Scrooge McDuck

Sir Scott,

I see your dread and fear of low interest rates, and will slay this with my positive outcome. My investment property in Queensland, which I bought cheaply, is positively geared and is reaping the rewards. I bought it in 2018 and interest rates have continued to decline each year. I feel this is a much better approach then just letting money sit in the bank earning next to nothing. I am quite shocked as to why you never encourage investment property purchasing when there is affordable housing across Australia. I feel you coach people to be Scrooge McDucks.

Pete

Hi Pete,

As they say in the classics, where do I start?

Whenever I talk about cash, I’m talking about short-term savings: money you’ll need in a pinch.

You suggesting that an investment property is an ‘alternative’ to saving money in the bank is weird.

They are not the same.

There are three things your 18-month journey into property investing hasn’t taught you yet:

First, interest rates may be the lowest in history now, but remember you are taking on a 25-year mortgage.

Second, properties are expensive to maintain. Something costly almost always goes wrong when you least expect it, and that will eat into your return.

Third, when speculators without Mojo go bust, it’s not pretty. And it happens quite a bit, especially in the go-go Queensland apartment market. Wait a few more years and you’ll probably see it.

Look, it’s not about being Scrooge McDuck, having money for money’s sake. That’s the opposite of my message. Rather, it’s about having a financial cushion so you can say “I’ve got this” no matter what happens to you.

And that gives you the ultimate return: sleeping well at night.

My ‘Free’ Land Cost Me $140 Grand

Barefoot,

My brother and I — both in our sixties — did a land swap, with no money changing hands. The aim was to facilitate generational change (when we eventually die). Now I have now been hit with a $140,000 capital gains tax bill! Is there anything I can do about it, even though I received no money at all?

Jamie

Hi Jamie,

No, you’re screwed.

Had you spoken to your accountant beforehand, they would have explained that (a) the ATO data-matches everything, (b) capital gains tax (CGT) is triggered when an asset changes hands, and (c) they’ll want their money regardless of whether or not money changed hands.

Yet there is something you can do: talk to your accountant to see if they can arrange a payment plan with the ATO.

Mum Makes 400% on Share Market

Scott,

You’ve made it no secret you are not a fan of AfterPay. I, however, am a massive fan. It has helped me to budget bigger (and smaller) purchases, Christmas presents and (now) essentials for our first baby. I love AfterPay so much that, when the coronavirus hit the share market earlier this year, my partner and I decided to enter the share market — and AfterPay shares were the first thing we bought. Those shares have increased by around 400% over the last six months, in comparison to a 20%‒60% increase for the other shares we purchased. I’m surprised, I’m elated, but I’m confused. Why have they increased so greatly? When will it stop?

Anna

Hi Anna,

Hee-haw, now that is an epic story.

Good on you!

Now let me zoom out and give you some perspective:

Over the last 50 years, the Aussie share market has returned an average of 9.5% per annum, including dividends.

In other words, rookie, you’ve made out like a bandit!

Now to your questions:

The sharemarket has rebounded so strongly for a few reasons:

First, because interest rates are as low as they have ever been in history, and that has forced many investors to take on more risk (most can’t pay for their sausages on the interest they earn from cash or fixed interest).

Second, because we’ve seen an unprecedented amount of financial support: trillions of dollars have been printed to help prop up ailing businesses and consumers.

Third, and most importantly, because shares were panic-sold on the way down … and then hot stocks like Afterpay ricocheted right back up. And it went up like a slingshot … or maybe a shotgun. AfterPay is up a staggering 1,000% since March, despite the fact that it’s never turned a profit.

What happens from here?

I honestly have no idea ... and that’s kind of the point.

When you’re investing in the stock market, you’re giving up control of the outcome, at least for the short term.

All I can do is point you to the 50-year return of 9.5% per year and tell you I’d be very happy if I achieved that over the next 50.

You Need to Know the Truth About Oprah Winfrey

Hi Scott,

I have been a fan of yours for a long time, but you lost me with your column last week. Great story about Chuck Feeney, the billionaire who gave away all his money, but to reference Bill Gates, and also Oprah Winfrey, shows that you are right in with the mainstream media. (Scott writes: At this point Tanya makes a great deal of unfounded accusations about a number of politicians and famous people, all of which I have kept out). I am just an average person, but I knew shortly after this whole plan-demic started that something was not adding up and that is when I started researching. Trump is the only president of America who is trying to drain the swamp and (Scott writes: again, Tanya makes some pretty wild conspiracy claims I won’t go into as they’ve been debunked).

Best wishes,

Tanya

Hey Tanya,

Look, I didn’t like Windows 8 any more than anyone else, but what you’ve written is ‘person randomly shouting on the train’ wild.

And yet, judging by the cacophony of conspiracy emails I got this week, the train is chock-full of shouty people.

To be honest, I wasn’t ready for the craziness unleashed by last week’s column on a humble businessman called Chuck Feeney donating his fortune. Apparently, when one (even briefly) mentions Donald Trump and Bill Gates it rings an alarm in some people’s heads that makes them write furiously about conspiracy theories.

The only thing crazier than my inbox this week was the US election.

Oh, and have you heard the latest conspiracy? Oprah Winfrey will run for president in 2024.

Ridiculous, right?

As if a TV celebrity could ever be president.

The Simpsons is showing its age

The Simpsons is now 32 years old ... and it’s starting to show its age:

You know the opening credits where Homer hears the hometime whistle at the power plant?

That’s actually a throwback to the 19th century, when very few people owned watches, so factories used whistles to signal to workers the start and end of their shift.

In other words, Homer got paid to belt uranium sticks until the whistle blew, at which point he’d race out of the joint so fast he’d end up running over his son each night.

These days, of course, our bosses don’t have whistles … or even a workplace!

And yet you and I know people who think they can still get by simply showing up and whistling away the time.

Well, that may have worked 32 years ago in cartoon land, but it won’t cut in the era of COVID.

For the first time in a generation we’re facing a recession, and most businesses will be looking to cut the fat.

Scary thought, right?

Well, let me introduce you to one person who I guarantee won’t get D’oh’d!

Her name is Melanie, and she wrote me the following message last year … before COVID:

Hi Scott,

In the ‘Grow’ chapter of your book, you advise people who are preparing for their annual performance review to narrow their position description down to three fundamental tasks, and then write ambitious goals to work on for the next 12 months. Well, I actually did it, and not only was my boss impressed that I had prepared for the review, but he decided to give me a pay rise right now because of the contributions I had made to date! Before reading your book, I would never have had the confidence to take control like this. I’m off to celebrate — now I can afford a $15 bottle of wine!

Melanie

I know what you’re thinking.

You’re thinking, “That was last year. Now I’m not looking for a raise ... I just want to keep my job.”

Agreed.

But if you want to keep your donuts, you need to do exactly what Melanie did:

Decide on three ambitious work-related goals, tell your boss about them, then set a diary reminder to do one small thing each day that gets you towards those goals within the year.

Simple, right?

Sure. But not easy. That’s why few, if any, employees ever do it.

And that is exactly the point: it’ll make you stand out in a very good way. And if things go nuclear at your workplace in the next 12 to 18 months, you’ll be in a stronger position than your co-workers — all in the time it takes to watch an episode of The Simpsons.

Toot! Toot!

Tread Your Own Path!

I’m Rich! I’m Really Rich!

Hi Scott,

As a result of recently selling our (multi-generation) family business, my husband and I are now $34 million wealthier (after tax). We have gone to see a firm that specialises in helping ultra-high net worth families like ours. The portfolio they have recommended is not open to the general public (it’s only for sophisticated private equity funds and the like). There are multiple fees that add up to around 1%, though they say they will have stronger returns than we could expect from the share market. My husband thinks they sound great, but I am not sure. I told him I was writing to you for your opinion, and he laughed!

Janice

Hi Janice,

Congratulations on the sale — that’s a life-changing amount of money!

And now for the bad news: being filthy rich won’t buy you higher investment returns.

Really.

A good example is Harvard University’s $42 billion endowment fund (built up over many years by donations from Harvard alumni). Harvard has literally got some of the smartest people in the world managing their nest egg. Over the years they’ve deployed high-octane trading strategies, invested in private equity deals, bought natural gas pipelines, even ventured into exotic investments like forests in Latin America. They literally scour the earth to make money.

And yet their returns have failed to match a no-frills index fund over one, three, five, 10, 15 and 20 years.

All that hard work and effort, all that stress, all the millions of dollars in fees, to end up with less than you’d have by simply buying a broadly diversified, set-and-forget index fund.

So what would I do in your situation?

Well, understand that my opinion is worth roughly what you’re paying for it (nothing).

Yet my thinking would be that you’ve already made your fortune. So I’d focus on simplifying your life, not making it more complicated by paying an advisor 1% — which in your case amounts to $340,000 a year — to farm out your investments.

Instead, I’d think of your wealth like owning a farm: focus on harvesting dividends … you’ll earn close to $1 million a year. And just like farming there will be good years and bad years (and there will be 2020!). Yet over the long run there will be more good years than bad. And if you never ‘sell the farm’, you and your loved ones can sit back and reap a harvest for generations to come.

The hero (living in a rented apartment)

“In America, anyone can become president … and that’s the problem!”, quipped comedian George Carlin.

I don’t know about you, but I’m a little over the Punch and Judy show — watching two cranky old blokes beat each other up, with the last man standing becoming … the leader of the free world.

Are these two really the best the ‘greatest nation on earth’ has got?

Well, let me introduce you to another old bloke who might just restore your faith in the US of A.

His name is Chuck Feeney.

Chuck is 89 years old, and lives with his wife in a small rented apartment in San Francisco.

He will die flat broke.

And yet Warren Buffett, Bill Gates and Oprah Winfrey call him their ‘hero’.

Chuck was born in the Depression, and as a young man answered his call of duty. Yet it was during the war that he started a little side hustle, selling duty-free booze to fellow US soldiers stationed in Europe.

When Chuck got back from the war he continued bootstrapping his little business, working night and day. And a few decades later he’d built it into the largest duty free shop empire in the world.

Here’s where the hero part comes in.

Chuck is the exact opposite of Donald Trump: he’s a real billionaire who is both humble and kind.

Question: What does a down-to-earth bloke who wears a $10 Casio watch, owns one pair of shoes and flies economy do with his wealth?

Answer: He decided to give it all away.

Even better, he did it anonymously.

Yes, for decades Chuck secretly gave away his billions. And he’d have continued along that way, except that when he sold his business in 1996 a dispute with a business partner exposed him as one of the biggest philanthropists in history.

Yet his story gets even better.

After the news broke, he was invited to a secret billionaires dinner in New York City.

Oprah was there. So were Bill Gates, Warren Buffett, and several other billionaires around the table.

Chuck spent the night telling his story and encouraging his fellow billionaires to follow his lead and “give away your money while you’re living … I’m sure you’ll like it”.

Over the course of that dinner, Chuck inspired Bill Gates and Warren Buffett to kick off their Giving Pledge, which so far has convinced 210 billionaires to commit to giving away at least half their net worth.

“He is my hero. He is Bill Gates’s hero. He should be everybody’s hero”, says Buffett.

Back to comedian George Carlin, who said: “When you’re born you get a ticket to the freak show. When you’re born in America, you get a front row seat.”

Well, right now Uncle Sam is putting on a helluva freak show.

Yet, for all its faults, the US has an amazingly entrepreneurial culture. No tall poppy syndrome. And when they make it big, they give big.

Tread Your Own Path!

Are We Insane?

Hi Scott,

My partner and I have $30,000 saved up. I have come across a promising opportunity to buy a juice and coffee trailer with an exclusive trade permit in a popular hiking and tourist spot. Is it insane to relocate and spend the majority of our savings on a business instead of a home? I always wanted to work for myself, and it would be a great opportunity for my unemployed partner to run it. And I would still keep my current part-time job for financial security at the start.

Tab

Hi Tab,

Is it insane to spend the majority of your savings on a business instead of a home?

Well, I don’t think I’d do it, even though I do officially make ‘the world’s best smoothie’.

(Seriously, you can ask my kids. Every dad needs to be the world’s best at something, so I claimed it early on.)

Okay, so what’s your worst-case scenario?

Well, that you end up buying yourself a hospitality job with no access to super or guaranteed minimum wage.
And the best-case scenario?

That you’ve stumbled on a gold mine where hungry and thirsty hikers line up all day, and you earn a good return on the money you put into it.

So, is it a good deal?

Well, I can’t imagine that a coffee trailer would be very expensive, so it’s likely you’re paying a premium for the ‘exclusive trade permit’.
So the first question I’d ask the seller would be: “How did you come up with your selling price?”

Then zip it, and listen to what they say.

Unless they can provide a track record of audited figures, they’re probably delivering you a sales spiel.

And if that’s the case, it’s time to wake up and smell the coffee.

I Want A Credit Card Too!

Dear Scott,

I wish to make a complaint. I am currently working through the ‘Domino Your Debts’ section of your book, and I feel I am missing out. I have never had a credit card, and the only debt I currently have is my HECS-HELP loan. I want to experience the joyful fulfilment of cutting up a credit card and burning a final statement but, alas, it is not to be. Should I sign up for a credit card just so that I can cut it up?

Linda

Hi Linda,

Yes, you should. But only for the rewards points. (Just kidding.)

You Got This!

The Trouble Began When My Sister and Her Husband Were Murdered …

Hi Scott,

My sister and brother-in-law were murdered in 2013. I have spent seven years and a lot of money fighting for their orphaned kids — my nephews and niece. I bought your book and am slowly getting myself out of debt. I have also been fighting the federal government and will be hopefully getting $750,000 for the kids. I want them to make the most out of the money in 10 years. So should I buy them a property? Shares? What should I do?

Renata

Hi Renata,

What an absolute tragedy.

My heart goes out to your entire family.

I don’t have enough details to give you a considered opinion, but I’d caution you not to jump to the final step of ‘where to invest the money’ too soon.

First things first. I’d have a lawyer set up a trust structure that specifies what the money can be spent on (like short-term needs or education) and the age the children will gain access to the money.

That will dictate what you invest the money in, though I’d suggest you focus on easy-to-manage, diversified investments that can be sold quickly and cheaply. In other words, I personally wouldn’t buy an investment property.

Generally, I’m a fan of limiting access to lump sums until children are in their late twenties, when they’re a bit more settled in life. Inheriting large amounts of money when you’re immature, or not mentally prepared, will often do more harm than good.

Finally, I’d work on educating the kids about money so they know that, when the funds are eventually released, they’ll be able to use them to honour the legacy of their parents.

You Kicked Me in the Guts, Barefoot

Scott,

I was really disappointed by your comments last week to Melanie.

While I agree that framing the husband’s gambling expenditure as “what else could that money be used for” was a good idea, the way you said it felt like a kick in the guts to women:
 
“After all, he’s got a 1-in-140 million chance of winning the jackpot … but if he saved up his money and splurged on  a romantic night away with you (without the kidlets) … well, I’ll leave it up to you to explain his odds of hitting the jackpot.”

She is not an object to be bought or gambled upon. You have objectified her and mailed that out to your many followers. Her ‘putting out’ as a reward for attention and money is also playing into an old and damaging trope of women’s power and value only being in the pleasure we provide for men. It stinks of misogyny. You can do better, and Melanie (and the rest of us) deserve better than that.

Sally

Hi Sally

I’m sorry for offending you.

You need to know that you are not alone — I have been offending people for years.

(Recently I was accused of misandry — hating men — so I am at least an equal opportunity offender.)

In fact, these days I often run my column past my wife, just to make sure I edit out, in her words, “the country boy”.

(This one must have slipped through the cracks.)

So here are my thoughts.

One of the most difficult things about being in a relationship is managing money. That’s why I’ve written into my plan monthly Date Nights, so couples can talk about things over a nice meal and a wine and stay on the same page.

Perhaps I should have just said that, and left it at that.

Still, I’m a lover not a fighter, and I’ll gamble (almost) everything for love.

So I’ll just apologise and thank you for writing.

Daughter Teaches Mum

Hi Scott,

My husband and I have been doing the jam jars with the kids since your Barefoot Families book came out. A few weeks ago, we went to Kmart and my eight-year-old daughter found a hat that she wanted for $6. She said she would save up and come back with the money the following week. Well, we came back the following week and realised she had looked at the price upside-down — it was actually $9. I said, “You know what? You have been so good lately that I will put in the extra $3.” She said, “No, Mum, how will I learn to save properly if you just give me the money?” I was sooo proud!

Jenny

Hi Jenny

With kids there’s a lot of slamming doors, tantrums, and “Why are you making me do this!?”

It can feel like there’s not a lot of wins — but you, Jenny, have won the parenting cup!

Your story reminds me of the infamous ‘marshmallow test’ — where young kids choose between one marshmallow now or two later. And it’s been shown that kids who can delay gratification for small things now have the ability to do it in the future with big things. In other words, show me the girl at 8, and I’ll show you the woman at 28.

She Got This!

My thoughts on ethical investing

You want to hear something crazy?

The most popular investing question I’m asked has nothing to do with making money.

True dinks.

The investing question my readers have asked me continuously for the past 16 years is:

“What ethical investing funds do you recommend?”

Now, truth be told, I don’t like any of the so-called ethical or responsible stock-picking funds. They always seem to be heavy on the woke-y marketing schtick, which they use to justify slugging their customers with high fees.

For me, it’s the investment equivalent of paying $12 for a kale smoothie, served with one of those ridiculous paper straws that go soggy after the third suck.  

Suck, suck, suck. (No juice.)

Thankfully, low-cost index investing has turned the ethical investing game on its head.

In fact, just last week Australia’s largest listed Aussie share fund, the $18 billion behemoth Vanguard Australian Share Index Fund (VAS.ASX), gained a woke sister-fund with the launch of the Vanguard Ethically Conscious Australian Shares Fund (VETH.ASX).

Let’s compare the pair.

Both funds charge rock-bottom fees and give investors exposure to the largest companies in Australia.

However, the Ethically Conscious Aussie Shares Fund filters out companies from the index that are involved in fossil fuels, nuclear power, alcohol, tobacco, gambling, weapons and adult entertainment. 

It also filters out companies that have been involved in ‘severe controversies’ relating to labour rights, human rights, environment, corruption and the like. A good example would be Dreamworld’s parent company, Ardent Leisure, which was found guilty and fined over the 2016 water-rapid ride tragedy that killed four people.

(And while Vanguard may be the world’s largest index manager, it’s not the only player: BetaShares, State Street, and VanEck also have low-cost local and international ethical investment offerings worthy of a look.)

Ethical investing in Australia is so hot right now, and we’re recognised as some of the wokest investors in the world. However, know this: your super money is not automatically invested in ethical options straight off the bat.

Investment house SuperRatings says that, while there has been an explosion of low-cost ethical options available in super funds, as a general rule they are not the default investment option most people are put into.

So, if you’re passionate about investing your super in businesses that support the future, ask your super fund what ethical index options they offer … and ideally choose low-cost offerings that don’t suck.

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 Name of Your Book Is Wrong!

Hi Scott,

I came to Australia four years ago with hopes of a better life for my family. We knew no one and had just $8,000 dollars -- that was a stressful time. Then I stumbled across your audio-book. Fast forward four years: I have three months of Mojo and we recently bought our home with a 20% deposit. I have increased my income by 33% and am due for another promotion. I have even started volunteering, following your advice -- we do laundry for homeless people. I live a much happier life thanks to your book. You call it a money guide -- wrong! It is a happiness guide.

Mayanka

Hey Mayanka,

Thank you so much for writing.

I get thousands of people who write to me all jazzed up straight after they’ve finished the book. Yet what’s cool is that now, four years since the book came out, I’ve been getting emails from people like you who’ve used it to make some amazing gains.

Congratulations on making your way in the best country on earth. You got this!

My eye-watering returns

When I look at my bank balance these days, I have the same reaction as getting a COVID test up the schnozz: 

Eye-watering pain. 

See, as a lifelong saver, it pains me to see the amount of interest I’m earning on my so-called ‘high interest online savings accounts’: a tearful 1.5% per year. On a lazy 10 grand that’s a whopping $150 a year. 

Ouch! 

But I guess that’s better than nothing, right? 

Actually it’s worse: after I pay tax on the interest, and then account for prices rising (inflation), I’m in the red. 

Yep, the money I have in my savings account is guaranteed to lose me money.

And remember, that’s with me earning a (relatively) decent 1.5% per year. If you’re saving with one of the Big Four, you’re probably not even earning half that. According to comparison site Mozo, over the last six months banks have cut the interest on 1,479 savings accounts and term deposits. And they’re likely to keep cutting, with the Reserve Bank of Australia (RBA) considering another rate cut as early as next month. 

When will it end?

The RBA has said that it expects rates will be low for the next three years. At least.

Pass me a hanky, Daddy’s got a nosebleed!

Yet don’t cry for me Argentina. Of all the people who write to me, there are two groups I feel most sorry for: young people saving for a house deposit, and retirees trying to live off term deposits.  

While they’re at opposite ends of the limbo stick of life, they both ask me the same question: 

“Should I invest some of my savings in the sharemarket?”

You can see their logic. After all, the week after last the share market went up over 5%. 

In a week!

However, my answer is always the same:

Never invest money in the share market that you’ll need — or think you may need — in the next five years. It’s just too risky. Chances are you could lose a chunk of your money. When you think of it that way, 1.5% doesn’t sound so bad after all, right? So keep your short-term cash in a boring savings account that’s covered by the government guarantee (up to $250,000).

Still, I know it sucks.

To deal with the post-traumatic stress of low rates, I’ve had to reframe the role that cash plays in my financial life. What cash buys me most is peace of mind. It gives me options in a time of crisis. And if there’s one thing we’ve learned in 2020, it’s that the world is a very unpredictable place. 

And that’s the rub: interest rates are said to be at their lowest levels in 5,000 years (and remember the pharaohs didn’t even have AfterPay). This is discouraging people from saving, and encouraging them to borrow up big and take risks. History tells me this will (eventually) end in tears.

Tread Your Own Path!

Hitting the Jackpot

Hi Barefoot,

My hubby spends all his ‘Splurge’ account on TattsLotto. And not just here and there — his account statements are littered with TattsLotto purchases. I think this is unhealthy but he is using his Splurge for it, which I guess shows a level of control. Am I just worried about nothing or is this something we should take seriously? I don’t want to be financially controlling, but it doesn’t feel right.

Melanie

Hi Melanie,

What a great question! 

Here’s a better one I’d ask him:

What could he spend his Splurge money on that would give him the best bang for his buck?

After all, he’s got a 1-in-140 million chance of winning the jackpot … but if he saved up his money and splurged on  a romantic night away with you (without the kidlets) … well, I’ll leave it up to you to explain his odds of hitting the jackpot.

And while you’re having a nice romantic dinner, you could do a Barefoot Date Night, review your buckets, and plan on doing more things that’ll make you both smile.

Fear and Loathing in Lockdown

Scott,

We need your help! We implemented the Barefoot strategy a few years ago and since then have paid off all our debt, amassed a healthy Mojo and will soon tick over $100,000 in shares. The problem is --  is this really it!? We are desperately unhappy. We live in a tiny, affordable home because we do not want to be ‘postcode povvos’. Our car is a bit Pete Murray (it’s seen better days). And I’m getting sick of our card declining when we have blown our ‘Blow Bucket’ for the week. We are hustling, but to where? Maybe COVID lockdown is getting the better of me, but we kind of want to enjoy our one precious life.

Jane

Hi Jane,

I hear you, this lockdown has been rough.

As a result there are a lot of Victorians suffering with their mental health ... and it shows up in the questions they send me.

Personally I’ve got it good: I’m in regional Victoria with (slightly) more freedom, living on a farm where I can do a three-hour walk and not see anyone, and I can work from home. The toughest thing for me is that I haven’t had a haircut for five months. My sheep have better bangs than me!

I can only imagine what it’s like for you being locked down in a cramped house, with kids homeschooling for months while you try to work from home, or waiting on welfare to be allowed back to work.

It would totally suck.

So let’s make it not suck so much by playing a game:

I want you to imagine what 2020 would have been like for you before you read my book:

Lots of credit card debt. No emergency fund. No shares. 

It’d be awful, right?

Instead, you two have single-handedly eliminated the number one stress that families have. 

That’s bloody amazing!

Now we all suffer from what psychologists call ‘hedonic adaptation’, which is a fancy way of saying we get used to things quickly, and eventually feel no better than we did before. (It’s as true for getting out of debt as it is for trading in Pete Murray’s car.)

Still, I’m all for doing a (socially distanced) Date Night (when it’s allowed) and coming up with a new and exciting plan: it could be a house, a holiday, whatever. Everyone needs something to look forward to, and you guys have proven that you can nail your financial goals. You are absolutely right, life is for the living!

A Magical Mystery Tour

Ben, 

I’m a Kids Superhero Magician - taxable income about $80K a year … or I WAS until Covid GRRR. After reading your last column about that smart single mum with cancer who set her life insurance in place, I followed your advice and have been looking at raising my life and TPD through my living super insurance - but  the premium was $5600 a MONTH!  Is there a good life insurance place that you would recommend? Any advice around this topic?

Steph

P.S - I went into Woolies last month and your book was half price - I went to the counter and the price on the tills was wrong so I told them AND GOT YOUR BOOK FOR FREE (Woolworths weird policies). 
P.P.S - I love you! But don't tell my partner snoring next to me.

Hi Steph,

First, I have no idea who Ben is, but I’ve been called worse (like Magoo), so let’s go with that.

Second, it’s common to get ‘bill shock’ when you attempt to increase your insurance.  You should call your super fund and see what options they have where they can offer financial advice and wholesale rates (without the hefty commissions). This is one area where you really want to pay to get expert advice that is specifically tailored to your situation.

Finally, let’s talk about that ‘smart single mum with cancer’ who inspired you to boost your insurance: Emma.

As a recap: Emma wrote to me a few weeks ago, thanking me for reminding her to boost her TPD insurance. She explained that just last year she was ‘a fit and healthy 42 year old single mum with two boys aged 10 and 7’ … yet she’d been diagnosed with cancer, and her insurance really helped her out.
I found out last week that Emma died.

The greatest respect I can give Emma is to put her story in front of my community of Barefooters. And I’ll say it again this week. Check your insurance. Make sure you have enough. Do it for Emma. Do it for your kids. Do it TODAY.
 

Barefoot’s Lovely Aunty shares a shocking story

Hello Magoo!

I’ve been doing a kitchen renovation. My builder, who I’ve known for many years, emailed me his invoice. What I didn’t know is that a scammer had intercepted the builder’s email and changed the bank details. I transferred the money, and kissed goodbye to my $11,000! The bank has not refunded me. Something good has to come from this, can you please share this with your readers?

Aunty Barefoot

Hi Aunty,

That is truly shocking!

It’s even more so when you consider that you live in a small country town, that you’ve known the builder for years, and you were expecting the bill!
This is known as a phishing scam, and it’s much more common than you’d think. 

Right now scammers are targeting people’s super -- signing up for the early release payment.

If you’re not in the habit of checking your super balance, it could be years before you cotton on...

So, here’s what you should do:

Take out your phone right now and check your MyGov account, and make sure that no applications have been made on your behalf and that your contact details haven’t been changed. That’s how the scammers are doing it.

Second, verify every large bill you get. Take 30-seconds to call the person up and check that you have the right bank details. Businesses may be shut down in this pandemic, but it’s Christmas time for crooks!

Barefoot Budget Will Send Us Broke?

Hi Scott,

I was reading about this week’s budget and there was an article saying that you thought the Treasurer was going to send us all broke. I assume it was referring to all the spending and government debt, but thought I’d go straight to the horse’s mouth and check.

Jim

Hey Jim,

Yes, it was clickbait.

While much of the budget commentary was the predictable ‘yay for a tax cut!’, yet my thinking is that if you’re struggling right now (as many are), then you should squirrel away the (on average) $40/week saving and use it to pay down debt or build up your Mojo, rather than spend it. 

Some headline writers suggested that meant I was sticking it to the government. Not true. All I was saying is that if you follow my lead, and follow a plan that has a bedrock of savings, rather than spending, over the long-term you’ll build up both your resilience, and your financial confidence.

That’s good for you, and good for the economy.