GESB video

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.