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    Hi everyone, my name is Brad Zaknich
    GESB, and I'd like to thank you very much
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    for logging onto today's recorded webinar,
    so it's not a live one today,
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    it's recorded and it's about investing
    in super 101. So we're gonna go through
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    the ideas of investing through
    superannuation compared to investing
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    in other formats. So, for those who
    haven't used webinars before, very simple
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    technology, sit back and relax. Some of
    the normal interactive opportunities we
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    have with webinars has been turned off
    for today's session, obviously things like
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    typing in questions and clicking send,
    you can't do that today because there's
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    no-one to reply to them. So what we'll do
    is get through some of the housekeeping.
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    What we're showing you here is what you
    already would have received, well, in fact
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    what you're going to be receiving, is a
    webinar survey follow-up email, we do
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    still love to get feedback, even with
    recorded webinars, so if you wouldn't mind
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    setting a few moments it takes to complete
    that, that'd be greatly appreciated.
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    The webinar, like I said, is being
    recorded, and you'll be able to sit back,
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    watch it at your own leisure. You can move
    forward, you can go back in the slides,
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    and you can watch it as many times as you
    like, and from my understanding, this
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    webinar will be staying live on the GESB
    website, so probably around the end of
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    the financial year, at which point we'll
    most likely get a new presentation up.
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    Now, I'd first love to show my respect
    and acknowledge the traditional custodians
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    of this land, of Elders past, present and
    emerging, on which this event takes place.
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    And then you've got the all-important
    disclaimer. When talking about
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    superannuation, investing, money, finance,
    it's important that you understand that
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    we're not giving you personalised
    financial advice today. My job today it to
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    provide you with information, explain
    things, explain how things work.
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    It's not to get you to make a decision
    based on what I'm saying. So if you do
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    need personalised financial advice,
    you'll need to go elsewhere to get that,
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    as GESB only provides you general advice.
    Now in today's session there is a lot to
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    get through, some of which might be
    concepts that you're familiar with,
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    and some maybe not. So in this session
    we're gonna talk about the basics of
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    investing, and we're gonna talk about
    things like income tax, and how that
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    impacts investing, budgeting, where to use
    your money, borrowing, and debt.
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    Also going to talk about with investment
    concepts, the idea of compounding
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    interest, the value of superannuation,
    understanding the different asset classes
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    that exist within super, and what
    investment options are available.
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    Now hopefully you all know who GESB is,
    I work for GESB, GESB is a state
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    government department, and it just stands
    for Government Employee Superannuation
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    Board. Now we've been around for over
    85 years, we've grown over $42 billion
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    in funds under management as of 31st
    December 2024, and GESB, being a
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    government department, we're a
    not-for-profit organisation.
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    So the only fees we collect from you,
    through your super, through your ??
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    are to run the fund, we are
    not-for-profit. And our returns are
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    competitive and long-term.
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    In regards to GESB's product structure,
    people often get a little confused,
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    but it's quite simple. GESB at the top
    of the tree there stands for Government
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    Employee Superannuation Board. Below that
    are the different schemes that we
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    administer. Now we're got some old
    legacy schemes like the Pension scheme
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    and the Gold State Super scheme,
    we're not going to be talking about
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    those at all today, okay, they don't sit
    within the ??? of today's presentation.
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    We're predominantly going to be talking
    about superannuation, that are in the
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    accumulation phase, and are accumulation
    accounts, so West State Super, GESB Super,
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    and some of the other invest, general
    super funds that work in a similar fashion.
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    When we speak about stuff that is general,
    superannuation, I'll make that very
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    well-known. When we're talking about
    anything that might be GESB specific,
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    I'll also make that well-known. What we're
    not going to talk about in great detail
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    today, or if at all, are the allocated
    pensions. They are the retired products
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    that most people use to draw down their
    retirement savings.
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    Well let's quickly talk about West State
    and GESB Super because there are some
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    differences between the two of them,
    and you need to be aware. So, West State
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    Super was the default super fund for
    WA State Public Servants who commenced
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    working for the government prior to
    15 April 2007. The reason that is
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    important is that after April 2007, new
    employees to the public sector might have
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    had a GESB Super account open, or perhaps
    some other super fund, Australian Super,
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    Hostplus, something like that. The reason
    it's important to know, is that most
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    Australian funds like GESB Super, and most
    other funds, are considered to be taxed
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    super scheme. Why is this important?
    The government allows super contributions
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    to be contributed at a lower rate of tax
    than your normal pay. We need to remember
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    that super comes under the tax regime,
    and GESB super, like most Australian funds
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    is a tax scheme and that simply means
    when your employer puts money into your
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    super fund, through your employers' 11.5%
    guarantee, or you put extra money in
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    through your payroll process called
    salary sacrifice. Those contributions are
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    only taxed at 15%, compared to
    your normal tax rates through your income.
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    But it happens on the way into your
    account, and while your money's still
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    invested. If however you've got a West
    State Super account, your money's are
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    not taxed on the way in, because it's
    called an 'untaxed super scheme'.
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    So the money's from your employers'
    contributions and any salary sacrifice are
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    not taxed on the way into your account so
    the full contribution hits your account.
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    Any investment earnings or growth in your
    fund would normally be taxed at 15% in
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    a regular fund, they are not taxed in
    West State Super whilst the money remains
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    in West State Super, but what happens
    however is when you take your money
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    out of the West State scheme, that is
    when the 15% tax gets applied.
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    So it's important that you understand the
    difference, and there are some other
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    differences to talk about in a little
    while as well.
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    Now, when we talk about tax, you need
    to remember as well that the way the
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    Australian tax system works is relative to
    your income, is the more income that
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    you earn, the more tax you generally pay.
    So up to the first $18,200 you earn in
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    earnings through your salary, through your
    income, there is no tax applicable to that
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    income for most Australians. But once your
    salary gets above $18,201, up to $45,000,
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    I shouldn't say salary, I should say
    income, in that bracket your income is
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    taxed at 16%, okay, for every dollar over
    $18,201, up to $45,000.
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    Then, if you're earning over $45,001 per
    year, the earnings between $45,001 and
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    $135,00, that portion alone is taxed at
    30%. So people often think 'well I'm
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    earning over $45 grand a year, I must be
    paying 30% tax. Yes, but only on the money
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    you're earning, above $45,000. And as your
    salary goes into the new higher brackets,
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    you pay more tax on the extra earnings.
    Now, as I said earlier, money's going into
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    superannuation from your employer's
    contributions, and through the process
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    called salary sacrifice. They are not
    taxed at your marginal, personal tax rate.
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    They are instead taxed at 15%. So when you
    talk about that, you can see that money's
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    being earned over $45 grand are normally
    taxed at 30%, money going into your super
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    only going to be taxed at 15% maximum.
    That is the benefit of superannuation,
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    so let's go through this. Let's start
    talking investing money, finances,
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    all those sort of things, and first thing
    when I talk about this is the basics of
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    investing and knowing where your money
    comes from.
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    So knowing where your money goes is
    extremely important, being able to track
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    your spending is an extremely important
    part of looking after your money.
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    Planning your goals, whether they be
    short-term, medium-term, or long-term,
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    basics of knowing where your money comes
    from, and what you're gonna spend it on.
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    But also being a smart borrower. There's
    nothing wrong with borrowing money,
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    but some would argue, borrowing money to
    purchase something that is declining in
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    value may not be a smart borrow, but
    that's up to the individual to decide how
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    they want to do that. Also understanding
    compounding interest.
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    Interest earnt, understand that maybe I'm
    making, for example, a 7% return on
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    my money, but when you understand that
    compounding interest is interest on top
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    of interest on top of interest, that's
    extremely powerful.
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    Albert Einstein once said 'compound
    interest is the eighth wonder of the
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    world, he who understands it, earns it.
    He who doesn't, pays it.' Something to
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    think about there. Well let's firstly talk
    about budgeting.
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    So there is a concept called the
    'bucketing approach', cause when we talk
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    about budgeting, people get quite
    concerned and they think very heavily
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    about every cent that this, and every
    individual item, and that is fair enough.
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    But if you simplify things in budgeting
    into a simpler approach, it might be as
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    simple as dividing your income into three
    buckets, or three aspects of your income.
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    And you might allocate, for example, 50%
    of your income to your needs, so for
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    example your home loan, your rent,
    groceries, utilities and your insurances.
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    So 50% is just a concept, you might have
    more than that, you might have less,
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    but when you identify an amount of
    money, that is used for your needs, set
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    that money aside and you know that your
    needs are covered.
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    And then you might have your wants, and
    you might decide to allocate maybe 30%
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    of your income to your wants. And they can
    be things like your, upgrading needs,
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    money's for evenings out, hobbies,
    sporting events, holidays, but upgrading
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    needs we might talk about maintenance
    on your home, new cars, things like that.
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    And then you might decide to allocate
    20% of your income towards savings.
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    And that might be an emergency fund for
    when things go wrong, or maybe long-term
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    savings for things off in the future,
    that might include other investments like
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    superannuation, shares, property, but it
    also might include the overpayment of your
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    debt, so paying extra money to pay off
    loans might be considered to be savings.
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    And when you break it down into 50%, 30%
    and 20%, it's a very reasonable starting
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    point, you might decide to put more money
    into savings, less into wants, but by
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    having structure, makes it easier to stick
    to that structure, and identify what
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    you're going to be putting your money
    into.
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    Let's now talk about being a smart
    borrower. Borrowing money is for most
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    people, a necessity in life, for certain
    things, but not all debt is equal, it will
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    depend on the purpose of the loan,
    it will depend on the interest rates
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    you're paying, how often and how much
    you payments are going to be, and it
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    should be consolidating different debts,
    or different loans, into one.
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    So for example, when they say 'not all
    debt is equal', if you're borrowing money
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    from a bank or institution, as an
    example, and maybe you're borrowing it
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    and you're having to pay, 5% interest
    or 6% interest to borrow that money,
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    but maybe you're borrowing that money
    to purchase something that's going to
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    increase in value by 7, 8, 9% per year,
    that might be said as being 'good debt'.
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    Whereas 'bad debt' might be something as
    simple as paying for a holiday, where you
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    don't have much to show for it at the
    end and you're paying extra when you get
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    back by way of interest. So understand,
    borrowing money is not necessarily a bad
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    thing, but understanding when you should,
    shouldn't borrow to purchase things is
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    something that you have to decide.
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    Now lets now talk about compounding
    interest, I'm gonna go through the example
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    we quite often use. Compounding interest
    is basically earning interest on top of
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    previously earned interest. So let's look
    at a case study of Jenny, who invests
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    $10,000 over a five year period. Now she's
    gonna, let's say in her example, she
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    receives 5% per annum compounded interest,
    compounded on a monthly basis.
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    Now, and the end of five years, her
    investments actually gonna grow to $12,834.
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    She's not just earning 5% on $10,000,
    so let's see how this works.
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    If she invests $10,000 at the start of
    year 1, by compounding interest at 5%
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    per annum monthly, she's doesn't end up
    with $500, which would be if she
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    compounded once, she ends up with $512,
    it's actually more than 5% over the 12
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    months because it's been compounded
    monthly. So at the beginning of the next
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    year she's got $512, which she earns 5%
    interest compounded monthly, for the next
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    12 months, she accumulates $538.
    Ends up with $11,049, and you can see over
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    five years, the interests that's been
    compounded grows, 512, 538, 565, 594, 625.
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    So compounding interest, we leave
    investments alone, and they compound on
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    top of each other. It's investments'
    interest on top of the last lot of
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    interest returns. That's where leaving
    things long term can generate greater
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    levels of interest, because it's not
    simple interest, it's compound interest.
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    And that's where these slides come in,
    excuse me, time is money.
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    People often talk about 'timing the market',
    it's often more important to spend time
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    in the market. What do we mean by that?
    Well let's say for example, you've got
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    a 20-year-old, a 30-year-old, a 40 and a
    50-year-old, who all of a sudden decide,
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    with a starting balance of nothing,
    they want to put an extra $50 a fortnight
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    perhaps even less, in superannuation.
    So let's just assume this is extra money
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    you're putting into your super, above and
    beyond what you might already be getting.
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    What difference will it make by putting
    $50 a fortnight, now let's assume an
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    annual earning rate of roughly 7.8%,
    so you're probably in the growth plan.
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    Now if you start when you're 20, an extra
    $50 a fortnight, taken out of the
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    conversation inflation and things like
    that, when you get to 60, so after 40
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    years, you'll have $340,758 extra sitting
    in your account.
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    By only putting in $50 a fortnight.
    Now if you don't start until you're 30,
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    now I've got $154,000, you don't start
    until you're 40, about $64,000,
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    you don't start until you're 50, it's
    $21,000. Now you can see, even though
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    they're only 10-year periods separating
    each starting point, the amounts of
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    difference are massive. Because the person
    starting making contributions earlier,
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    is getting compounding interest every
    month on top of the contributions that
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    have already grown. And that's why the
    balance can be quite large, by putting in
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    significantly small amounts of money,
    if you start really early.
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    Well let's now focus on that $345,000
    because we know that starting at 20,
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    over 40 years, should generate a figure
    that's similar to that.
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    But what if, you need that amount of
    money, but you don't start when you're 20.
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    Well if you don't start 'til you're 30,
    to meet the same objective, you'll need to
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    put in $112 a fortnight, significantly
    more. If you don't start 'til you're 40,
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    now you've gotta do $270 a fortnight,
    for a much shorter period of time.
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    And if you don't start 'til you're 50,
    now it's $807 per fortnight.
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    So this is where compounding interest can
    work against you, the longer you wait to
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    start making investments. And because
    superannuation can't be accessed,
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    generally until the age of 60 anyway,
    for a lot of people making extra
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    contributions in super, the benefits of
    compounding interest come along anyway,
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    because you can't get access to it.
    But what it does say, is if you want to
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    start growing your super, the earlier you
    start, generally speaking, the less amount
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    you've gotta make as a contribution
    a fortnight.
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    And what is the value of superannuation
    to you? Well the value of super is this;
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    It's a very tax-advantaged saving scheme
    for retirement, often more, better tax
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    advantages than you're gonna get through
    your income tax rates.
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    Why is superannuation compulsory, and it's
    been compulsory since 1992, it's so that
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    you have an alternative to, or a
    supplement for, the age pension.
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    The age pension, is not going to disappear
    anytime soon, but it is still seen as
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    being only a safety net for retirement.
    Because we've been getting compulsory
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    super now since 1992.
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    And the value of super for you might be
    to give you the options in retirement
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    that you might not otherwise have, by just
    relying on the age pension, or even just
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    compulsory super, maybe making extra
    contributions, will meet your objectives,
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    as to what your lives might look like
    in retirement.
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    Now there are different ways of getting
    money into super, and the main way is
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    your employers' contributions.
    Now down on the left-hand side you can
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    see, you can put super through your
    employers' contributions, through salary
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    sacrifice through your payroll, voluntary
    after-tax contributions, through cheque
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    or B-pay or even through your payroll.
    There are also personal deductible
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    contributions which we're not going to
    go into great detail about today,
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    and there's also spouse contributions.
    But across the top, there are two main
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    forms of contributions. One is called
    concessional contributions, one is called
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    non-concessional.
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    What is the difference? The difference
    comes down to the name. Concessional
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    contributions are moneys' that go into
    your super before you pay your income tax.
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    Now when I showed you before that for
    most Australians earning over $30,000 a
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    year, most of us are paying 30% tax on a
    fair chunk of our income.
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    So for when you have a non-concessional
    contribution, that means you've earned
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    your money, you've generally paid your
    tax on your income, which could be 30%.
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    So if you earn $1000, you might lose 30%
    being 300, you can get $700 into your
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    super, that would be a non-concessional
    contribution. But when putting money
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    into your super as a concessional
    contribution, the money comes out of your
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    income, before it gets taxed at your
    regular tax rate and instead goes into
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    your super and will only be taxed at 15%.
    So you earn $1000, only to lose 15%,
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    you're left with $850. So superannuation
    concessional contributions is like earning
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    $1000 and being able to invest $850,
    whereas non-concessional contributions,
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    which you can invest in anywhere, might
    otherwise be earning $1000 and only
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    getting $700 invested. That's the benefit
    of superannuation.
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    And what this slide here is showing,
    excuse me, is normally you earn your
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    salary, your salary gets taxed at your
    marginal tax rate, think 30-odd percent or
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    possibly more, at the top end, and money
    goes into your bank account.
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    Money that you can buy and invest
    elsewhere, the interest or earnings are
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    also taxed at your marginal tax rate.
    But when you put money into superannuation
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    through your salary, through salary
    sacrifice, it'll only be taxed at 15%,
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    either on the way into your account with
    most super funds like GESB, Australian
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    Super and Hesta, or the money on the way
    out, with West State Super, still 15%.
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    And not just that, not only do you pay
    only 15% tax on the contributions, you
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    only pay 15% tax on the investment
    earnings, as opposed to your marginal tax
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    rate.
Title:
GESB video
Video Language:
English
Duration:
33:57
Lucytheninjagofan edited English subtitles for GESB video Mar 4, 2025, 2:22 PM
Lucytheninjagofan edited English subtitles for GESB video Mar 4, 2025, 6:38 AM
Lucytheninjagofan edited English subtitles for GESB video Mar 3, 2025, 2:54 PM
Lucytheninjagofan edited English subtitles for GESB video Mar 3, 2025, 7:36 AM
Lucytheninjagofan edited English subtitles for GESB video Mar 3, 2025, 4:37 AM
Lucytheninjagofan edited English subtitles for GESB video Mar 3, 2025, 3:59 AM

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