Dad shot the cow

I had half the under-12s basketball team in the ute, driving them home.

“What are you up to tomorrow, buddy?” I asked our point guard, riding shotgun.

“Dad shot the family cow. Tomorrow we’re cutting it up. He says I have to wear gumboots.”

“It’s gonna be pretty gross,” he sighed. Then he brightened. “But we’re having spag bol for lunch. And steak for dinner!”

“MMMMM,” the whole ute hummed in unison.

When I got home I told my wife. She’s vegetarian. She looked at me the way a vegetarian looks at a man who has … just described a spleen to a ute full of children.

My five-year-old looked up from the floor.

“Yum.”

The kid is an animal. He won’t touch anything green (that’s cow food). To him, the paddock is just the menu with legs.

Now Sunday night is documentary night at our place, so I decided to give the kids the sanitised city version of the same story. On went Dr Karl’s ABC series, How Things Work.

First up: meat pies.

My kids inhale meat pies until Dr Karl appeared in a hairnet beside a dumpster-sized pile of what he politely called “beef trim.” (ABC-speak for the bits that didn’t make the cut.)

“That is disgusting,” said my thirteen-year-old, who swore off pies on the spot.

The five-year-old leaned in. “Yum.”

But it was time for dessert. Next episode: how lollies are made.

All four sat open-mouthed as Dr Karl showed them the vats of liquid and paste that become jelly snakes.

“Now this is more like it!” said the five-year-old.

I hit pause. “See that gelatin? What do you reckon it’s made of?”

“Jelly?” my daughter said hopefully.

“No. Cow. Skin, bones, hooves. The lot. Chucked in a pot, soaked in chemicals, dried out and ground into powder. That’s what makes your snakes wobble.”

Blank stares.

“So, hands up who wants a snake?”

One hand went up. You know whose.

The lesson?

The further your food gets from the paddock, the harder it is to know what you’re eating.

The point guard’s old man gets it. Old Daisy was a lawnmower until Friday. But with beef up 13.5 per cent in a year, she’s grass-fed gold in a second-hand freezer. Their family beat inflation with a rifle and a chest freezer.

Gross?

Sure. But that kid knows exactly what’s on his plate, and what it costs.

Your super works the same way. The further it gets from a basic index fund, the shinier the brochure, the more “sophisticated” the fund, the less you know what’s inside.

Buried deep within it is the financial equivalent of that gelatin. A fee on a fee, on a fee, that you never knew you were paying, ground into powder and stirred through your balance so you never taste it.

It’s all disclosed of course, deep in the fine print the size of the ingredients list on the back of a lolly packet. Which is to say: printed so nobody reads it. Not hiding the hooves. Just listing them in a font you’d need a magnifying glass to find.

The point guard eats better than most grown adults invest. He looks in the pot.

So should you.

RIP Daisy.

Tread Your Own Path!

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Your Questions & Answers

• The 36 Year Old Virgin

• I Left My Lawyer’s Office Feeling Sick

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The 36 Year Old Virgin

Hi Scott,

At the ripe old age of 36, I’m about to do something I’ve never come remotely close to before: my girlfriend is moving in. Natalie is 25, we’ve been together since March, and things are going suspiciously well. I earn around $700k, she earns $110k. The house and mortgage are in my name. Natalie has $75k in savings.

So … what’s fair? I don’t need her rent, and charging her to help pay my mortgage feels a bit grubby. But I also don’t love the idea of paying for everything. So, should she pay some rent? Cover bills/groceries? Put her $75k in my offset and I pay her the interest? Or keep things completely separate for now? What would Barefoot do?

Tom

Hey Tom,

I’ve had a stick of salami in my fridge longer than you’ve been in this relationship.

In other words, it’s way too early. Keep things cool. Her money is hers. Your money is yours.

What you both earn doesn’t matter yet …

What matters is that she is not a financial trainwreck looking to hook on your little red caboose.

The fact that she’s 25, earning good money with $75k saved, tells me she’s not. It also suggests she should be totally capable of having an adult conversation about money, before you share a toothbrush.

Toot! Toot!

Here are some suggestions for ‘the talk’:

Both of you open an Up bank account, which lets you create a 2Up account (a cute name for a joint account, which can be closed instantly if things go bad).

Sit down and work out how much your living expenses are, and then transfer an equal amount of money to pay power bills, groceries, booze and possibly a cleaner. Make it clear that you are solely responsible for paying the home loan, insurance and maintenance. It’s your house, not hers.

As for the rent, you’re right, you don’t need her money, but you absolutely do need to establish healthy boundaries. I’d first ask her what she thinks is fair. It could be that she pays you whatever rent she’s currently paying. Whatever you decide, have her set up a direct debit to a savings account in your name.

And for godsakes leave her $75k where it is, in her own account, earning her own interest. Don’t let it disappear into your offset this early.

You could also talk about getting a binding financial agreement, which covers you both if things go from “I love you” to “I hate you and I never want to see you again”.

Now, what would Barefoot do?

Well, 15 years ago I was in your situation (though I wasn’t earning as much dough as you!).

I did pretty much what I’ve just advised you to do, though we didn’t get a binding financial agreement, despite the pleadings from my lawyer. We gambled everything on love, and hit the jackpot.

Keep it spicy!

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I Left My Lawyer’s Office Feeling Sick

Hi Scott,

My darling dad passed away in December at 96. He loved your column and bought all his school-age great-grandchildren your book. He never owned a new car and lived carefully his whole life. He left his six children the house he built himself 74 years ago, his super, a country block and a share portfolio. A straightforward will, divided six ways.

I engaged a probate lawyer in February. It’s now June, probate still isn’t granted, and he’s stopped answering my emails. At our last meeting he said we wouldn’t see dad’s money for two years. His staff would manage it at $350 an hour, him at $500. His sister would do the conveyancing. And Dad’s shares were “too complicated” to transfer, so they’d need to be sold.

Every time I pushed back he looked me in the eye and said: “Now is not the time to penny-pinch. Your father left you plenty.” He said it three times. I left feeling sick. My dad was such a careful man. He’d be horrified. Should I sack this guy?

Maree

Dear Maree,

Something here does not smell right.

I’m not a lawyer. I rang mine, Dr Brett Davies, and read him your letter.

Here’s the bit your bloke skated over: your father’s estate does not belong to the lawyer. It does not belong to his firm. It’s controlled by the executor. Everything hinges on that one word, so before you do anything, check the will: are you the executor?

If you are, get this straight. That lawyer works for you. He advises you. He does not command you. He does not decide the shares are “too complicated” and flog them off. He does not hand the conveyancing to his own sister unless you say so. And he does not get to pat you on the head with “your father left you plenty” while the meter runs at $500 an hour.

If that were me, I’d have given him the same spray I save for the umpires when I’m in the Demons cheer squad at the MCG. No mercy. He’s a flog.

And he said it three times. Three!

Look, I’m not having a go at lawyers. Just this one. Good ones are worth every cent, and probate with property, super and shares is genuinely fiddly. But there’s a canyon between “this is complex” and turning your careful old dad’s life savings into a fee festival.

So, in writing, ask him for the probate application, the costs agreement, an itemised bill, and a full list of the estate’s assets. Get him to explain on paper why the shares must be sold and why his sister’s doing the conveyancing. And confirm nothing gets sold or transferred without the executor’s signature. Then take the lot to another probate lawyer.

Don’t argue. Don’t apologise. Don’t let him make you feel small. Your dad was a Barefooter. He lived carefully, built his own house, and handed my book to a mob of great-grandkids so they’d grow up the same way. That wasn’t penny-pinching, Maree. That was his character. Honour it.

Thanks for reading,

Scott.

The Billionaire versus Barefoot

“Third!” I yelled.

My eight-year-old daughter was riding shotgun. She didn’t miss a beat. She leaned over and confidently moved us into third gear. All the while grinning from ear to ear.

And why not?

She’d mastered a skill that evades her automatic-licence-only mother.

(I often yell “third” to Liz, but she doesn’t dare touch the gearstick.)

What a clutch.

My Toyota V8 ute has woolly seat covers, an ashtray, and a custom-fitted and totally-offensive train horn. (The Tesla famously has a fart button that makes passengers laugh. My ute’s horn makes people on the street fart.) Lucky is chained up in the back, wind in her chops, as we roar into third gear.

It’s little wonder my boys are already fighting over who inherits it when I run out of diesel.

Yet at the peak of the oil crisis it was costing me $310 to fill the thing. And with the fuel excise about to snap back I've started asking myself:

Is it time to go electric?

My wife recently bought an EV and she loves it. I find it stressful. It’s like she’s driving with me.

Too close to the lines? Ding!

Eyes off the road? Ding!

All it’s missing is, “I wouldn’t have done it that way”.

An ABC article called the Labor government’s EV leasing scheme “an amazing secret deal”. And that’s exactly why it’s blown out tenfold, costing taxpayers $1.4 billion this year alone.

The government says it can save you $5,000 a year.

Sweet tax break!*

*Terms and conditions apply. Including the bit where your EV ends up worth half what you paid for it at the end of the lease.

Ding! Ding! Ding!

But it’s getting worse.

First, because all those amazing secret deals are leased and most will be dumped on the market in three to five years.

Second, because buying an EV is like buying a phone. (Case in point: I tried to trade in my perfectly functional but old iPhone 13 mini recently. The guy offered me a used K-Pop Demon Hunters phone case and $80 cash.)

In other words:

The first owner gets the tax break. The second owner gets the bargain.

Honk!

Tread Your Own Path!

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Your Questions & Answers

• You’re a Loser, Barefoot 

• The Broken-Hearted Mum

• Leave Your Husband. Now. Don’t Delay.

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You’re a Loser, Barefoot

Scott

Calling SpaceX “the most overvalued piece of junk going around” shows that you have no idea about AI and the massive disruptions it’s about to make (including to the financial advice industry). The stock is up 50% in the last five days. FIFTY PERCENT! I bet you wish your boring index fund had more than a 0.06% stake? The world’s richest woman, Gina Rinehart, is one of its biggest backers. Maybe you should listen to her, you loser.

Dean

Hi Dean,

You’re right.

Making 50% in two days is seriously get-rich-quick stuff.

You’re also wrong.

I’m perfectly comfortable with my boring 0.06% stake through my index funds.

Why?

Because I’ve been investing for three decades, and I don’t think in two-day time frames.

I think in decades.

You're right, I'm clearly not in Gina Rinehart's league. But then again, my Daddy didn't leave me a chunk of the Pilbara.

My index funds give me a slice of the earnings from thousands of businesses around the world. A slow and steady climb that compounds over time, not overnight.

And I’ve made peace with the fact that there will always be someone getting richer quicker than me:

That stops me from trading with my ego.

Now, on AI. I think AI is going to change the world. As did the internet. The internet transformed how we work, communicate, shop, travel and date. Yet most of the dot-com darlings that promised to change the world ended up broke.

A great technology doesn’t automatically make a great investment.

The current excitement around AI reminds me of every investing mania I’ve lived through. People stop talking about earnings. They stop talking about what a business is worth. And they start talking about the share price. Or, in your case, how much it went up in the last five days. 

Maybe SpaceX will prove me wrong.

Yet if there’s one thing I've learned after thirty years of investing, it’s this:

When everybody is talking about how much money they’re making, it’s usually time for me to get interested in something boring.

Boring wins.

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The Broken-Hearted Mum

Hey Scott,

I am a broken-hearted mum right now. After a wonderful Mother’s Day weekend with both my sons, my older son has now ghosted me. No warning. No explanation. When I finally got a response, he told me he’d started seeing a psychologist who had helped him uncover suppressed emotions from his childhood. He says he can’t talk to me without screaming. I am at a loss. He had a good childhood. There was no abuse (okay, I yelled when chores didn’t get done and he got smacked when naughty) and no neglect (our food bill halved when he left home). Yet somehow I seem to have been cast as the villain of his story. My question is this: my son is 24, a sometimes full-time uni student, and works casually pushing trolleys at a supermarket. We still have him on our health insurance, pay for his NRMA roadside assist and even cover his Netflix. Is it time to cut the cord?

Sad Mum

Hello Sad Mum,

Before I answer this, a disclaimer: I am not a family therapist. My kids are still young enough that I can settle most disputes by threatening to turn off the Octonauts.

However, you didn’t ask me why your son is angry. You asked whether to cut him off financially.

And I can answer that one:

Hell, no.

If you cancel the insurance and Netflix today, he won’t suddenly remember that you loved him. He’ll see it as punishment, and you’ll have given him one more reason to stay away.

You’re heartbroken. You love your son. You want him back in your life. Money has got nothing to do with it. Parents and kids often remember the same childhood very differently. Sometimes one of them is wrong. Sometimes neither of them is.

What matters right now is keeping the door open long enough to see your son walk back through it.

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Leave Your Husband. Now. Don’t Delay.

Scott,

Reading your question last week about Wendy hit home (“I live with a man I no longer love, but stay because of the money I’d have to pay him out”). I did the same thing for over 15 years. Finally, I left. Somewhere along the way I had become the money-bags and a parent to an infant adult rather than a partner. The injustice is the hardest part. Everything you worked for, sacrificed and provided will be split with someone who doesn’t care. It feels completely unfair. And it is. But here’s what I know from the other side.

I was Wendy two years ago. In denial about the settlement figure. Worried I wouldn’t get through it. So I delayed. It cost me nearly $100,000 more. Bloody property prices! Wendy, don’t delay. The settlement only gets worse the longer you wait. The house gets paid down, your super increases, the asset pool grows. They’ll still get their 50%, just of a bigger number. Take the leap. It will be hard. But you can do hard. You’ve been doing it every day of your relationship. You just didn’t see it at the time.

Hardworking Woman

Amen to that.

See you all next week.

Scott.

My Husband Knows Best?

Scott,

My husband is wanting to create a self-managed superannuation fund, and wants to put 80% of this into the stock market into high-risk assets that are US listed, with high volatility, mostly tech and crypto correlated. My husband and I have never put money into the stockmarket and do not know much about it, other than what my husband is learning from the people encouraging this. They are even suggesting which assets to invest in. They are promising that he will be able to create ‘intergenerational wealth’ through doing this, which has him excited. My husband and I have no savings, and have not put enough time and energy into planning our future financially. We are both in our late 40s. I am trying to convince my husband that we need to seek independent financial advice before we make a big mistake. I feel sick. Please help!

Zara

Zara,

You know that line, trust your gut?

Your gut is working perfectly.

The people “encouraging” your husband to invest your life savings, and “suggesting which assets to buy” are salespeople (at best) or scammers (at worst). Financial experts don’t promise “intergenerational wealth” to people with no savings and no investment experience. Spruikers do.

Here’s what’s actually being proposed: two people in their late 40s, no savings, no investment experience, hand their retirement money to a self-managed fund and punt most of it on high-volatility offshore crypto-correlated tech stocks. Based on the advice of weirdos on the internet.

Is your tummy rumbling?

Mine sure is!

Your husband isn’t stupid. He’s had his greed gland rubbed by people who are very good at making this sound exciting and easy.

So here’s what I want you to do. Show him this column. Then show him the ASIC MoneySmart website and look up the people who are “encouraging” him. If they’re not licensed to give financial advice in Australia, they cannot legally tell him what to buy. Full stop.

You are not trying to kill his dreams. You are trying to save his retirement.

So am I.

My Teenage Son Thinks I’m Stupid

Hi Scott,

My 17-year-old son says I’m holding him back because I won’t let him access $1,000 of the money we have saved for him, to invest on something called BloFin. When I ask where he got this idea, he says “people”. I ask who – real people? – but I never get a straight answer. I’ve told him that if he’s that keen to invest then he can get a school holiday job and risk that money instead. That’s when I’m accused of being old-fashioned and not understanding investing. He might be right, I don’t understand crypto-style platforms. But I do understand working, saving, and not gambling money at 17. The digital world moves fast, and I know I’m behind. I don’t even trust what I read online anymore. Am I being overcautious? Or are these online trading platforms something parents should be deeply wary of? How do you guide a teenage boy who thinks the internet knows more than his mum?

Chloe

Hi Chloe,

Your son is right about one thing: you don’t understand investing.

What you do understand is that losing money hurts a lot more when you’ve earned it.

He’s 17. He’s bulletproof. He could lose the entire $1,000 and still not admit you were right.

That comes with the ability to grow sideburns.

Here’s my advice: let him lose it.

I know that sounds crazy. Hear me out.

When I was younger than your son, my first investment was something called a “special situations” managed fund. I’m fairly sure “special situations” was code for “whatever the fund felt  like betting on”.

The fund had ridiculously high past returns.

Which of course was exactly why I invested in it.

Guess what happened?

The special situations became extenuating situations. Then terrible situations. Then “where did all my money go?” situations. (I think they were big into emus at one stage.)

I lost most of my money, and it turned out to be one of my best investments. It taught me more about risk, hype and human nature than any book, podcast or online ‘expert’ ever could.

So here’s what I’d do:

Tell him he can invest the $1,000 in BloFin – but I agree with you, only if he earns it first with a school holiday job. If he won’t work for it, he doesn’t get to risk it. Simple.

If he earns it and loses it? That’s an expensive lesson.

But it’s a cheap one compared to what he’ll lose later in life if he never learns it.

The goal isn’t to protect your kids from making mistakes … it’s to make sure the mistakes happen while the stakes are still small!

The Hottest Trade in the World Right Now

Scott, 

My grandfather bought two 1kg silver bars in 1987 for $701, which was all he could afford from his savings. He’s been hiding them in my parents’ house for 39 years as an investment for my sister and me. I just found out about them, and silver’s gone bananas. Should I cash out now and move the money into stocks for better long-term growth? What’s your take on precious metals versus equities?

Nathan

Hi Nathan,

For all the things Gramps could pull out at the kitchen table (his false choppers, a laminated funeral notice for someone named Trevor, his prostate exam results) … that is a pearler!

Silver is the hottest trade in the world right now:

Until it dropped an alarming 26% this weekend, it had notched up gains of 50% this month … and that’s on top of the 145% it gained last year.

“Traders are OBSESSED with Silver”, shouts a headline from CNBC.

Alright, enough of the shouting. Let’s see what it means for you:

Gramps’ silver bars have increased in value from $701 to around $7,836 over the past 39 years.

That’s a compound return of 6.4% per year.

That’s better than a slap on the rod with a Murray cod (as my grandfather would say).

But don’t forget: you’ll pay CGT on the profit. And silver dealers charge outrageous buy-sell spreads, so you’ll lose a decent chunk to margins.

Now if Gramps had instead invested that $701 into an Aussie shares index fund and ticked “reinvest the dividends”, that $701 would be worth around $20,200 today.

More than double.

Plus, unlike the metal bars, you’d be getting a tax-paid dividend of around $800 a year which you could spend, or reinvest to compound your money.

I know what I’d do!

I’d take Gramps out for a slap-up dinner and thank him for being the best granddad in the world. A lifetime ago he invested his savings into you and kept the faith.

And that’s worth its weight in gold (or silver).