Barefoot Investor: Talking dollars and sense with Prime Minister Malcolm Turnbull
IT’S not every day you get to sit down with the Prime Minister. From energy bills to salary-sacrificing, the Barefoot Investor put your questions to the PM.
Barefoot Investor
Don't miss out on the headlines from Barefoot Investor. Followed categories will be added to My News.
THIS week I sat down one-on-one with the Prime Minister.
A journo from a rival rag snivelled, “He’ll answer questions from hosts who aren’t wearing shoes” … which, unless Malcolm has been doing vox-pops with homeless people, is a swipe at yours truly.
(And for the record, I not only wore shoes, I even donned my wedding suit jacket for the occasion.)
Anyway, I found him to be a good bloke — though maybe that’s because we’ve got a lot in common (like me, in his line of work he tends to upset people, and, like me, he’s even been known to cop it in the neck from his own … er … kitchen cabinet).
More Scott Pape:
Is it worth starting your own business? Scott Pape outlines challenges entrepreneurs should consider
Barefoot Investor: How to save for a baby without going broke
Here are a few of the (edited) questions I asked him:
POWER TO THE PM
BAREFOOT: You’ve recently given the energy retailers a slap. I’ve saved $540 on my power bill by going to energymadeeasy.gov.au. Have you run the numbers on The Lodge?
PM: (laughs) Well, I’m pretty sure my son-in-law has … but I must say your savings are representative of what a lot of people are making by switching.
FINANCIAL EDUCATION
BAREFOOT: Something close to my heart is financial education. The Commonwealth Bank is one of the biggest providers of financial education in schools. Do you think there’s a conflict of interest in having the banks teaching kids about money and then getting them on a database to sign up as customers?
PM: Well, um, I can understand that argument, but I think the important thing is getting plenty of people in schools giving that financial education. I mean, financial literacy is critically important as you say, so it’s a fair point.
COMMUNITY Q&A
BAREFOOT: Now to some questions from our Barefoot Investor community. Laurie asks, “Why does our government continually reduce the amount we can salary-sacrifice into super?”
PM: I don’t think it’s fair to say we continually reduce. We made some changes in the last budget to make the super system fairer and more flexible, but we don’t have any plans to make any other changes.
BAREFOOT: Elle asks, “Why is so little being done to help housing affordability? There are so many tax deductions for property investors, like negative gearing, but those of us trying to buy just one home get jack!”
PM: You’ve got to recognise that there’s nothing special about negative gearing … It’s been part of the income tax system since the Income Tax Act was passed in 1911.
(Barefoot aside: Though in 2005 he agreed with you, Elle, labelling it “tax avoidance”.)
BAREFOOT: Finally, I’d like to give you a copy of my best-selling book. I think you’ve got your money sorted, but you might want to give that to ScoMo — it could help him balance the budget.
PM: (laughs) Thanks very much, Scott.
Tread Your Own Path!
HOLD THE PHONE
TIM WRITES: I was one of the sheep who bought Telstra in the floats (T1 and T2) when the government thought it would be a good time to sell off taxpayers’ assets. I have been a long-term investor — I have been holding them for 20 years and they have delivered me bugger all! Now they have come out and cut their dividend, the share price has been shredded even more. So my question is, should I just sell this dog?
BAREFOOT REPLIES: The first thing to understand is that the stock market doesn’t give a stuff about what price you bought Telstra for. Seriously, it’s totally irrelevant. The only thing that matters is what the price is today. So you need to ask yourself this question: “Knowing what I know now, would I buy Telstra shares today?” If you wouldn’t, sell them. If you would, keep them. It’s that simple. I’m a Telstra shareholder … and I’ve been buying Telstra shares recently. Why? First, because data is about to explode, as the internet goes from your computer to syncing up to your fridge, your washing machine, and every other smart device. Second, the NBN is proving to be quite the white elephant. While it’s true that Telstra has (sensibly) decided to stop paying out all its profits in dividends to shareholders, this decision is in part to fund the rollout of their 5G mobile network, which could eventually eat the elephant. Finally, while the dividend has been cut, on the revised numbers it’s still delivering around 6 per cent fully franked. They’re my reasons for continuing to hold the dog-and-bone, anyway. Over to you.
ON THE WRONG TRACK
ROB ASKS: I am 31 and earn $120,000; my wife earns $90,000. We have a $750,000 mortgage on a house worth $1 million, $10,000 in index shares, and $20,000 in Mojo. Can I buy a $40,000 1970 Corvette Stingray? Or is that totally irresponsible? I would save up and pay cash for it, I promise!
BAREFOOT REPLIES: Years ago my wife got a bloke in to measure up some curtains. As he was up on his ladder, she asked him, “Will this fabric give full blockout?” He looked at her, then turned to me — the man — and gave the answer. (“Well, mate, you have to understand that total blockout is not …”) This little game played out for the next five minutes — my wife getting increasingly testy, me trying to play sexist charades with the curtains guy (raising my eyebrows and nodding to my wife) … and the curtains guy being totally oblivious as to who really wore the pants (and the curtains) in our household. Bottom line? The curtains bloke didn’t get the job … and it looks like it’s curtains for your Corvette. Now that’s got nothing to do with whether you can afford it, and everything to do with the fact that you’re writing to me about it, rather than discussing it with your wife on a Barefoot Date Night.
Read more:
Teach your teen money management
WHERE THE HEART IS
CLAIRE ASKS: How do I come up with $372,255 ASAP? I am 43 and going through a divorce and property settlement. My ex-husband has offered the house and 8ha to me if I can come up with the money. But I am a low-income earner with no assets (other than my two gorgeous children) and no substantial savings. I am thinking I need to either go to the bank for a whopping loan or find some investors, and I am planning on subdividing 2 x 2ha to pay them. Any suggestions would be greatly appreciated as I am out of my depth.
BAREFOOT REPLIES: Don’t take on the house. You can’t afford it, and, in the unlikely event you raise the dough, you’ll end up working around the clock and stressed out about your debts. That’s not fair on your kids. They need you right now — they need all your focus and energy to help them through this really difficult time. So give it to them, and not to a pile of bricks, your husband, or your bank manager. The house doesn’t matter; instead focus on the dining room table you sit around each night as you talk with your kids.
MAKING DAD’S DAY
MAYA ASKS: I loved your “Ultimate Father’s Day Present” column so much! My dad, who is 76, lives in WA and I have not seen him for five years. Today I called him to say I am booking a ticket for him to visit us at Christmas (and I will be recording his answers to your questions). As a single parent for over five years living week to week, there was no way I could have done that before. But I have saved, Barefoot style, and now I can! Your advice has changed my world (and my family’s).
BAREFOOT REPLIES: Nice one. (For those of you who missed it, last week I urged readers to whip out their phones and ask their dads some simple questions, like “How would you like to be remembered?”) Tell your dad what you just told me, and it’ll make him proud.
Time to teach young the basics about saving and investing
Don’t take on long term debt by marrying into a family in denial
People can get into deep financial trouble but taking control gives a way out
What to do when your partner spends too much
The Barefoot Investor holds an Australian Financial Services Licence (302081). This is general advice only. It should not replace individual, independent, personal financial advice
Originally published as Barefoot Investor: Talking dollars and sense with Prime Minister Malcolm Turnbull
Why all that glitters is not gold
The price of gold may be on the rise but it’s not quite as shiny as it seems. When it comes to long-term gain, it pays to follow the golden rule — only invest in things that regularly put money back in your pocket, writes the Barefoot Investor.
Don’t get high on the short-term sugar hit
Despite the COVID crisis, money questions have been flooding in from readers about how to buy and trade stocks, or even gold. Maybe it’s down to raiding super, or the government stimulus, but the key to financial control is first to get out of debt, writes the Barefoot Investor.