yeah, that's a very good point. You talked about in the book, and I love this expression, the asset class of weapons of mass financial destruction. Is what we've been talking about part of that,

or are there other instruments that listeners need to be aware of in terms of its potential impact? Well, yeah, look, there are, I mean, derivatives, you know, financial markets like options, futures, but at the end of the day, they can be used for protection, which can protect the downside of a portfolio, but a lot of the time they're used for speculation, which means that, you know, I guess whenever something gets leveraged, the outcomes get multiplied many times over, both, you know, on the upside and the downside. And when there's debt involved, then it can be a fairly devastating effect.

So, you know, that's not something that other than for protection measures and in protecting, you know, I say a retirement portfolio, you know, towards the end of a person's working life. And look, it is a Warren Buffett coined phrase, just got to be very careful with debt because you know playing with debt it's great but and look and I

think learning you know part of the journey is about learning about debt but you'd be using it for assets that produce income rather than just for speculation which is what where people sometimes come a cropper. Yeah it's very good advice

one of the other exercises I thought was really good in the book before we start digging into the world of self-managed super, you mentioned some guru's portfolio or the master's portfolio asset allocation approaches. I'd love you to share some of that because one thing that I see a lot of investors don't do is think carefully about diversifying and hedging their portfolio. Can you just sort of give us an example of one or two from the book that will just open the listeners' eyes to the sorts of approaches that they might need to adopt?

Yeah. No, so there was an interesting one that I did put in there because as part of, you know, the Warren Buffett annual newsletter, he actually, his wishes for his family is to have 90% of his residual wealth. I mean, he's giving a lot of it away, but for his family, he is simply advocating an S&P 500 index fund and 10% in bonds. So I think it's just that I often find it's just a great way to build a conversation because I guess at the end of the day, we all need to learn that there's certain assets that do well in different economic environments and not others. And look, the cold

hard truth of it is that there are four economic seasons. And so we've got high growth, low growth, high inflation low inflation you know no asset class yet as a whole does well in all four the best you can hope for is two out of four so in terms of that building a real or weather portfolio then then having all of those bases covered is a very important part of capital preservation so you know if the markets do go down another 25 percent again which they which undoubtedly they will well you're not going to be giving yourself a permanent injury you've got opportunity to be to invest more that's sort of just one and then i guess you know i mean jack boga which is sort of the traditional 60 40 fund which is 60 percent into um 60 percent into diversified stocks and 40

into bonds um that's potentially a dated concept these days because i'm very worried about bonds and where they sit uh in the cycle at the moment um and and stocks are sort of looking you know quite expensive at a global from a global perspective given the amount of money printing that goes on and the unlimited um uh purchases that go that go on by central banks um you know stocks are looking quite high bonds are looking quite high as well um so that type of that was deemed to be a a diversified portfolio um at one point in time and that was sort of coined by jack Bogle, who is the pioneer of sort of index funds in America. And then probably just one final one I'll mention is from, you know,

Ray Dalio, who is probably regarded as the top hedge fund guy in America. And that's where, you know, you start to sort of delve into, well, look, okay, we might just have 30% into shares and 7.5% into gold and 7.5% into, you know, commodities and some bonds and things like that. And that's sort of, you know, starting to cover more economic seasons. And we sort of did some back testing of some of those portfolios just to see where they sit from a risk perspective as well as a return perspective over a long period of time. So that's sort of an interesting exercise. But I suppose the goal of that sort of section in the book was really just to, you know, help people think a bit more beyond just shares or just property or just, you know, precious metals.

for example, just bonds, you know. So having that more full conversation in terms of, well, just understanding how the levers work and how they interrelate with each other, which is important. Yes, and that correlation piece is the piece that a lot of people don't even get their head around. So they might think they're diversified, but if they're all buying assets that are either all going up together or all going down together,

then it can be really good or really bad but not much in the middle so from that preservation perspective that you spoke about earlier and that risk management perspective just getting your head around how different assets generally perform against each other so that you're ultimately protecting

the amount of money that's left in your pocket is something I don't see enough people putting energy into but yeah so let's have a quick chat Because, you know, in my own view, and I don't know that a lot of Australians appreciate this, but our superannuation system is an absolute free kick that you just, and you'd know this way better than I, but I just don't think similar types of opportunities exist around the world where a, you know, a nice meaty portion of our income is being force fed into opportunities that can replace our income over time. talk to us a little bit about super in the general sense uh because uh you know if it's if it's not managed the right way uh i'd love you to share your impressions and some of the stats that you might be aware of in terms of where people end up and uh if they if they don't proactively take control of their own money management and then conversely what's the opportunities uh for people

to do it a lot better. Look, I think, yes, I mean, superannuation, look, it's probably the only sort of legal tax haven in the world when you think about it. And as you say, there is a bit of a free kick there to the extent that, well, look, we've got sort of, you know, the superannuation guarantee, so there's money that, you know, automatically is going into the superannuation account each week

or each month or whatever it is, and that is going towards you know one's retirement um but in terms of uh superannuation generally like it's important to know like what choices you do have because there are there are a number of choices out there like we've got things uh like we do have things called self-managed funds which is where people have um you know wanting to get on that financial education journey and take control and do a bit more for themselves um but there are also other options in the retail uh superannuation space which is like the the amp and macquarie and so on and so forth um and then you've got the industry super funds which is like the australian super and host plus and and um q super those sorts of guys

yeah so and so although they've all got different strengths and weaknesses and i i guess i elaborate on that a little bit more than a lot of the time if you're looking at things from purely a cost perspective you know i mean for example that the self-managed super fund might not be for you and and the reason i say that is um look there's an awful lot of you know super funds out there in the retail and industry space which are virtually for free so if if you really look hard enough you'll be able to find something that that is very very cost effective um and there's also a feature of some of these uh superannuation funds that that have what they call a member directed investment which is um it's a bit like well you know it provides an arm to your just say

if you invested with australian super i know they've got one and i'm not sort of advocating um or otherwise but they do have that facility where you know for example bushy martin could have an account there, there's an amount of money in that account, and he can go and invest a portion of that money in, say, the top 200 or top 300 ASX stocks and ETFs. And for people that are just, you know, really are focused on equity markets and things like that, you know, then that can be sort of a worthwhile option worth considering. I mean, generally speaking, you do find you know that there's a lot of super funds that are named and shamed um the town and you know look and there are some there's a thing it's called stock pot i think that's a it always a very

interesting report where they they name and shame that the fattest uh superannuation funds in terms of fees um make sure you you know your listeners aren't on that list because you probably need to go and shop for another advisor or shop for another fund um so so they're so they're really I guess, your options at the end of the day. So, there can be some engagement and some level of control, even in the retail and industry superannuation sector. You've just got to have a really good, you know, cast a real discerning eye over fees, of course. I mean, a lot of industry funds, for example, you know, will sell the fact that they don't pay financial advisor's fees, which is which is fine but but there are still management fees there and quite often those

management fees aren't that small but there are some out there that are incredibly cost effective especially if you're looking for that more of that index sort of type of approach to managing your money but if you're thinking outside of that you're thinking about property and development and and building something that's a bit more all weather well if you're on that financial education journey and that's where you know perhaps a self-managed super fund might be worth thinking about yeah well let's let's delve into the self-managed super now and i guess one of the the sort of crossroads decisions are the sorts of questions that uh the listeners need to ask themselves uh to to get some clarity around whether they stick with a normal fund uh or

go down the self-managed super road i know you cover this off in the book can you give us a sort of a bullet point summary of the sorts of things they need to consider there? Yeah, well, certainly costs is one factor, or at least being aware of the costs. And because, you know, need to obviously, I guess, in the self-managed super sector, there's a lot of service providers out there that provide different services to help people, you know, run their self-managed fund. Some of them, you know, there might be some onus of work on you. to keep the fees down sometimes that you know they might be doing everything from paying you know

paying the bills for you so you've got these sort of different levels of service and it's important to compare an apple with an apple um i mean if we look at statistics and um and just sort of raw numbers on it you know i mean look i mean you know a lot of five hundred thousand dollars seems to be bandied around a lot these days um and that may well be about right but but look i've seen many cases where lower a lower investment number could work out okay from a pure cost perspective and sometimes more than that as well so depending on depending on the level of opting in and opting out of services attached to the smsf administration because effectively an smsf it's like another trust there's still annual reporting there's audits there's ato fees and things like that

You might be paying a financial advisor if you're wanting to get, you know, counseled on certain things. So, you know, all of that needs to be sort of thrown into the milkman pot and have a real look at the cost-benefit of staying or leaving. But I would argue, like, more importantly to that, it's sort of more, you know, about your attitude to your own, you know, financial education and whether or not you're there for the long haul or if you think this is going to be a quick fix and a quick win,

you know, you might be sort of rudely shocked. I mean, a lot of people sort of, you know, I mean, I guess from the mistakes I see or have seen people made over the years, quite often it's on the back of, you know, something going wrong with their fund or under-delivering. They then sort of roll it into a self-managed fund and without really any financial education, they might want to go and buy a property. And then they realise buying properties, generally speaking,

if you're going to do it yourself, it's hard work, it's a grind, it's a relentless sort of pursuit, sort of finding the right property and giving yourself a bit of margin of safety and those sorts of things. And unfortunately, a lot of those people then, you know, lose patience and they, you know, grow impatient and they buy something off the plan out in the sticks with a rental guarantee and all of a sudden the value of that property over a period of time has plummeted.

And so they're sort of some of the things where people do lose patience and they don't really have a plan to begin with, which is probably more to the point. Yeah, and that is the key. There is no real plan other than I like property or some spruiker has said we can get you into a great property if you set up a self-managed sleeper fund. We don't see quite as much of that now as what there was some years back.

Thank heavens. Tell me just around that subject then because, again, you cover this well in the book. What's the ideal mindset that someone with a self-managed super fund needs to adopt? Well, if they want control, I guess they want control and they're real seekers of knowledge and they're interested in financial advice.

They want to, you know, also want to know a bit about the system. Like there's a lot of great sort of tax benefits attached to superannuation and like a lot of those can, you know, help improve your returns just by simply knowing how to pay a bit less tax along the way. So it's like a risk-free rate of return if you can sort of save some tax on your savings along the way. And really just having the right mindset so you take action and you learn from your mistakes.

So when you make mistakes, you dust yourself off, you learn from it, and you move on. So if you're sort of in that sort of mindset and you're prepared to sort of, you know, invest in your own financial education over the long haul, well, then I think, you know, it's something worth thinking about for a lot of people. Yeah. The other thing that I think needs to factor in here, and it's something that I talk a lot about, Darren, is make sure that whatever avenue you pursue and whatever you invest in also matches the time that you've actually got to manage that properly because what I

see a lot of people do and years back I saw a lot of people jumping into the self-managed super fund space thinking that that was going to be a great thing, didn't understand the cost but also didn't understand how much of a time commitment was required on them to actually properly manage it and what inevitably happens when when people get busy is that things fall through the cracks and all of a sudden they're not getting anywhere near the sort of performance that they were expecting to get but what's your thoughts on that? No well that's a that's a good observation and probably an example of that as well is that if they you know I guess in that same scenario I talked about with before where people roll over money into a self-managed

fund, if they can't find the property that they desire, quite often they end up getting sucked back into that managed fund world as well because it sort of becomes too hard or the process of investing and investing, you know, a bit of time and effort into and forward into investing, quite often they get sucked back into the managed fund world, which can mean that, well, effectively you're doubling up on your costs. so there's really you know that there's you know generally speaking there are exceptions to this rule but but generally speaking having managed funds in a in a self-managed fund defeats the purpose in many ways because really you want to be able to the purpose of it is for you to take

control and you do more for yourself there can be some scenarios such as look there might be a particular market that you're wanting to invest in that might need a manager, and usually that might be a very small, you know, sometimes a smaller part of a portfolio, but putting the lion's share back into managed funds, like, yeah, why would you do it? Yeah, exactly. Just fees on fees, basically, and cost as a result. Totally agree. Okay, well, I wouldn't mind delving a little bit more

into the property side of self-managed super because, I mean, it's had, unfortunately, a bit of a bad rap for some of the reasons you've spoken about. Spruikers trying to flog these, what they try and promote as dual occupancy, flat passive income properties that end up being in the boondocks

and have no growth potential and just doesn't stack up, that's the bad side. But there are some very positive sides. And, you know, one of the obvious ones that sticks out for me is if you're running your own business and you need business premises and you've got a property that you're going to hold beyond retirement age, then it's a very effective way to deploy some investment funds and very, very tax effective, both initially and ongoing.

Can you put a little bit more colour around that and perhaps some of the other areas where property might be appropriate to be considered in a self-managed super fund? Yeah, and look, I think that's probably the, you know, when you look at the most successful self-managed superannuation funds in terms of their asset performance,

a lot of the time there is you know strong elements of real you know investment grade property in there and a lot of the time it is linked in some way to a to a small business so so self-managed super funds can you know buy business premises and and lease them back to your own business so so effectively the the landowner can be the self-managed super fund whether directly or potentially if there's borrowings that's got to be done in a slightly different way. But the overall sort of scenario is that property can end up being owned by a superannuation fund that you pay rent for to your own fund. So you're not paying a landlord or a stranger or a bank. It's going to your own superannuation fund at a low tax rate because

the maximum sort of tax rate for superannuation funds is 15% on its income. And that can potentially go to 0% once you get to what they call retirement phase and when you start drawing a pension. So it's extremely tax effective, even in the worst case scenario with 15%. But also on top of that, it's a way to keep the bottom line of the business down. So if you charge yourself $50,000 a year rent, and that's all got to be commercially justified, that $50,000 is actually a tax deduction for your business, so that can help keep the business taxes down, and you're able to then convert, I guess, assets from an active environment,

which is like an at-risk environment for your business, into a passive environment, which that money can then be used to invest and hopefully grow that from there. So, yeah, business real property, and that's probably the utopian sort of strategy for small business owners, if they already have a business that's owned elsewhere, there's a number of different, there's probably at least 12, 14 different ways in which a property

can be moved into a self-managed superannuation environment to be able to get the benefits of, I guess, having growth, potentially not taxed at all if it's sold in retirement or if it's never sold, that's fine. and along the way, rent won't be taxed any more than 15% and your business get a tax deduction for it. And on top of that, because the rent that a fund receives, that's an investment return,

that has nothing to do with your contribution cap. So you're still allowed to add another $25,000, for example, into the coffers of the super fund and just makes everything extremely tax effective and it's just a way to build wealth and have it sort of taking it from an at-risk environment, which is your business, to a lower-risk environment, which is your super fund. Yeah, there's certainly layer upon layer of potential benefit there

if you're in that position of running your own business. So real food for thought around that. Mate, you sort of briefly touched on earlier in our conversation that you felt given the waters that we're moving into And, you know, it's fairly obvious from everywhere you look at the moment in most assets, whether it be equities or property, that there's a sort of an emerging potential asset bubble occurring, particularly in the US, but to a lesser extent here. And you mentioned that the old 60-40 fund, while it did have some relevance at a point, probably doesn't really apply now given where bonds are heading and where stocks are looking pretty expensive and the action of the central banks. What would your thoughts be then on what investors need to start thinking about moving forward in the short to medium term? Yeah, look, I'd probably just start by saying, well, look, there's certain, you know, it's

always an interesting conversation when you just sort of think about, well, what assets can go to zero? Which ones can crater to the ground? And generally, you'll find, well, it can't go to ground. Most people would say real estate, if that's sort of properly looked after and you keep it clean. from a debt perspective that can't go to zero gold and silver i don't believe can go to zero but but things like stocks well they can go to zero derivatives they can go to zero bonds they

can go to zero so sort of in a really simplistic way sort of you know often well just just honing in on what what could go wrong and and then obviously preparing for the world because you can't really predict your future. All you can do is prepare for it. So, sort of, you know, so therefore, when you sort of take a step back and you think about those four economic seasons, you know, high growth, low growth, high inflation, low inflation, and knowing which assets can then be dovetailed in. So, for example, if you have lots of property or if you're happy with your property portfolio, we probably need to start thinking about shares, for example. Properties are fantastic in an inflationary environment. So, that's sort

of – there's always going to be a nice sort of hedge there. Shares, well, they behave differently, you know, and they cover a different economic season. You know, they're good in a high-growth type of environment. But we're in this sort of environment at the moment where, look, there's other things that we probably need to look at as well, which is such as commodity-based stuff like the gold, silver and different, you know, different asset, different energy commodities, different agricultural commodities, things like that, that can really help broaden out and deepen the diversity of a fund.

So I think, you know, a lot of time, well, if you've already got your shares and you've already got your property, well, then looking for things like commodities, you know, is another important place to start because I think you know I've you know you often hear about talk about paper assets because generally speaking you know if you think about things in terms of what is a paper asset the paper asset is a is a bond like that's just like a loan and it's not abnormal for loans to not be prepaid so so that sort of is is you know same with shares shares can go to zero bonds can go to zero some would even argue like fiat currencies like 650 times in history that's

gone to zero so sort of you know having real assets in a portfolio such as in the commodity space i think it's a really important sort of conversation to have with with clients at the moment just to help build out that diversity in a portfolio more and more love it and uh we can't have that conversation uh given the the talk about uh fiat currency uh for those who aren't aware fiat currency is basically the printed currencies of the of the country so you know that for many years the sort of global mean has been the u.s dollar as a fiat currency but as we know central banks can just keep printing unlimited amounts of that uh the latest craze and i'm i'm sure the interest in your thoughts around this but uh when i start hearing people talking about

how they're looking at selling their property to buy crypto, I start to spasm. What are your thoughts around the current crypto craze? Look, I'm just fascinated by it. I've been probably studying it quite a lot over the last year and a bit. Have I done it myself? No. Have I had clients that have dabbled? Yes. and one sort of, well, actually two extremely successfully,

breathtakingly successfully, in fact. And I think when getting back to that conversation about what can go to zero, I think there's probably one or two crypto, maybe three out there that I don't think can go to zero. But don't forget, there's like probably 3,500 of them now and most of them are fake. um so so you know and it's all about you know whether or not there is going to be any adoption

at the end of the day but but the whole bitcoin is sort of fascinating to me because there's a lot of things that are happening where it's nearly becoming too big to fail um in insofar as well there's many states in america now like some of the big ones even that that just just just um pay you know people pay their bills their rates and their taxes in bitcoin you know in certain States in America. And we've seen a lot of take up with NASDAQ companies now, such as the Teslas and the PayPals and whatnot. They're now in on it. And certainly Wall Street is dying to get in, you know, they're dying to get in on the action. So there's this money that's potentially sort of happening there. You know, again, we don't know what the future is going to be. A lot of people

talk about it being legislated out or regulated out, but it is a trustless system. And I guess that, to your point, the whole fiat currency system is purely based on trust and the good faith of governments. But how much faith will you keep having in a government? For example, like America a couple of years ago, it had, you know, $5 trillion in expenses, $4 trillion in tax revenue, so they're a trillion short, and they just went and printed another trillion dollars. And so the balance sheet of the government's, well, okay,

so it's $30 trillion in debt now, but they might have $7 trillion in assets. You know, that's taking trust. We're just having to trust the government to be able to – and, look, it really gets down to how many people in society sort of will trust the government with their money. Because there's people – you know, I've met people from Venezuela that have had, you know, control or deleted their money. And so it's just important, I think, just to be, you know, be aware that, you know, like, yeah, study the history of money and see what sort of happens when fiat currencies sort of get out of control and debt gets out of control at a country level. So then it gets back to real assets, doesn't it? Like, you know, real things that people need and want, you know, in daily life.

Interesting. Yeah, it's a very interesting area. and in our current times and what's going on, there's a lot of dynamics there. But it all comes back to me, to what you said earlier in the conversation, and if you're diversifying and you're making sure you've got the majority of your funds

in real assets or assets that can't or won't go to zero, then regardless of what happens, you're on the right track to protecting yourself. Mate, you've spoken, and I've sort of dabbled in quite a few areas that you talk about in your book, Master Your Super, and it's a great read. It's, you know, super's generally not a subject that keeps you excited, but you've got this happy knack of breaking it down into bi-size lumps

and quite engaging conversation with lots of examples and some great quotes that go with it. Just to sort of bring that to a head, you know, why did you write the book and who should read it and what are the key take-home messages as you see it? Yeah. Oh, thanks for that, Will, because as I said before, I was, you know, I think the whole textbook thing

with superannuation sort of has been done to death really. So, you know, thanks for that feedback. I was sort of hoping that it would be more relatable to the lay person and to people that are thinking a bit further afield and looking to, you know, looking to do better for themselves and their families. I mean, the reason why I sort of wrote it was really I've just become, well, concerned about two things,

concerned about the big end of town superannuation funds and people being lulled into a false sense of security with their balance funds. So I've sort of got that, you know, I'm concerned, you know, from that perspective because, you know, the people that don't pay attention might, you know, might do themselves some harm and also conversely in the smaller superannuation people that already own a self-managed fund not although not all of them are done well and a lot of them are done

without a real plan and not having a real plan um and and as a result sort of you know suffering losses so so really it wrote it just to be able to sort of help those people just be able to make smarter decisions with their money and just give them some tools to be able to um make their own assessments and their own judgements and decide on the best way forward for them without any sort of real conflicts out there. So in terms of I think like a lot of the premise of the board is as well, for people that are thinking about a self-managed fund but aren't sure where to, maybe they're too scared to speak to a financial advisor or they don't want to speak to a financial advisor or they're

just wanting to learn a bit more to before they then um um take the next step well i think that's certainly for them but also for people that already have a self-managed fund where they haven't done that well or maybe they even need to get out you know because it just might not be for them and and that's and that's fine that that's that's okay um as i said that there are still lots of um you know superannuation funds out there and do your own research maybe you need to do need to take a bit of advice if you're just disinterested financially. But I think they've given plenty of tools in there for people that are wanting to maximise what they've got

and protect themselves as much as they can. And that's really the main theme of the book. Yeah, awesome. Where can readers get their hands on a copy if they want one, Darrell? They can do that by visiting masteryatsuper.com.au. Yeah, as I said, we've got a discount there for Bushy listeners. And so, yeah, so that can be done in hard copy as well as we've got all the different digital formats there.

So, yeah, no, look, that's certainly available. And I can be contacted and DMed via LinkedIn and via our website at kingdonfinancialgroup.com.au. Awesome, mate. Mate, I'm going to slip into what I refer to as the ambush or the bushfire lightning round where I ask five quick questions that the listeners always like to gain your words of wisdom on. The first one of those is, and you've got some great quotes in the book,

by the way, but what's your favourite quote and why? Look, I think the one at the back of the book, which was, you know, however beautiful the strategy, you know, you should occasionally look at the results. So that was by Winston Churchill, but probably in wartime, And I think, you know, I guess relating that to finance, well, look, you know, looking beyond the pie chart and really just finding out what's there and just assessing is it working for, you know, if you're trying to get

from A to B, is that the best way forward, you know, towards you and your ideal life, you know? So I always sort of – and I'll put that one on the back of the book. I've always sort of quite bonded that one. That is a cracker, mate. I actually haven't heard that one before, but good old Winston was a good man for some of those great quotes, wasn't he? Absolutely. Now, talking about the authorship business a bit for a minute, apart from your book, Darren,

what's the top book that you'd recommend the listeners have a read of and why? Well, I reckon I would say The Richest Man in Babylon, on, mainly because it's really, I guess, the godfather of all personal finance books, and I guess that's, you know, when I decided to do a bit more for myself, it started from that, and you do find at the end of the day, a lot of the, most of the great personal finance books since are really, you know, somewhat a derivative of that, or have been derived from that in some way, shape, or form, so that's a great starting point, but look, from there don't stop you know keep keep going keep going down to think and grow rich and then all

the way through to to um you know now noel whittaker and a mate of our people they're all we've got great they've got great um advice you know personal finance advice yeah i totally agree yeah and i mean i've got quite a few in noel's books and they're just across a whole very australian based which is what i love about them the same with pete boards and stuff, it's very relevant to us here and now, as is your book in terms of the Australian context. So, yeah, great suggestions. Mate, back on the investment topic for a minute.

What's both the worst and the best piece of investment advice that you've ever received? Well, probably, well, worst, probably just getting sucked back into the managed funds world when I just wasn't paying attention. I think that was probably the worst bit of advice I got. Best bit of advice, happy wife, happy life. I think that's what I'm often told at home, so that's probably important. But I do and I will always take the advice of my wife, so that's certainly important, and it is important. I totally agree, mate, 100% agree.

Yeah, that's a good one. I do like one again it was a I think never test the river with both feet which is I think an old chestnut from Warren Buffett that's a good little philosophy to go by as well it is a good one

that is a very good one I haven't heard that one for a while mate that is a classic mate if we turn to yourself for a minute in the last question of the series what's a personal happy habit or rewarding ritual that you believe has contributed most to your success today?

Look, I think, I guess, you know, like gratitude is important, just being grateful for the health and wellbeing of your family and also, I guess, just from a business perspective, just valuing your time and where you spend your time. Financially, I think just really simple things like paying yourself first if you're in business and learn to save to invest and don't be afraid of making mistakes. Take action.

Learn from your mistakes and start again. I think that's sort of some habits that we try to go by in the Kingdon household. Yeah, love it, mate. Love it. Some timeless gold on those. Brings us nicely to the final question and it's a big one that gives you a bit of an opportunity

to wrap all this together. But if I gave you a microphone that spoke to every single one of the 7.7 billion people that are currently alive in the world and I gave you 60 seconds to talk, what would you tell people to get invested in and what would you say? look if if i was starting from from scratch i would be saying look find a mentor uh you know seek out the people that uh you aspire to be and and um and and look to be in their company as as often as you can um so i'd certainly start with that because i think it's important to know the difference between mentors and advisors like mentors show you what to do where advisors just tell you what to do and often they don't they don't do they don't um eat their own cooking um find some land you know i think i think that's you know the cornerstone of virtually all

you know great portfolios so if you can find that piece of dirt they're not making any more of any more dirt um and um and arguably it's shrinking just with the footprint of risers and things like that, learning to save to invest, and I would suggest, like, start to learn about the history of money. Like, learn about, you know, from the silver coins and gold coins and where things used to be backed by something. I think having people's eyes open to, you know, what the real meaning of money is, I think that will go a long way to helping people build their own all-weather portfolio because because we none of us can predict the future um all we can do is really just plan for the future so so having that knowledge uh innate in yourself and for your

family i think is really important love it mate uh some again some timeless uh advice there uh mate uh you've touched on this already but for those that do want to reach out uh and talk to you more about either you know their own superposition what their options might be and what the best ones might be for them. What's the best way for them to do that? Well, that would be probably through the, yeah, just Kingdom Finance. Well, Darren Kingdon's on LinkedIn, so you can certainly connect with me and DM me there.

There's also a tab through the Kingdom Financial Group website, kingdomfinancialgroup.com.au. Yeah, more than happy to take people's questions and have phone calls and get people thinking a little bit more for themselves. Love it, mate. Been a great conversation. It touched on an area that a lot of people are aware of, but it's often in the back of their mind, not in the front of their mind.

And, you know, if it's one thing that I think we both share, it's wanting hardworking Australians to live with intent and start to take control of their own future and their own financial future. So I really appreciate your time today, mate, and I look forward to talking to you again. Yeah, no, that's tremendous bullshit. No, it's been a blast. Many thanks, mate.

Excellent. Thanks, Darren. Talk soon, mate. All right. Cheers, then. Get a summary of all this investment gold in the show notes. Just email me on hello at khgroup.com.au. That's H-E-L-L-O at khgroup.com.au.

Or check us out at www.bushymartin.com.au forward slash getinvested. I look forward to joining you next week for another episode of the Get Invested podcast. So thanks for listening. And as always, dream as if you live forever and live as if you die tomorrow.