Best Kids’ Bank Account?

Hi Scott,

My 14-year-old son wants a debit card. He is a good saver and has a few thousand dollars in his bank account. But he currently saves with BankWest and they have an age restriction of 16 years for debit cards. I am thinking of changing his savings account over to Suncorp, as I think their interest for savings accounts is 2.6%. Any suggestions for institutions that will offer a debit card to a boy of 14 years?

Mandy

Hi Mandy,

Ah, the BankWest Kids Bonus Saver!

It’s like a slippery dip on a hot Summer's day … with a dog turd waiting for you at the end.

It certainly looks good ‒ earn 4.75%***** ... but then you get … asterisked.

* In addition to setting up a BankWest Kids Bonus Saver you also need to set up another Bankwest account, the Children's Savings Account (which has a much lower interest rate).

** You only earn the bonus interest when you deposit $25 to $250 per month and make no withdrawals.

*** In any month that you don’t meet these conditions, the standard interest rate (currently 0.01% p.a.) applies.

**** After 12 months everything over $1 in the account will be swept into your linked Children's Savings Account, “so you can start afresh”, says Bankwest. Yes, you can start afresh … with all your kid’s cash in the lower interest rate Children’s Savings account.

Slippery!

Okay, so the account you mention, Suncorp, pays 1.4%, and a bonus 1.2% ‒ if you deposit at least $20 each month and make no more than one withdrawal each month ‒ so a total of 2.6%. They also allow kids over the age of 11 to get a debit card.It’s okay, I guess.

But I’d be tempted to go with the CUA Youth eSaver, which pays 4% p.a. with no pesky hoops to jump through, and link it to the CUA Everyday Youth Account, which will give him fee-free banking and a debit card for kids over 14.

(Note: I get paid nothing for mentioning CUA, though I do get a kick out of berating BankWest.).

Scott

Reminder: I first wrote about this years ago and highlighted the low costs. Today there are better deals on offer. How do I know? Because my readers constantly email me about them! So before you do anything, do a quick google.

You Made Me Rich! … Now What Do I Do?

Hi Scott,

Twelve years ago (May 2006), you wrote an article in the Herald Sun talking about why you were buying shares in Warren Buffett’s Berkshire Hathaway. I know the date because I followed your advice, and I am very glad I did!I remember looking at the share price at the time and was astounded that a single share could be worth $59.Well, it is worth $217 a share!Even better, the Aussie dollar has gone down since my purchase, so I am sitting on a 350% total return.I am wondering whether I should sell, because I could use the money to pay off my mortgage. And Warren Buffett, now 88 years old, is older than my grandmother. How long can he go on for?What are you doing with your Berkshire Hathaway shares?

Nina

Hi Nina,

I hope you bought a lot of shares!

If you thought the Berkshire Hathaway’s shares were expensive, just remember that what you bought was ‘Class B’ shares. The original ‘Class A’ shares are currently trading for $450,000 per share in Aussie dollars. That’s for just one share.

Yes, Berkshire is currently trading at all-time highs, for two main reasons:

First, Buffett’s decision to invest in his own shares, via a share buy-back.In other words, the greatest investor in history is essentially telling investors that he thinks his stock is cheap.

(Who are we to argue?)

And second, the US stock market is also at all-time highs. However, Berkshire is sitting on around billion in cash, presumably waiting to be greedy when other people are fearful.

For all these reasons, I’m not going to be selling mine. However, I’m in a different situation to you, and I don’t have a mortgage. Just make sure you need to factor in capital gains tax (CGT) when you eventually decide to sell your shares.Well done!

Scott

One Star Amazon Reviews

After 18 months of tapping and toiling away, I finally pushed my new literary baby into the big wide world.

And the very first review on Amazon?

One star.

(Amazon is being generous here, because you can’t click zero stars.)

Yet I actually punched the air when I saw it … true dinks!

I took it as a good omen, given my last book’s first review was also ‘one star’.

(An employee from my old publisher thought he’d try and generate some buzz, so he wrote my very first review -- “great read!” -- but then ballsed it up by clicking one star instead of five  … and it’s still there today.)

What am I getting at?

We’re living in a hyper-connected, hyper-critical digital age, and you can’t control what people say about you.

Case in point, this week a bloke wrote that he’d seen through my covert operation of writing a book for kids and had unpicked the darker side of what I’m plotting: “He’s just hating on Commbank because they are in the same space he wants to be in ... schools.”

Boom!

So, while revelations this week showed that Australia’s largest issuer of credit cards paid Queensland state schools almost $400,000 for the right to sign up school kids, apparently I’m trying to compete with them to sign up kids to … jam jars?  And I’m apparently trying to flog their parents my book … that they can borrow from their school library? (I have donated 10,000 books ‒ one to every school in the country, so parents don't have to go out and buy it).

Bottom line?

Make peace with the fact that if you’re doing brave things (working hard, starting something, backing yourself), you’re going to make some people uncomfortable. And when it comes, don’t be surprised by criticism. Embrace it. It’s a sign that you’re treading your own path.

Tread Your Own Path!

P.S Can you please do me a favor?

I’d really appreciate it if you leave a quick honest review here.

(Good, bad, or otherwise).

Can Grandparents Do This?

Hi Scott,

I ordered three copies of your book, one for each of my adult children, but I am worried they will be too busy to get time to read it. For my grandkids’ sake I really want them to actually do it! So my question is, is this something we should do as grandparents, or do you have another idea?

Barbara

Hi Barbara,

I’d say you have three options:

First, you can do it with your grandkids. Why not? It may well grow into a special bond that you create with them.

Second, you can read the book and break it down for your time-poor adult kids so that it’s really easy (all they need to get started is three jam jars and a scoreboard (you can print from my website ‒ www.barefootinvestor.com/resources ‒ for free). Then you can casually skip to Chapter 3: The Grandparents’ Dinner Party and introduce them to the concept of the Barefoot Money Meals while you’re enjoying your grandkids’ cooking!

Third, you can get them (your adult children, I mean) the audiobook and ask them to play it when they’re in the car.

Here’s to changing your family tree!

Scott

The Second Chance

Hi Scott,

I was so excited when I read last week that you donated some of your books to a father doing time in Bathurst Correctional Complex. I just wanted to say thank you. Having someone in your position say “everyone deserves a second chance … and many people inside are parents” means a lot.I work for a non-profit volunteer group called Second Chances SA. We work with prisoners, their children and their families to help them create a better future for themselves. It’s not easy, but it’s just so important for the kids. They’re the innocent victims of their parents’ crimes. It’s not their fault!

Helen

G’day Helen,

You’re in luck.At the beginning of my new book I make what I call ‘The Barefoot Pledge’.

It was inspired by my old man. When I told him I was writing another book he said: “Just make sure you don’t become a wanker. Look after the battlers, son.”

So for every 10 copies of the book that I sell, I’m pledging to donate one copy to a parent in hardship.

And having a parent in the clink would certainly be bloody hard, so I’m going to send you through some books.

Thanks for the hard work you do.

Scott

My Proudest Dad Moment

I am not like most fathers.

See, most kids grow up watching their dad get into his work clobber and head off to work each day.

I, on the other hand, spend months at a time in my tracky dacks, heading upstairs now and then to tap away at a computer.

The very same computer my kids watch The Wiggles on. For all they know, I could be spending my day with Dorothy the Dinosaur.

Yet every father longs to be a hero to their kids.

So last year I decided to take my four-year-old son to a bookstore to show him my bestselling book.

The only problem?

I couldn’t find a single copy. It wasn’t on the shelves. I looked everywhere. Desperately. Not even one.

“Your book. It isn’t here, is it Daddy?” he said, squeezing my hand.

As luck would have it, a shop assistant walked past, recognised me and said “follow me”.

She took us out to the storeroom and showed us a sign pinned to the staff noticeboard that read: “Barefoot Investor … Because of theft, NO copies will be kept on the floor.”

True story.

Daddy’s book was popular … with thieves.

Recently, for the launch of my new book, my publisher asked if I could go to the printers’ and sign some copies.

I didn’t have to be asked twice. See, my son (now five) is obsessed with machinery. This was my chance to show him plenty of big machines … and plenty of copies of my new book.

The day turned out to be one of the highlights of my career:

Not just because of the sight of a hundred thousand copies of my book rolling off the presses.

But because I’m incredibly proud my book was printed in Australia — and, as luck would have it, only an hour from our family farm, at McPherson’s Printing in Maryborough, country Victoria.

The workers really turned it on for my son and me (and my dad, who tagged along too — they got three generations of Papes who are fond of a good conveyer belt!).

When we returned home from our adventure, I seriously felt like Gary Ablett (Junior or Senior, take your pick).

“It was the best day of my life, better than Christmas!”, my son announced to his mother.

“So, I guess you want to be an author like your dad when you grow up, hey?”

“No, I want to be a printer!”

Tread Your Own Path!

How Do You Get Paid, Barefoot?

Hi Scott,

I may well be the only person who had never heard of the Barefoot Investor, until this week! I heard you on ABC Radio’s Nightlife and bought your book the next morning. I’ve now finished it and can’t wait to get my investments going for my daughter (four years old). Yet the one thing that makes me a little unsure is that you have these product recommendations in there (zero-fee bank accounts, investment bonds, various super funds). What do you get out of mentioning them?

Steve

Hi Steve,

Awesome question.

Everyone should ask questions like this, because you need to know how people earn their money ‒ and if they’re getting any kickbacks.

So, how do I get paid?

Well, these days I move a lot of books, and I also have an investment newsletter, that’s how I get paid.

In the past I have done paid speaking gigs (for companies, for AFL and NRL clubs, for government departments like ASIC and the ATO, and for banks and super funds), though I haven’t been on the speaking circuit for years.

Yet given you’re new to Barefoot, Steve, let me get one thing very clear: I don’t get paid to recommend any products. Rest assured that anything I write about in my books ‒ the bank accounts, the super funds, the investment bonds, whatever ‒ are simply the lowest-cost, best-value products on the market, and I don’t receive even one cent for any recommendation. And I never will. That’s how I roll.

Having said that, I’d encourage you to do your own research, and, if you can find a better bank account or a cheaper index fund, go with it. Then let me know ‒ because one of the reasons I update my books every year is to keep hunting down the best deals.

When there’s a better deal in the market place, I’m all over it. No fear, no favour.

Scott

Why are you wearing Mummy’s makeup?

Writing a book is a weird experience.

I’ve spent months holed up on the farm, tapping away on my lonesome.

Yet this week couldn’t have been more different … ‘Lights! Camera! Action!’

Yes, I’ve been on the dog and pony show promoting my new book, The Barefoot Investor For Families.

I’ve spent the week spruiking my book on radio and television … generally being interviewed by people who hadn’t read it, weren’t likely to, and often asked the exact same questions.

Then last night I came home to an awkward question from my son:

“Dad ... are you wearing Mummy’s makeup?”, asked my five-year-old.

“It’s for the TV, cobber.”

(Some fathers wear hi-vis and steel-capped boots to work … I wear powder and lip balm.)

Yet what got me through the week was the Barefoot community.

You guys have been sending me awesome pictures of your kids, bringing the book to life and creating new family rituals. Please keep sending them through (scott@barefootinvestor.com) ‒ they absolutely make my day.

So it’s only right that I answer your questions about the new book in my column this week.

Now let’s get into it (after I powder my nose).

Tread Your Own Path!

First Share Purchase and I’m Petrified!

Hi Scott,

I have just learnt that the value of shares I own have dropped by $5,000 since last week, from $25,000 to $20,000. In April last year I purchased them at $30,000, so they had already dropped $5,000. I want to sell immediately, but I talked to my girlfriend last night and she suggested I contact you. The shares are Audio Pixels, which is an audio company. This is my first ever experience with shares, and I want to cry. I have a high mortgage and can’t afford to lose $10,000 grand. I am petrified if I leave it there, but hate to take such as loss. Please help me quick!

Paul

Hi Paul,

Admittedly, I’d never heard of this company before, but Audio Pixels Limited has a very new-age sound about it:

“Audio Pixels Limited was founded in July 2006 [and] has developed a revolutionary technological platform for reproducing sound, thus enabling the production of an entirely new generation of speakers that will exceed the performance specifications and design demands of the world’s top consumer electronics manufacturers.”

Sounds impressive, but then my ears began bleeding as I flicked open their latest 2017 annual report:

Over the past five financial years Audio Pixels has lost a total of $17.76 million.

And in the past 10 years it hasn’t turned a profit … and there’s not even a squeak of the revolutionary speakers.

“A material uncertainty exists that may cast significant doubt on the Company’s and Group’s ability to continue as going concerns”, says their auditor Deloitte.

That doesn’t sound good.Paul, there are three rules I apply to investing:

1. Don’t invest with money you can’t afford to lose.

2. Don’t put all your money in one stock.

3. Don’t invest in businesses that don’t make any money.

Cobber, you’ve broken all three!

So what should you do?

Don’t pray that the share price returns to what you paid for it … because the share market is tone deaf to your prayers (much like Audio Pixel’s speakers). If I were in your shoes I’d sell this stock immediately, pay down your mortgage, and buy some Sonos speakers.

Scott

How to get your gouged super back

Did you know you have a one-in-three chance that you could be owed thousands of dollars?

It’s true.

This week law firm Slater and Gordon announced they’re launching Australia’s biggest class action:

“The Royal Commission into banking has revealed that if you've been a member of a big bank-owned superannuation fund (or AMP) then your retirement savings may have been gouged for years. We believe you can and should get your super back.”

Giddyup!

In fact Slater and Gordon reached out to me personally this week to see if I would “promote this to my networks”.

Consider it done!

So, what do I really think?

Well, I think if there’s a group I trust even less than finance executives … it’s ambulance-chasing lawyers.(Never get between either of them and a bucket of your money.)

And so with “clowns to the left of me, jokers to the right …

Here I am, stuck in the middle with you.”

Slater and Gordon are suggesting there are five million Aussies who have been shafted by their retail super funds (my words), for a total of up to $1 billion (their words). They’ve set up a website where you can register to getyoursuperback.com

**Less their hefty legal fees, of course.

And if you genuinely believe you’ve been screwed ‒ most notably because you’ve invested your super in low-earning cash options (though I simply can’t believe that can be too many people?!) ‒ well, yes, you should sign up to the class action.

After all, why not?

“Ya got to be in it to win it, son”, advises Bluey at my pub (a man who admittedly will drink from the drip tray because he’s so broke from punting.)

However, let’s get a few things straight.

First, there is nothing new about bank-owned funds underperforming their peers. Since super began, AMP and Commbank (and other bank-owned retail super funds) have, on average, charged high fees and delivered members low returns.

(In fact, I wrote about it in 2016 in my book. An old bloke named Frank, from Bendigo, was (legally) gouged with fees by AMP for tens of thousands of dollars over his working life. I suggested the least he could do was to ask the AMP CEO to mount a plaque at AMP HQ’s toilet saying “This urinal was paid for by Frank from Bendigo’s super”.)

Second, paying high fees on your super is the easiest way to rob yourself of a secure retirement.

Yet get this: around 82 per cent of the Aussie market is invested in high-fee, actively managed funds, rather than in the low-fee index funds I recommend.How’s that working out?

“Active fund managers let investors down”, was the headline in the Australian Financial Review this week.

“Most Australian active fund managers in a majority of categories failed to beat their benchmarks in 2017‒18, lending more ammunition to the case for passive [index] investing.”

Vanguard’s Robin Bowerman said: “I don’t think anyone is surprised by the results. Active underperformance is less about the investment style and more about the high costs. In investing, the more you pay, the less you get.”

Touché!

So, my final piece of advice is this:

By all means join the class action if you think you can claw back some money.

But that’s all in the rear view mirror.

For the future, keep your eyes on the road and your hands upon the wheel.

Don’t rely on the regulators, or your super fund, or lawyers, to look after you.

Instead, do what Frank didn’t, and ask your super fund whether you’d be better off having your money invested in low-cost, passively managed index funds.

Tread Your Own Path!

Reminder: I first wrote about this years ago and highlighted the low costs. Today there are better deals on offer. How do I know? Because my readers constantly email me about them! So before you do anything, do a quick google.

The Ultimate Father’s Day Present

To celebrate Father’s Day yesterday, I want to close with something that’s becoming a bit of a tradition.

It began in 2014 when we lost everything in a bushfire.

Today, almost all our stuff has been replaced.

Almost.

You see, my wife’s father died a few years before I met her. And in the fire we lost some of the last remaining photos of him, the letters he’d written, and the paintings he cherished.

Those can never be replaced.How does my wife explain who her father was to me?

How does she explain who grandpa was to our kids?

The physical reminders are now lost in the ashes.

So, if you’re lucky enough to have your father still with you, here’s how you can give him the ultimate Father’s Day present (okay, today it’s a day late, but do it anyway). Whip out your phone, hit ‘record’, and ask your dad the following questions:

1. How did you meet Mum?

2. What advice can you share with me about money, life and happiness?

3. What does being a dad mean to you?

4. What are you most proud of?

5. How would you like to be remembered?

This is not for Facebook or Snapchat. It’s for you and your family’s legacy. One day, it’s all you’ll have left of him.

And you’ll treasure it.

Shout-out to the Heroes!

Hi Scott,I do not have a question but I just wanted to thank you for your support of financial counsellors! They are the heroes of humanity in the financial sector. You have a big following and an influential voice, and it is a credit to you that you use it to give a financial shout-out to the people who willingly take on the giants of financial bullying. A financial counsellor helped my parents in a way that I could never express thanks for ‒ and that counsellor goes home with a pay packet that could never express her worth!

Toni

Hi ToniI’m hoping that one recommendation from the Royal Commission is that more money is made available to get more financial counsellors on the ground. The banks make a lot of money, yet it’s the financial counsellors who mop up a lot of their mess. Fingers crossed!Thank-you for reading

Scott

Dear Mrs Barefoot

Dear MRS Barefoot Investor,I am very curious to know how you manage to fund the ‘maintenance costs’ of being a woman! Even low-maintenance women such as myself incur way more expenses than men. I do not get spray tans, have my nails done or buy lots of clothes, but I do need salon hair colour, makeup, skincare, bras, clothing and waxing to keep me looking and feeling my best. Hubby’s response is “you don’t really need that stuff”, but this is unrealistic. Please help!

Renata

Hi RenataWell, this is a first ‒ my wife has never had a question directed to her before.So I read out your question, and here is her reply:“Let the weeds grow, and see how your hubby likes that!”(Only my wife could get away with saying that ‒ I’d get hate mail for weeks.)Liz and I share the same bank account and have a pre-set ‘no questions asked’ amount we can spend. When you’re sharing money it’s really important to have the freedom to spend money on whatever you want.(Besides, I’m sure some of his expenses wouldn’t fit your idea of necessary either. “My shout, boys!”)

Scott

Where Do I Save For My Kids

Hi Scott,I have the CBA Youthsaver account for my two boys. They’re not earning a lot of interest, and after ringing CBA I found that I need to be making regular deposits into their accounts to accrue the bonus and credit interest. I have looked at investment bonds, but they require $100 a month and that is a bit hard for a sole average wage earner with a wife, kids, mortgage and bills. Is there a better way to set my boys up, or am I missing something?

Rick

Hi Rick,Most kids’ bank accounts are marketing gimmicks.Having said that, the best account is the CUA Youth eSaver, which pays a variable 4% per annum on balances up to $5,000. That’s good for short-term saving, but you really don’t want to save long term for your kid in a bank account.If you have a longer timeframe (say seven years plus), you could invest in your wife’s name (the lower income earner) with an app like Raiz, where you can kick things off with a few bucks, rather than the higher amounts you need for investment bonds..Regardless of where you choose to save, the fact that you’re saving some money for your kids tells me you’re already on the right track: the number one predictor of raising financially fit kids is being good with money yourself.

Scott

Reminder: I first wrote about this years ago and highlighted the low costs. Today there are better deals on offer. How do I know? Because my readers constantly email me about them! So before you do anything, do a quick google.

What will Labor do to my wealth?

Hi Scott,Given the way the Liberals have self-destructed this week, it’s looking increasingly likely they’re not going to be in office next year. Yet the thought of Bill Shorten making it into office terrifies me. I am 54, earn $110,000 a year, and have an investment property. Should I be worried? How do I prepare?

Rod

Hi Rod,I wouldn’t advise basing your long-term investment decisions on short-term politics. (After all, the way Canberra craters, next year we could have Kyle Sandilands and his deputy Jackie O having a tilt at the leadership.)A good case in point is Donald Trump, who the experts suggested would be a disaster for the US economy, and who has (thus far) proved everyone wrong.Having said that, Labor’s proposed policies ‒ restricting negative gearing to new properties, and halving the capital gains tax discount ‒ will almost certainly serve up a short-term hit to our already fragile housing market.A study from RiskWise Property Research and Wargent Advisory suggests Labor’s proposed policies would cause a 9 per cent fall in house prices in NSW and Victoria, 7 per cent in WA and the NT, and 6 per cent in South Australia and the ACT. That’s a guess, of course, but an educated one.Investment legend Warren Buffett has said that he’s never based an investment decision on the current state of the economy, or on the politics of the day. That’s because he knows that, over the long term, the future is incredibly bright.

Scott

The Kind Stepmother

Scott,I have five beautiful new step-daughters. They all live nose-to-device, get cranky when offered advice of ANY kind, “don’t like to read”, and have a massive hole in their hand. All of them work, yet promptly spend it and/or are paying off maxed-out credit cards/bank loans (already!). They think living in debt is just life, what ‘everybody does’. Which of your books is best for young people with zero attention span? How can we get them interested in making a positive change?

Tania

Hi TaniaA cynic would suggest I trawled through thousands of emails to find one to plug my upcoming book.I didn’t … but maybe it’s the universe sending some self-promotional vibes my way? In any event, I’d suggest you get my new book, The Barefoot Investor for Families, which is now available for pre-order.If the girls are still living under your roof, you have more influence on them than you know. My new book sets out 10 very special ‘Barefoot Money Meals’ to give them experiences that will change the way they think about money. (I’d suggest you go straight to Chapter 4: ‘Breaking the Brat’.)Thank-you for reading,

Scott

Down the Rabbit Hole

Hi Scott,I have a spinal cord injury and am paralysed from the chest down. I am self-employed and lucky enough to have a wonderful wife and two great kids. Health-wise I probably have 10 good years left, as I have been in the wheelchair now for 20 years and kidney problems tend to happen at the 30-year mark. I am 46 and earning $80,000 and I want to put my kids through private school, but I also want to see them grow up, not just work and come home exhausted. What is your advice?

Chris

Hi Chris,I’d seriously consider not sending your kids to private school.Why?Because you say you have 10 good years to spend with your kids.Personally, I’d rather spend less time working -- and less time stressing about work -- and invest that time into your kids. If I were in your situation, I’d do two things. First, set up a direct debit into an online saver, so that you put your savings on autopilot. Second, spend that money on experiences you can do with your kids: travel, sporting events, hobbies.Good luck, and good health.

Scott

My Lover Works Too Hard!

Hi Scott,I am 23 and have fallen in love with a 28-year-old who earns $135,000 a year (a lot more than me). He works in construction six days a week (overtime on Saturdays) and he is absolutely set on buying a house ASAP. I love his commitment to the future and to us, but he is always tired and rundown and is rarely available to spend time with friends and family. Is he doing the right thing by working as much as possible? I would like him to take Saturday off occasionally, or am I being immature?

Christina

Hey Christina,I’m pretty sure my wife said the same thing about me when we first met!Sounds to me like your bloke has his head screwed on properly: he’s working hard for the future. You can get away with doing that in your twenties, before the triple Ms (marriage, mortgage and midgets). After that it gets tougher: your time isn’t your own. It’s often said that you spend your twenties learning and your thirties earning -- and that it sets you up for living a very different life in your forties and beyond.There are two books I’d suggest you read -- both of you I mean: The first is mine (obviously!), which sets out the Barefoot Steps that will keep you safe. The second is How Much Is Enough? by Arun Abey. This book has practical exercises that you can do, as a couple, to ensure you put work and the accumulation of wealth in its proper context.I’ll leave the final word to my dearly departed 92-year-old grandmother, who always advised:“Whatever you do, don’t marry a lazy person.”Good advice, Grandma.

Scott

Happy Campers

Hi Scott,I am camping with my husband (first time ever) and have stopped to read your Barefoot email. I was really pleased to see your praise for financial counsellors. They really are unsung heroes and great advocates too. As a social worker, I know how often these invariably calm and focused people help those who are vulnerable and in dreadful debt (not always large amounts, but soul-destroying high interest). They systematically help people begin to navigate a way out and to regain hope in their futures.

Sam

Hi Sam,I tried to get my wife to go camping once … didn’t work out that well. We’re coming off the largest debt boom in history, and as a wealthy nation we need people like financial counsellors (and social workers) who can help our most vulnerable Aussies. Everyone needs someone fighting in their corner. The Minister for Social Services’ office contacted me after last week’s column to arrange a fireside chat. I’ll keep you posted.Thank you for reading,

Scott

Boxing at Retirement Shadows

Hi Scott,We read your book and loved it. However, we got a little confused near the end when talking about superannuation approaching retirement (which we hope to do in two to three years). My husband and I are each putting away extra super to bring it to 15%. Does the entire 15% need to go in as cash, or just our extra contribution over our employer payments? And will HESTA do this for us?

Mary and Phil

Hi guys,What haunts me is the letters I received back in 2008 from people just like you.They were on the cusp of retirement, and then the Global Financial Crisis pummelled their portfolios.Finance professors call this ‘sequencing risk’. Yet it’s really just bloody common sense: if you’re retiring you should have enough money to ride out a downturn without having to be a forced seller.As Mike Tyson says, “Everyone has a plan, until they get punched in the mouth”.Well, that’s why I believe it’s prudent to build up a cash buffer in the final years before they retire. I like three years of cash (minus any age pension payments). Though I’m conservative.You should call your super fund and ask to speak to one of their financial advisors, who can help you structure your super, so the market doesn’t land a killer blow this close to the final round.

Scott