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TPC Gold | Types of Wealth – What Type of “Rich” Are You?

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In today’s bonus snippet, Bryce and Ben talk all things wealth. 💰 

Do you know what type of “rich” you are?  

Discover how understanding your current financial position can help you move forward with confidence, and why true wealth is measured in time, not money.  

Listen to the full episode here: Episode 335 | The Four Types of Wealth.

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Types of Wealth & The Seven Grades of Financial Wellbeing

Now that you know a little bit more about the different types of wealth, it’s a great time to conduct a health check on your finanes.

These are the 7 Grades of Financial Wellbeing: 

  • 1 – Financial Turmoil 
  • 2 – Financial Survival 
  • 3 – Financial Consciousness 
  • 4 – Financial Stability 
  • 5 – Financial Control 
  • 6 – Financial Peace 
  • 7 – Financial Contribution 

Take the Financial Wellbeing Quiz now to work out what grade you’re in and how to move up a level!

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Transcript

Bryce Holdaway
In terms of financial wealth, we think there’s seven grades of financial wellbeing and it’s probably worth revisiting those Ben, because it’s been a little while since we covered this on an episode.  

Ben Kingsley
And it’s going to be more prevalent in the work that we do moving forward because we’ve done the fundamentals around asset selection and all those types of things, so the next part of the journey that we want to take the community on is: how do you then measure that? Because it’s going to be different for everyone – rather than putting a dollar value on it straight away, what we want to be doing is talking about just understanding where you sit in terms of your current position and how you take that forward.  

So your starting point is not financial turmoil, but that’s number one. If you’re in financial turmoil, you need to get some professional help. If you are at financial survival, it’s very clear you’ve made some judgment decisions that haven’t gone the right way, and so you’re in a bit of strife. The starting position is financial consciousness. So technically this is our benchmark. This is base camp where we start and then we want to try and move up the ladder and we get to financial stability. That’s really important. So all of a sudden we’re now starting to say righty-o, got a bit of a sense of what’s going on here, still more to learn. And then we move into financial control. And this is the big piece that we’ve been talking about on our podcast a lot is feeling on top of it all without necessarily spending too much time on it is our goal. That’s what MoneySMARTS is all about. 10 minutes a month, but just feeling like you’ve got that money control and now starting to lift your eyes to get into that investment space and making that money work harder for you. And then as you do that, you move towards financial peace.  

Now, what I love about these seven grades is that’s what we do every day. That’s our purpose in terms of why we get up and what we do in our business is move people into financial peace. Hopefully not from financial turmoil. Hopefully we’re getting them from financial consciousness or financial control, and then basically moving through that. And there (are) a lot of moving parts there but what today’s lesson about is we’re talking more mindset today than ever before in terms of the technical stuff that we talk about. But the one I really love and I’m glad we added it is because we do measure the progress of the clients that we’re helping towards financial peace. But when someone gets to a fairly significant position, we’re obviously in a great position to also have financial contribution. And from my point of view, that’s where you pay it forward. So if you’re in a blessed position where you can then set up a trust fund – maybe for the generation of children that are going to come through for education purposes, because education is everything. Or you can contribute to a cause or a purpose that you really have passion about.  

Bryce Holdaway
(Something) bigger than you.  

Ben Kingsley
It’s bigger than you and that doesn’t matter, that doesn’t have to be financial either, that could just be time because what financial peace gives you, the greatest thing it gives you is time and the choice of what you do with your time. So I think that’s important if you haven’t listened to a deep dive of that episode, it’s (episode) 275 that we did last March. I encourage you to do that. We also on the socials, I think on Instagram we have a nice little storybook around that and we have a downloadable on that as well. So I think there is something to do. So we’ll make sure that those are in the show notes. But that’s the scene setter for what we’re talking about.  

Bryce Holdaway
So let’s go through that again Ben, just to get that to land. So grade one was financial turmoil. Grade two was financial survival. Grade three was financial consciousness. Grade four was financial stability. Grade five was financial control. Grade six was financial peace and grade seven was financial contribution.  

Ben Kingsley
And we have some amazing things that we’re working on that are going to really bring this to life, hopefully at the second half of the year. So when I get back from my break, we’re going to be really focusing in on that. And we’ve got some exciting things to be sharing with the community in the second half of this year. So I can’t wait for that. That gets me out of bed every day.  

Bryce Holdaway
What I like about that too Ben is it shows us the first six are really a journey of the individual or of the family unit. And then grade seven becomes instead of just being about you and your family units, about how can you impact others and make a contribution? And obvious examples are Bill Gates and Warren Buffett who are benevolent.  

Ben Kingsley
Yeah, the Atlassian boys. You look at Mike Cannon-Brookes, he spent, you know, about over a billion dollars on renewable energy. He’s thinking there’s an amazing opportunity here for Australia for that. So we love stories like that. And again, that’s the stories that you see in the main press. But I mean, I don’t know whether you caught the Twinnies episode, the Australian story on the Twinnies. So there’s these girls in there. I suspect they’re probably in their 40s, maybe early 50s. They do damaged and injured bird life.  

And so they live in Queensland, and them and their mum and their dad basically put all of their money into looking after and recuperating these birds and then sending them back out into the wild. Now, talk about purpose, talk about contribution, talk about all of those things, right? It’s a charitable thing. So Jane and I watched that the other night and we were like, I’m so glad we watched that. That was such a cool little episode to see these people who are doing this type of work.  

So that’s also what we’re talking about. If you’re in a fortunate position or even (if) you say to yourself from a financial position, you’re not fortunate, but you want to dedicate your life to serve. That couple of ladies, a fascinating study on twins, but also a fascinating study on what they’re doing in terms of their contribution.  

Bryce Holdaway
Well sounds like that might be the balance. I don’t know if you’ve watched on Netflix Seaspiracy yet.  

Ben Kingsley
No I haven’t seen that one yet.  

Bryce Holdaway
For anyone who’s listening to this, I felt flat, significantly after that and it’s changed the way I (think) even if it’s 50% true.  

Ben Kingsley
So what is it (about)? Give us a little backstory on it. 

Bryce Holdaway
It’s talking about how the fishing industry is overfishing the ocean and the impacts of that, and the lengths that we’ll go to and how it’s not being talked about. So it sounds like you need to have that one for a bit of a balance. But a couple of things in financial wealth for this particular type, I mean, we’ve talked about it for six years. So we’re not going to do anything groundbreaking today that we haven’t talked about before, other than just a few key concepts around: it’s about passive income over active income. So everything we’re talking about to get to grade six, which is that financial peace is where, you get more passive income coming into your wheelhouse than your expenses. So then you are in a place where you can get type three back, which we’ll talk about shortly. And also just the concept that wealth is measured in time and rich is measured in money.  

Ben Kingsley
I love that, say that again.  

Bryce Holdaway
Yeah, the difference is really important because wealth is measured in time, whereas rich is measured in money. It kind of goes to the fact that rich is kind of a four-letter word on this podcast because it sounds dirty. In our industry it’s full of spruiker talk. But we’ve always talked about having meaningful wealth around being able to sustain a lifestyle that gives you the opportunity to do the things that you actually want to do.  

Ben Kingsley
There’s no race to the top. You know, we’ve talked about that before in terms of the richest person in the world. What do they really got? You know, how important is that? And will they ever stay there? And when you get there, so what? I think for some of those people, if they serve well and they’re successful in serving others, all power to them, right? Very empowering when you’re making a true contribution, and you’re rewarded for that contribution. But in terms of the whole idea of being mega wealthy or being in the billion-dollar club and all of that, it does lessen my respect or view of some of those people if that’s what they’re chasing, right? If that’s their motivation, (if) it’s purely around how wealthy they can be.  

Bryce Holdaway
Type number three is my favourite. It’s time wealth. And the reason it’s my favourite is because I get to spend more time with them.  

Ben Kingsley
Hope you liked that short TPC Gold, folks. And if you’re looking for the free download or the quiz, check out www.thepropertycouch.com.au/quiz-financial-wellbeing. The link is also in the show notes, so just swipe up on your podcast platform and check it out. Have a play around with the quiz and we hope you’ll be at the stage that you aspire to be. But until next week, knowledge is empowering, but only if you act on it. 

TPC Gold | Dumb Things Smart People Do With Their Money

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Are you guilty of making dumb decisions with your money? 🤔💸 

In today’s bonus snippet, we dive into some of the dumb things even smart people do with their money. 

Join us as we explore some of these common financial mistakes and learn how to avoid these traps. Tune in for some laughs, self-reflection, and valuable insights on how to smarten up your money habits.  

For more tips on making better financial decisions, listen to the full episode here: Episode 72 | Dumb Things People Do with Their Money!  

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Dumb Things Smart People Do with Their Money – What Next?  

Now that you know the top three dumb things people tend to do with their money, it’s the perfect time to take a closer look at your finances and make your cash work harder for you. 

If you haven’t yet heard about our simple 7-step MoneySMARTS system, claim your FREE copy of our bestselling book Make Money Simple Again now.  

Discover how to trap more of your income AND guarantee a surplus in your bank account every single month! 

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Transcript

Ben Kingsley
Well, we’re just going to talk about dumb decisions with money.  

Bryce Holdaway
Dumb things people do with money.  

Ben Kingsley
There it is, there’s the topic. 

Bryce Holdaway
Dumb things people do with money. Hey folks, we’re a property investment podcast largely, but if anyone has been listening to our podcast series, they’ll know that we place as much emphasis on the minutiae of detail of cash flow management as we do on buying investment properties. So all of our regular listeners will know that. So today we’re talking about pillar three or “C” (for) cashflow management. So mate, we’re going to kick off a few things and we’re going to see if any of our listeners can relate to some of these dumb things that people do with money. 

Ben Kingsley
Our listeners wouldn’t do these things, but it’s up to them to then pass that on to their friends and educate their friends on how to do that.  

Bryce Holdaway
So folks, if we say anything offensive, we’re not talking to you. We’re talking to your friends.  

Ben Kingsley
But if you’re starting to go red in the cheeks and something, well, then maybe that’s the one you need to jot down to take a look at.  

Bryce Holdaway
I’ve got to say to our listeners as well, I’ve done a heap of these dumb things myself. Important thing is I’ve corrected the ship and I’ve got back on track. But over the journey, some of these dumb things, I’m actually just talking to a mirror right now.  

Ben Kingsley
It is all education and ultimately these are our observations in terms of what they look like. 

Bryce Holdaway
So kick it off, mate.  

Ben Kingsley
Okay, well there’s a piece of paper in front of me. (Number one is) too many separate individual accounts. So when people come in, they fill out their online fact find. And then basically, you know, we go and have a look at all of their financial situation. And I’m looking at six or seven bank accounts and I go, “Why?” And they’re (going): “Well, you know, I’ve got a credit union…that’s sort of the slush fund…that’s the emergency buffer money. So I’ve got $1,000 in there and $500 in the ING saver account.” And I’m like, well, wait a minute, don’t you have an offset account? Like, what’s that lazy money over there doing? Get it back in. Tidy it up and get back to MoneySMARTS. So that one for me, you got something on that one? 

Bryce Holdaway
Yeah, bank fees on each and every one of those accounts is adding up. MoneySMARTS, if someone’s just listening to this podcast for the very first time today, we’ve talked about it a number of times. But MoneySMARTS for us is, you know, we’ve got a genius in the office here Ben, Michael Pope, who you’ve said it before, he is that fastidious and that…what’s the right word?  

Ben Kingsley
Well, he has measured every dollar that he has spent since the age of 19. Now, I’m not giving away his age, but he’s got grey hair. So, he’s been able to put three boys through private school, technically, when it was impossible. So, using these little tricks around, you know, paying in advance or paying utility bills, so I don’t want to jump ahead, but he’s just done a lot. So this guy knows everything about money management. We’ve got another former colleague here at work, him and his wife are amazing money managers and are very diligent about how they look after their money as well. So that is part of wealth creation. You’ve got to manage your money well and you’ve got to take yourself on that journey.  

Bryce Holdaway
Yeah, so he says that MoneySMARTS is simply interest rate optimization. Yeah, and so you’ve heard of tax optimization when you’re doing all these whatever strategies you put in place. This is optimizing interest rates, costs and pricing within your family household structure. So too many separate individual accounts. They should all be brought down to your loan account, your offset account, a visa debit and a –  

Ben Kingsley
Yeah, so the lifestyle account. The credit card gives us the interest free period. And that allows us to use the bank’s money for a period of time whilst our money’s saving interest on our mortgage. And that’s what we’re about.  

Bryce Holdaway
You see lots of situations where husband and wife have separate banking as well.  

Ben Kingsley
Yep, yep, I don’t quite get it if you’re in a union. Yeah, and they come in, and I’ve even had people come in, one party comes in and says, “I want to invest in property. My wife’s not so interested or my wife wants to do it.” I mean, I’ve had plenty of times where the wife actually comes in and says, “I want to get my husband involved in this, how can we do that?” Because the reality is if you’re not both on the same page, we would advise not to invest in property because it will cause so much anguish inside the family unit that you’ve got to both be on the same page. In fact, one of our questions when people come in is: “Are you here under sufferance?” We ask that between the two parties. The body language normally tells us, but when we’re interviewing people in terms of taking them on this journey and understanding their opportunity and potential, it’s amazing to know that if one of the parties isn’t fully on board, then ultimately it’s not going to work for them. And part of going on that education journey around cashflow management and borrowing power and doing a plan, is to actually understand your cash flow movements and that’s why we use our wealth simulator because it measures cash flow movements for 40 years by month. So people get a little bit more confidence that they’re able to do it because they put all of their expenditure in there, they put all their future plans in there, and then they can see that there is an opportunity there and they’re not going to break the bank – which is the biggest fear for most people. So it comes down to fear and obviously procrastination as well. 

Bryce Holdaway
Very good, so too many separate individual accounts is a dumb thing that we see people do with money. Number two, not wanting to change to a better loan structure simply because they’re used to their internet banking. They know their password, they’ve had it for 10 years, they know what the format looks like, they feel comfortable, and the change really worries them – despite the fact that the loan structure will save them thousands. The interest rate could save them hundreds and hundreds, purely because they like their internet banking portal, and they don’t want to change it.  

Ben Kingsley
Look, we’ve just updated our server and given everyone new computers and we’re going through it; some things I’ve never seen. Trust me, technology change sometimes gets me mad. So, I’ve had a couple of meltdown moments this week. 

Bryce Holdaway
No, I haven’t noticed.  

Ben Kingsley
I don’t know whether you noticed what we’re recording on today. That’s because one of our drivers has dropped off the server and we can’t work out why. So we’ve got the IT people trying to fix that. 

Bryce Holdaway
Back to basics. This is just recording on a smartphone today, folks.  

Ben Kingsley
So the reality is we don’t like change. So naturally it’s not easy for us to make that change. I mean, I know when they change the internet banking setups on the different banks, and they try and make it more dynamic and more digitally friendly and for the young people. I remember opening up one particular bank, it’s a new app. So the old app was great; I could understand, navigate, and they put this new app and I didn’t even know how to open it. I didn’t even know how to transfer. And then someone says, “just swipe”. And it’s like, so I’m automatically meant to know that? Like it wasn’t intuitive at all. So that is the challenge you obviously have around this, but it comes back to the point of, when you do make the change, you’re going to have a month of anguish. And that’s what I’ve sent out to all the staff today. I’ve said, give it a month and we should be able to iron out all the bugs and we’re going to be okay. That’s life.  

Bryce Holdaway
So that’s your message to the folks who don’t want to change their internet banking. Do it, give it a month, you’ll be settled in.  

Ben Kingsley
You’ll eventually work it out. You’ll write complaints like I normally do to the banking, to say, you know, like, this is ridiculous, it’s not self-explanatory, it’s not intuitive. You know, I’m not an IT geek, so, you know, make it for the common people. And then I saw them make a lot of changes because obviously I wasn’t the only one.  

Bryce Holdaway
Yeah, so keep your eye on the big prize here. We want to save money to trap more surplus so we can invest more. So that’s why we’re doing it. We’re not wanting to make your life feel anxious because you’ve got a different format.  

Ben Kingsley
So true.  

Bryce Holdaway
Another one, thinking credit card money is actually their own money.  

Ben Kingsley
Hope you liked that short TPC Gold, folks. Now everything we said in this episode is general advice only. Make sure to consult a professional expert before making any investment decisions. If you’re looking for an investment-savvy mortgage broker, check out Empower Wealth. They are an award-winning team and have saved $4,000,000 in interest just last financial year alone. And remember, knowledge is empowering, but only if you act on it. Bye for now. 

What’s Your Money Story Like? Join us for our Summer Series and share your story!

By in Free Resources, Summer Series

We get it… Talking about money can feel awkward and uncomfortable.

But it shouldn’t be a taboo subject!

Having conversations about money not only allows us to understand ourselves better but also gives us the opportunity to learn more from each other.

So, would you like to be in our Summer Series podcast?

We’d love to listen to your story and hear about your tips and tricks when it comes to money management! And if you have a specific question in mind, we want to hear it directly from you too!

Just fill in the form below and we’ll get in touch. 😉


  • Name

  • Nickname
  • (Do you have a nickname/alias you want used on the podcast?)

  • Email

  • Contact Number

  • And a quick summary on your Money Story!

    Let's start with What Money Means to You. We are interested to know what motivates you particularly when it comes to money. From the options below, please select the top five that matter to you.

  • A quick summary on your Money Story!
  • Don't spill all the beans 😉

  • And finally, have you implemented our MoneySMARTS system?

  • This field is for validation purposes and should be left unchanged.

TPC Gold | What’s the “Magic Pill” to Wealth?

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Ever wondered what financial wisdom lies behind the success of Paul Clitheroe – renowned finance expert, author, advocate of financial literacy, and chair of Money magazine?  

In today’s bonus snippet, Paul dives into the MOST common question he faces about personal finance: What’s the “magic pill” to wealth? 

Also discover his candid thoughts on property investment, the human tendency to buy in booms and sell in busts, and the simple yet powerful principles that lead to long-term financial stability.  

For more nuggets of gold from the “Money” Man himself, tune in to the full episode here: Episode 200 | Paul Clitheroe – Timeless Wisdom from the Original “Money” Guru 

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Paul Clitheroe’s #1 Money-Making Secret!

Now that you know what the “magic pill” is to wealth…here’s something that might be of interest: our Masterclass on How to Build a Property Portfolio and Retire on $2,000 a Week. 

Discover how you can create your own roadmap for life, avoid making costly mistakes, and optimise your wealth starting TODAY.

It’s absolutely free to sign up, so don’t wait around too long! 

 

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Transcript

Ben Kingsley:
What are some of the more common questions that you constantly get asked about that you just don’t feel is dropping from an educational point of view? Like, you know, what’s the Q&A that you have to do all the time? That they’re just asking that same question like, “please, please” that we can get out to the viewers and the listeners.

Paul Clitheroe:
The magic pill. People want the magic pill.

Ben Kingsley:
They want to get rich.

Paul Clitheroe:
So the most common; had (this) two or three times walking down York Street. Not people being impolite and yelling; just people are lovely, actually. That, and I like this in Australia, is that people respect your privacy. So people give you a glance and say hello. But, you know, generally, people are polite. If you stop for a coffee, the person in the queue will say, they always want a hot tip. And I’ve got a couple. I say, “Look, don’t stand in a canoe and be nice to your mother”. They are both qualified, very helpful, quality pieces of advice. So the reply I always give is: Why do you think I’m still working now? Why do you think I don’t have a 300-foot boat in the Mediterranean, for heaven’s sake? And so the thing for me is that the absolute constant is just spend less than you earn. And look, you guys know as well as I do when you get times like this (where you see property going backwards for a while), you just think, hang on a sec, where’s this going? And you go, okay. Population’s growing, population’s living longer, population’s wealthier than ever.

Paul Clitheroe:
You think to yourself, all the downturn in property can mean it’s a good time to buy. That’s all it can mean. Yep. How many of these will we live through? I’m much older than you two.

Paul Clitheroe:
So when do you buy? When do all humans want to buy? During the boom. When do we want to sell? The only thing, one of the things I do love about property, by the way, is that in a downturn, it’s hard to sell. See, I got really, really cranky during the GFC, you might remember (and) I’ll use Commonwealth Bank as an example. It was only, what, a decade ago? When did Australians sell the greatest number of Commonwealth Bank shares in the history of Commonwealth Bank? When it hit about $23.40. So one of the funny advantages of property is when the market turns to crap, which it always will, it’s a bugger of a thing to sell. I call it a self protective mechanism, because, again, we just know that humans always want to buy in a boom and they always want to sell in a bust. And you say to yourself, why is the bust happening? Well, if you told me the Australian population was shrinking in size, our economy was going backwards, wages were going backwards, and we’ve got population shrinkage, then sell your property as fast as you humanly can for anything you can. It is worth nothing. You guys are property experts, not me. It’s a supply and demand asset. It’s pretty simple stuff, isn’t it? We’re going to have 35 million people in this country in the next 27 years. We will probably continue to be one of the richest people on earth. And with no death duties and stuff, we will preserve that wealth.

Ben Kingsley:
Touch wood, touch wood.

Paul Clitheroe:
Now, one way of stopping the rich getting too rich, buddy. Yeah, I know, I’m going to make you cranky, so I better be careful here. We might have to debate about that.

Ben Kingsley:
We might have to take that one offline.

Paul Clitheroe:
But basically this simple money stuff, and this is why I can’t give you a hot tip. But, you know, my two adult kids have been in the market for a while and this decent little downturn, particularly where we live in Sydney, I said to both the adult kids: “Wow, you know, this is your moment”. And my son in particular is an economist; he works at PIMCO. My son said, “Gee, but dad, it’s going to get worse than this, you know” and I said yeah.

Paul Clitheroe:
But if you find the place you like and you get a decent discount on what it used to be, I actually agree with you. I think it will be worth less in a year. But like we’re talking about a ten-year deal. And, you know, he’s a smart kid. And he said, well, you’re quite right. He said, in ten years time, the population where we live in Sydney, it’s growing by, you know, half a million people every blahdy blahdy blah unless the economy goes backwards, or the population shrinks, or we get hit by an asteroid.

Paul Clitheroe:
And so I find it very funny that we get this mass panic: the lemming thing. “Oh, the market’s going down. We’d better sell.” “Oh, the market’s booming. We’d better buy.” I’m not sure how we ever train people out of that fundamental human instinct.

Ben Kingsley:
I wish we could.

Paul Clitheroe:
Well, but the evidence is so. I love stuff because I do love my economic history. If you want wonderful examples in history, you go back to when there was nearly a 99% collapse in property prices in Venice in 1328, 30, 35 or something. Don’t quote me.

Bryce Holdaway:
That’s what I thought, too.

Paul Clitheroe:
Yeah. Bubonic plague killed nearly exactly 55% of the population in one year.

Ben Kingsley:
There you go.

Paul Clitheroe:
And when you kill half the population, it’s a bugger for property prices. So if you’re telling me Sydney is going to be 2 million people, you know, I really think property is going to be a truly shocking investment.

Bryce Holdaway:
Yeah, well, that’s the conversation that we’re trying to have with people via this podcast. It’s a cash flow issue, not a balance sheet issue. Because the only thing that takes you down during, you know, a perceived bust is if you can no longer hold the property.

Paul Clitheroe:
Correct.

Bryce Holdaway:
So if you’ve made a decision to buy and your cash flow is still okay, don’t worry about paper gains and paper losses, because if you’re playing the long game, it’s fine. But like you, it’s the advice that you’re giving your kids: “now’s a great time to be buying great assets.”

Paul Clitheroe:
Well, but the point you see, is this question all came from: “What is a hot tip?” I don’t have one. Vicki and myself are quite happy with what we’ve got now. I’ve got a couple of fintech companies I’m involved in, where I’m really hoping we can do well out of those because I’d love to put that money into our foundation, which is part of Vicki and my personal legacy. And the kids and our directors, you know, we’d love that. We’d love the kids to be able to keep giving money away when we’re gone as well. So I would love to actually have another business success so I can top up our charitable foundation. That would be absolutely fantastic.

Paul Clitheroe:
So in a sense, I am concerned about making money for that purpose. But I can’t do it in one, three, or five years. And all I know about money is that if I pick a trend, and the most valuable trend you have, is the fact that every one of us is an economic miracle. You know, basically for each Australian who is born, who comes to this country: they buy bread, they buy milk, they buy petrol, they buy a car. We are, you know, it’s called the aggregate economic effect and each individual is just a little economic miracle. It’s one of the reasons why those (and I get all the population pressure stuff and I’m not going to get into a political debate, but one of the issues that I do know, putting aside the political debate and population pressure), one of the things I do know is every person who arrives in Australia or is born in Australia actually adds to the economic wealth of this nation. And so that’s why I’m a bit balanced on the population growth issue, and that’s why the only hot tips I can give in the short term are: spend less than you earn. That is the only hot tip I can give you.

Paul Clitheroe:
Because if you spend less than you earn now, I don’t give a tuppenny toss because the next question is: Do I buy shares or property? I don’t care. And the reason I don’t care is there is no evidence that either asset is particularly better than the other. So if you come to me with a bunch of properties, I would encourage you to buy a few shares. If you come to me with a bunch of shares, I would encourage you to buy a property. But the idea is that when people say: “Give me this hot tip” and I say, look, guys, let’s be serious, it’s about, are you creating? Do you have surplus income? If they have surplus income, then they get very excited about shares or property. They get quite upset when I say: I don’t care, just do something.

504 | Everything You Should Know Before Turning Your PPOR Into an Investment

By in Podcast, Property Investment, Q&A

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Trevor is seeking a “Tree Change”: To escape out of the city with his family. What are the implications of turning his Principal Place of Residence (PPOR) into an investment property to do so?

Meanwhile, Emma’s got a duplex under a single title. She lives in one unit and has rented the other; is she eligible for Capital Gains Tax exemption?

Clinton wants to know what the best loan to attach his offset account to is: an interest-only or principal-and-interest loan.

Folks, today’s massive Q&A highlights the most significant benefit of Australia’s tax system, the importance of seeking good tax advice (and the implications if not!) and exactly why record-keeping could save you thousands.

Tune in now! 😊

 

Free Stuff Mentioned

  • How much is your property earning (or costing) you?  Moorr’s newest Property Cashflow Projection Tool is now live! Get a detailed breakdown of money going in and out over the next 12 months, plus the full tax story. 

 

Questions We Answer…

Q1) Capital Gains Inquiry from Emma  

Hello, my partner and I bought a full duplex with a single title in 2022 for $465K. 

This year in February 14th, we sold it for $550k. The unit 1 was rented when we first purchased the property and is still currently rented by the same tenant. She stayed there even after the settlement whilst we moved into the unit 2. 

Can you please help me with the capital gain tax calculations and whether we would be eligible for an exemption. I can’t seem to find a straight answer online, whether we would take the capital gains tax on just unit 1 or whether we could apply for the exemption for the whole property. 

Thank you. I appreciate your help. 

 

Q2) Where to attach my offset account? from Clinton  

Hi Bryce and Ben and the team on The Property Couch. I just have a question in regard to which loan I should have my offset account attached to? 

So, we currently have our PPR in Cairns, which is of the value of approximately $600k which in the next three years we’re going to rent out. Hence, it’s an interest only loan.  

And we are also going to buy a property in Melbourne this year of a value approximately $800k but that will be with P&I loan. Just wondering which loan would be better to have the offset attached to as $800k purchase will be P&I and the $600K PPR right now will be interest only.  

Obviously, interest only helps with cash flow as well. I understand that it’s probably better to have the offset on the higher mortgage, but would it be better to have it with the lower mortgage considering it has the interest only loan? Thanks guys. 

 

Q3) How to turn your PPOR into an investment property and move to the country? from Trevor   

Hey guys. 

Love what you do, the podcast and the content you share. My wife and I are on our journey with Empower Wealth, and we’ve just loved every minute of it. We’re keen to keep kicking goals on this journey we’re indebted to you guys for. 

My question centres around a sea change for us and our family – albeit moving to the country, not the sea or the ocean – would love to, you know, buy that acreage on a hill somewhere and just want to understand I guess in general terms, how that would look or play out for our current situation, being that we have a PPOR in the city here in Brisbane, we’re sitting at about 25% LVR on that. 

We’ve just executed on our first investment property and the total LVR would be about 46% and with the available equity 80% of the PPOR of about $750,000. I guess I want to understand how you can or could you turn the PPOR into an investment property, move to countryside and buy another PPOR and convert that one into an investment?  

How that sort of plays out in the finance and its tax implications, recognising that you know with the LVR so low on our current PPOR, it would be I guess positively geared considering that rental appraisals are around about $1200 per week in today’s market? 

So I’m struggling to understand how we could do that and I guess live our best life where we are keen to live. But yeah, look forward to hearing what you guys think and yeah keep up the great work. 

Cheers. 

 

Timestamps

  • 0:00 – Everything You Should Know Before Turning Your PPOR Into an Investment 
  • 1:17 – Welcome back Bryce!  
  • 4:13 – How to calculate how much your property is earning or costing you 
  • 8:41 – Mindset Minute: “The Gap between the Life you want and the Life you are living is called….”  
  • 10:50 – Q1) Are we eligible for a Capital Gains Tax exemption? from Emma   
  • 12:10 – The greatest gift of the Australian tax system 
  • 16:11 – Why talk to a tax advisor?  
  • 17:54 – A $21,250 tax bill & setting the precedence in 2023 
  • 22:32 – Q2) Where to attach my offset account? from Clinton   
  • 23:47 – The best place to park your offset is… 
  • 26:40 – Why does your highest cost of debt matter? 
  • 28:15 – Why record-keeping here matters!  
  • 28:51 – Don’t miss THIS tax advantage!  
  • 29:47 – Q3) How to turn your PPOR into an investment property and move to the country? from Trevor   
  • 32:35 – Will it become positively geared?  
  • 34:13 – Ben’s preference in these scenarios 
  • 35:27 – How modelling can make an impact  
  • 37:02 – Brisbane’s an interesting market because of…  
  • 38:25 – Tax implications & the team to help  
  • 40:40 – At minimum, it’ll cost you $40 to $50G… 

And…

  • 43:49 – Lifehack: Take a _____ overseas! (And don’t leave your card in the safe 😉)  
  • 54:14 – WMPN: Always read the terms and contracts & Westpac’s Prestige Property Report: Which investor gets the best tax concessions?   
  • 1:03:41– A letter from Alex from Episode 399!  

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