Hi everyone, my name is Brad Zaknich GESB, and I'd like to thank you very much
for logging onto today's recorded webinar, so it's not a live one today,
it's recorded and it's about investing in super 101. So we're gonna go through
the ideas of investing through superannuation compared to investing
in other formats. So, for those who haven't used webinars before, very simple
technology, sit back and relax. Some of the normal interactive opportunities we
have with webinars has been turned off for today's session, obviously things like
typing in questions and clicking send, you can't do that today because there's
no-one to reply to them. So what we'll do is get through some of the housekeeping.
What we're showing you here is what you already would have received, well, in fact
what you're going to be receiving, is a webinar survey follow-up email, we do
still love to get feedback, even with recorded webinars, so if you wouldn't mind
setting a few moments it takes to complete that, that'd be greatly appreciated.
The webinar, like I said, is being recorded, and you'll be able to sit back,
watch it at your own leisure. You can move forward, you can go back in the slides,
and you can watch it as many times as you like, and from my understanding, this
webinar will be staying live on the GESB website, so probably around the end of
the financial year, at which point we'll most likely get a new presentation up.
Now, I'd first love to show my respect and acknowledge the traditional custodians
of this land, of Elders past, present and emerging, on which this event takes place.
And then you've got the all-important disclaimer. When talking about
superannuation, investing, money, finance, it's important that you understand that
we're not giving you personalised financial advice today. My job today it to
provide you with information, explain things, explain how things work.
It's not to get you to make a decision based on what I'm saying. So if you do
need personalised financial advice, you'll need to go elsewhere to get that,
as GESB only provides you general advice. Now in today's session there is a lot to
get through, some of which might be concepts that you're familiar with,
and some maybe not. So in this session we're gonna talk about the basics of
investing, and we're gonna talk about things like income tax, and how that
impacts investing, budgeting, where to use your money, borrowing, and debt.
Also going to talk about with investment concepts, the idea of compounding
interest, the value of superannuation, understanding the different asset classes
that exist within super, and what investment options are available.
Now hopefully you all know who GESB is, I work for GESB, GESB is a state
government department, and it just stands for Government Employee Superannuation
Board. Now we've been around for over 85 years, we've grown over $42 billion
in funds under management as of 31st December 2024, and GESB, being a
government department, we're a not-for-profit organisation.
So the only fees we collect from you, through your super, through your ??
are to run the fund, we are not-for-profit. And our returns are
competitive and long-term.
In regards to GESB's product structure, people often get a little confused,
but it's quite simple. GESB at the top of the tree there stands for Government
Employee Superannuation Board. Below that are the different schemes that we
administer. Now we're got some old legacy schemes like the Pension scheme
and the Gold State Super scheme, we're not going to be talking about
those at all today, okay, they don't sit within the ??? of today's presentation.
We're predominantly going to be talking about superannuation, that are in the
accumulation phase, and are accumulation accounts, so West State Super, GESB Super,
and some of the other invest, general super funds that work in a similar fashion.
When we speak about stuff that is general, superannuation, I'll make that very
well-known. When we're talking about anything that might be GESB specific,
I'll also make that well-known. What we're not going to talk about in great detail
today, or if at all, are the allocated pensions. They are the retired products
that most people use to draw down their retirement savings.
Well let's quickly talk about West State and GESB Super because there are some
differences between the two of them, and you need to be aware. So, West State
Super was the default super fund for WA State Public Servants who commenced
working for the government prior to 15 April 2007. The reason that is
important is that after April 2007, new employees to the public sector might have
had a GESB Super account open, or perhaps some other super fund, Australian Super,
Hostplus, something like that. The reason it's important to know, is that most
Australian funds like GESB Super, and most other funds, are considered to be taxed
super scheme. Why is this important? The government allows super contributions
to be contributed at a lower rate of tax than your normal pay. We need to remember
that super comes under the tax regime, and GESB super, like most Australian funds
is a tax scheme and that simply means when your employer puts money into your
super fund, through your employers' 11.5% guarantee, or you put extra money in
through your payroll process called salary sacrifice. Those contributions are
only taxed at 15%, compared to your normal tax rates through your income.
But it happens on the way into your account, and while your money's still
invested. If however you've got a West State Super account, your money's are
not taxed on the way in, because it's called an 'untaxed super scheme'.
So the money's from your employers' contributions and any salary sacrifice are
not taxed on the way into your account so the full contribution hits your account.
Any investment earnings or growth in your fund would normally be taxed at 15% in
a regular fund, they are not taxed in West State Super whilst the money remains
in West State Super, but what happens however is when you take your money
out of the West State scheme, that is when the 15% tax gets applied.
So it's important that you understand the difference, and there are some other
differences to talk about in a little while as well.
Now, when we talk about tax, you need to remember as well that the way the
Australian tax system works is relative to your income, is the more income that
you earn, the more tax you generally pay. So up to the first $18,200 you earn in
earnings through your salary, through your income, there is no tax applicable to that
income for most Australians. But once your salary gets above $18,201, up to $45,000,
I shouldn't say salary, I should say income, in that bracket your income is
taxed at 16%, okay, for every dollar over $18,201, up to $45,000.
Then, if you're earning over $45,001 per year, the earnings between $45,001 and
$135,00, that portion alone is taxed at 30%. So people often think 'well I'm
earning over $45 grand a year, I must be paying 30% tax. Yes, but only on the money
you're earning, above $45,000. And as your salary goes into the new higher brackets,
you pay more tax on the extra earnings. Now, as I said earlier, money's going into
superannuation from your employer's contributions, and through the process
called salary sacrifice. They are not taxed at your marginal, personal tax rate.
They are instead taxed at 15%. So when you talk about that, you can see that money's
being earned over $45 grand are normally taxed at 30%, money going into your super
only going to be taxed at 15% maximum. That is the benefit of superannuation,
so let's go through this. Let's start talking investing money, finances,
all those sort of things, and first thing when I talk about this is the basics of
investing and knowing where your money comes from.
So knowing where your money goes is extremely important, being able to track
your spending is an extremely important part of looking after your money.
Planning your goals, whether they be short-term, medium-term, or long-term,
basics of knowing where your money comes from, and what you're gonna spend it on.
But also being a smart borrower. There's nothing wrong with borrowing money,
but some would argue, borrowing money to purchase something that is declining in
value may not be a smart borrow, but that's up to the individual to decide how
they want to do that. Also understanding compounding interest.
Interest earnt, understand that maybe I'm making, for example, a 7% return on
my money, but when you understand that compounding interest is interest on top
of interest on top of interest, that's extremely powerful.
Albert Einstein once said 'compound interest is the eighth wonder of the
world, he who understands it, earns it. He who doesn't, pays it.' Something to
think about there. Well let's firstly talk about budgeting.
So there is a concept called the 'bucketing approach', cause when we talk
about budgeting, people get quite concerned and they think very heavily
about every cent that this, and every individual item, and that is fair enough.
But if you simplify things in budgeting into a simpler approach, it might be as
simple as dividing your income into three buckets, or three aspects of your income.
And you might allocate, for example, 50% of your income to your needs, so for
example your home loan, your rent, groceries, utilities and your insurances.
So 50% is just a concept, you might have more than that, you might have less,
but when you identify an amount of money, that is used for your needs, set
that money aside and you know that your needs are covered.
And then you might have your wants, and you might decide to allocate maybe 30%
of your income to your wants. And they can be things like your, upgrading needs,
money's for evenings out, hobbies, sporting events, holidays, but upgrading
needs we might talk about maintenance on your home, new cars, things like that.
And then you might decide to allocate 20% of your income towards savings.
And that might be an emergency fund for when things go wrong, or maybe long-term
savings for things off in the future, that might include other investments like
superannuation, shares, property, but it also might include the overpayment of your
debt, so paying extra money to pay off loans might be considered to be savings.