Expert Investor: Understanding Superannuation w/ FairVine Super

Bryce: [00:00:57] Welcome to another episode of Equity Mates, a podcast where we help you learn to invest in 45 minutes or less. We break down the world of investing from beginning to dividend so that you can hopefully make some returns. My name is Bryce and as always, I'm joined by my equity buddy Ren. How's it going, bro? [00:01:12][14.9]

Alec: [00:01:12] I'm very good. Bryce very excited for this episode. We're going to be talking about something that everyone, regardless of your stage of investing, has to deal with, which is superannuation. [00:01:20][8.1]

Bryce: [00:01:21] Absolutely. And superannuation with a bit of a different view. And we'll get into why that is the case. But I would like to introduce head of customer experience at FairVine superannuation, Rachel Hamlyn, to the show. Thank you for joining us. [00:01:34][12.7]

Rachel: [00:01:34] It's an absolute pleasure. I love that you're excited, as excited, as excited at the start [00:01:41][6.6]

Bryce: [00:01:41] of every episode, I think, which is genuine. [00:01:43][1.6]

Alec: [00:01:43] But this one I'm particularly excited for because I don't [00:01:46][3.2]

Rachel: [00:01:47] hear that a lot in my line of work. There you go. [00:01:48][1.9]

Bryce: [00:01:50] Now, the reason we have Rachel on the show is I to get stuck into a lot of the superannuation sort of questions and topics that continuously get thrown at us, Ren and other then future super. We haven't really sat down with a superannuation fund to discuss sort of just the basics around super, but also because on Super has a really interesting sort of story and take on on what they're trying to achieve, and that is focussing on women and the importance of superannuation for women. So Rachel will get stuck into that in a bit. But I'll hand over to Ren to get started with one of the games we generally [00:02:24][33.4]

Speaker 3: [00:02:24] like to play. [00:02:24][0.3]

Alec: [00:02:26] So after that full preamble about superannuation, we're going to pivot and play a game. If you're up for it, you can you can say you're not up for it. But we like to start these interviews with a bit of a game of overrated or underrated where we throw out an investing index or a topic or theme that's been big in the investing community. And we ask you if you think it's underrated or overrated. So you up for playing [00:02:47][21.1]

Rachel: [00:02:47] on that, playing with the proviso that I cannot give specific financial [00:02:52][5.0]

Speaker 3: [00:02:53] advice on how [00:02:54][1.3]

Alec: [00:02:55] important Provisor [00:02:55][0.5]

Speaker 3: [00:02:57] can we say [00:02:57][0.4]

Rachel: [00:02:59] Grandal on the same page. [00:03:00][1.1]

Alec: [00:03:00] So to kick it off, overrated or underrated, the ASX 200 index? [00:03:05][4.5]

Rachel: [00:03:05] Look, I think, you know, being a proud Australian resident, because you can hear that I'm a Kiwi, you know, obviously I'm supportive of the ASX and think, you know, Australian, and that's great. I guess there are a couple of schools of thought. But because I work in superannuation, because I'm about security in investment, that's a very large part of what we do. I think it's potentially a little bit overrated. There's not a lot of diversity, diversification within the ASX. [00:03:32][26.4]

Bryce: [00:03:33] Would that same sentiment then flow to the S&P 500 over in the States, overrated or underrated? [00:03:39][6.2]

Rachel: [00:03:40] Had a conversation about the S&P 500 today, actually with the guys at work. And my personal opinion is that it's underrated because it does have that diversification. And, you know, that's a very singular view of the whole thing. It's also pundits are saying it's overrated, you know, and overvalued. And, you know, but we have been reading for many years now. Is a crash coming as a crash coming, as a crash coming? It's overvalued. It's overrated. I realise that's not really an answer, but [00:04:05][24.6]

Speaker 3: [00:04:07] sort of in some aspect of Bryce has been [00:04:09][2.8]

Alec: [00:04:09] highly physical, a massive crash for about three years now. [00:04:12][2.7]

Speaker 3: [00:04:14] Yeah, pretty much everyone has. Exactly. Yeah. Yeah. [00:04:16][2.6]

Alec: [00:04:17] So speaking of things that the pundits have had a lot to say about recently, overrated or underrated, the Australian residential property market. [00:04:25][7.9]

Rachel: [00:04:26] Oh yeah. Look, I think there are a lot of people out there who really want this market to to flounder a little bit so that they can get into the market. [00:04:33][7.3]

Speaker 3: [00:04:33] Yours truly. I kind of looking around the room I gave them to thirty. [00:04:37][4.0]

Rachel: [00:04:39] You know, I would caution people who feel that way that potentially your parents have got a lot of equity sitting in property. And if they lose that, then you could well have your parents crashing on your couch. So let's not wish that too much. [00:04:52][12.8]

Alec: [00:04:53] It's a real double edged sword, isn't it? Your house. Have your parents live with you? [00:04:56][3.0]

Speaker 3: [00:04:56] Yeah, 100 per percent. [00:04:58][2.2]

Rachel: [00:04:59] I think, you know, we went through the some people would say it was a price adjustment a couple of years ago, but the market rallies and it's look, it's it's an odd market. Residential property has always been a strange market. But I think what keeps it buoyant is that people are used to it. They feel safe with it. It's something that they're familiar with. It's bricks and mortar. They can literally touch it and they know that their money is in this thing. So it becomes one of those things that, you know, people are comfortable with it. So so they will tend to invest in it quite heavily, which keeps it potentially falsely inflated. One of the things that I am concerned about within that property market is the amount of unregulated investment advice that's out there. It's kind of the Wild West. I've attended a few seminars in my time and, you know, it's almost religious and it's further. And, you know, I've definitely found myself sitting in these rooms thinking, wow, people are lapping this up and just not. They want this to be true then looking for confirmation bias that this is true, [00:06:01][62.2]

Bryce: [00:06:01] so we won't go to much detail, I could [00:06:05][3.4]

Speaker 3: [00:06:06] talk about one of our major loves the topic, but [00:06:07][1.7]

Bryce: [00:06:09] moving to more sort of, I guess, equity related stuff. And this is a question we often get from our audience, and that is additional contributions to superannuation as a millennial or I guess when you are still a very long way away from retirement. Is that an overrated or underrated thing to be thinking about? [00:06:31][21.8]

Speaker 3: [00:06:31] Well, what do you think I'm going to say this will lead us into that conversation? [00:06:37][5.6]

Rachel: [00:06:38] Well, look, that's of course, that's a big fat yes for me. Of course, it's it's a great investment. And, you know, it's interesting you say millennials are a long way from retiring. Some of the millennials are 39 years old. [00:06:50][12.1]

Bryce: [00:06:51] True. [00:06:51][0.0]

Rachel: [00:06:51] And that's actually not that far away. It's like 28, 28 years until retirement, which, you know, it doesn't sound it sounds like a long time. But when you're looking at what you've actually got to save for a comfortable retirement, it's worth thinking about. And look, I am obviously a fan of superannuation. I think there's a lot there's a lot that makes it a good investment. Simply probably the main one for me is that it's locked away and you can't touch it. You can't touch it if you're waiting. You can't touch it to to pay for your trip to Thailand. You cannot really touch it unless it's a really dire circumstance. So, you know, there's a lot to be said for that. There are huge tax benefits. And, you know, I suspect we'll probably talk about that in a little while. And, of course, the power of compounding interest, which it's a difficult thing to explain, but you earn interest on the interest, on the interest, and it grows exponentially. And that, I think, is something that a lot of people don't really appreciate. [00:07:45][53.6]

Alec: [00:07:46] The power of compounding interest may be difficult to explain, but it's basically the premise of this whole podcast. [00:07:51][5.3]

Speaker 3: [00:07:52] So hopefully we've done an [00:07:55][2.8]

Alec: [00:07:55] OK job of explaining in the last three, four [00:07:58][2.9]

Speaker 3: [00:07:59] grand. [00:07:59][0.0]

Alec: [00:08:02] So thanks for playing the game. As we get to talking to the interview, we always like to start with the same question for every guest. And that's the question of your first investment. There's normally a good story or, you know, good lessons that come out of it. So to kick us off, what was the story of your first investment? [00:08:17][15.3]

Rachel: [00:08:18] It's almost ironic because it is not why I ended up working in superannuation, but my first proper investment as a proper grown up was superannuation. And I was born in 1972 in New Zealand and I got my first really proper paying job. Twenty four thousand dollars a year. And you look [00:08:36][18.3]

Speaker 3: [00:08:36] out. [00:08:36][0.0]

Rachel: [00:08:37] Well, it wasn't bad back then. [00:08:40][3.1]

Alec: [00:08:40] Yeah. And since then. [00:08:42][1.4]

Speaker 3: [00:08:42] Yeah. Inflation since then. [00:08:43][1.2]

Rachel: [00:08:43] Yes, yeah. And I joined a very established company, so one of the oldest companies in New Zealand and New Zealand, and they had a pretty amazing superannuation scheme now. And New Zealand superannuation is still not compulsory. Should be, but it's not. It's a story for another time. But there was obviously within New Zealand. It had been a government run company and they still had this grandparent scheme that allowed you to join their superannuation fund. And they would put it dollar for dollar to a certain point, plus the returns on that dollar for dollar. Yes. So, you know, by the time when I was probably one of the youngest people in there because I was all of about 20 years old, you know, by the time I got to 30, I had a significant amount of money in my superannuation because of that significant amount of money. [00:09:32][48.9]

Bryce: [00:09:33] It's interesting that you mentioned well, it's interesting that you think of superannuation as your first investment, because I'm sure if you asked a lot of people who have superannuation at the moment, are you investing, their answer would be no. It's an interesting thought that people separated so much between investing traditionally through stocks and property. And then this thing that happens in the background, it's not really an investment as such. [00:09:56][23.4]

Alec: [00:09:57] So I guess my first investment was superannuation, but I've never thought of it like that. [00:10:01][4.5]

Speaker 3: [00:10:02] Yeah, there you go. I got Ren [00:10:03][1.7]

Bryce: [00:10:04] first investment outside of Super was [00:10:06][2.3]

Speaker 3: [00:10:07] what was it for Slater and Gordon that went ninety nine per cent. Yeah. [00:10:12][5.2]

Alec: [00:10:14] There's so little in there now that I can't cover the brokerage to sell it. [00:10:18][3.6]

Speaker 3: [00:10:19] I'm so sorry. It's a better story. [00:10:21][1.4]

Bryce: [00:10:23] But Rachel, you mentioned that you started in airlines and we were speaking off before the show and you had a pretty extensive career in airlines, but now you are head of customer experience at a superannuation fund and obviously very passionate about superannuation, and particularly when it comes to women. How did that sort of journey eventuate to where you are now before we get stuck into a bit more of the super stuff? [00:10:45][22.2]

Rachel: [00:10:45] It's an interesting and complex journey. I was I was married for 23 years and I made some really poor decisions throughout. Years around my finances, and I think, you know, look, certainly it's very easy to to play the blame game and leave it on another person, but one thing I realised quite soon after my divorce was that if I was to recover from this and if I was to trade a new path, that I actually needed to think about what I'd done and how I'd played into this. And that's not to take away from the responsibility of other people in this. But, you know, for me, it was a case of what did I do? Because I needed to think about the mistakes that I'd made and the things that I needed to avoid. And I lost a significant amount of money when I moved to Australia through because I wasn't engaging with my own money. I was relinquishing my responsibilities because I was busy. You know, I was moved to Australia to to start an airline. And that's not something you do easily. And it was kind of time consuming. And, you know, I was working with massive budgets at these airlines in excess of, you know, hundreds of millions of dollars and was responsible for these budgets. So the last thing I felt like doing when I came home from work was to think about my finances and to look at budgets and think about money. I wanted to go out to dinner and have a glass of wine. And, you know, I wanted to do nice things with the money that I was earning. And there was a moment when I came to, if you like, and realised that the money that I had saved in my superannuation, that I was talking about, the money that I'd gained from the sale of of my home in New Zealand when I moved to Australia, that was all gone. Every last cent of it was gone. And that was a very, very dark period in my life. A terrifying moment and having to then pick myself and my husband up and bring us out of the other side of that. I found reserves of strength in myself that I didn't know I had. But as I say, importantly really engaging with the why why I let this happen, because I would be there again today. I'm about to get married for the second time and I am making completely different decisions. I'm doing things completely differently. And I think it's really important for anybody who's had a challenging money story in their life to not lay blame or, you know, lay blame by all means, you know, straightaways out of the card as much as you like. But make sure that you also look at yourself, actually look at what you've done to contribute to this situation. And look, there was some really dark days for me. There were there were days where I couldn't afford gas to put in my car. So I had to catch the bus to the airport. And I was wearing designer clothes and it was earning one hundred and forty thousand dollars a year. And people, I think, look at that and think that's ridiculous. But I think that there are probably people listening to this podcast who can relate to that, you know, the the wealthy, poor, if you like. And I now understand that it's not what you earn, it's what you spend. And it's also not just what you spend. It's how you feel about money, how you're engaged with your money. [00:14:02][196.6]

Alec: [00:14:03] So without going too deep into the personal side of that, I'm interested in what the lessons and what the outcomes were from that sort of self reflection and reflecting on your relationship with money. [00:14:13][10.2]

Rachel: [00:14:14] I think giving responsibility to other people when you know that those other people are not necessarily good with money. That was a really big one for me because it was easier it was easier than having the conversation and having another argument and making that person feel bad because I loved him and I didn't want him to feel bad. I didn't want him to think that I knew he was bad with money and, you know, to to literally save his feelings and to protect him. I never had that conversation. And it cost me in excess of Dollars million [00:14:48][33.7]

Speaker 3: [00:14:50] expense of feeling it was. [00:14:51][1.2]

Rachel: [00:14:52] Those are very expensive feelings, you know, and this is it's a cautionary tale. And I really want men and women to hear this message. It's not just a message for women, but, you know, and I'm not saying that I had no partners for sure. You know, I'm not stupid. I knew that the money had to be coming from somewhere. But, you know, if I was if I was sad or if I was bored or if I was avoiding something, you know, I would I would go online shopping or I would go out to the shops or, you know, I'd say, oh, let's just go out to dinner. And, you know, before you know it, you've spent five hundred dollars in a day. You can do that quite easily in Sydney. Yeah, quite easily. Well, five hundred dollars in a week even. That's not sustainable. [00:15:30][38.9]

Bryce: [00:15:31] Ren susceptible to that spending. Five hundred [00:15:33][1.7]

Speaker 3: [00:15:33] dollars. I'm over time keeping I think [00:15:37][3.4]

Bryce: [00:15:38] the [00:15:38][0.0]

Speaker 3: [00:15:38] arms to touch. I was going to say you not wearing it today. Now the brand is so good that you wouldn't even know. [00:15:45][6.7]

Alec: [00:15:46] That realisation is probably a realisation that a lot of people have. And even if it's not that they're giving control of their money to someone else, it's that they're not taking control of them. Themselves and Bryce is an example of someone who has a spreadsheet for everything he's he's moving house and was preparing a spreadsheet for that over the weekend. I'm probably someone that is the opposite and is very much sort of out of sight, out of mind. And when you had that realisation, when you decided I need to take control of my money, what was sort of some of the steps you put in place to get on top of it and really take control? [00:16:18][32.1]

Rachel: [00:16:19] Look, Bryce you do you [00:16:20][1.3]

Speaker 3: [00:16:22] think there's nothing wrong with an Excel spreadsheet? [00:16:24][2.4]

Rachel: [00:16:25] There's nothing wrong with it. You know, it's actually interesting because of people I think often when I when I speak at events or, you know, things like that, people have this idea. People say to me, you know, I suppose, you know, you really tighten your budget and you write down everything you spend into it. And I the answer is no. And as I said to you, but for me, it's almost the flip side of the same thing. It's a fear of money. I did go through a period of, you know, that Excel spreadsheet, logging everything I spent, you know, really watching that. And that was a valuable exercise because it helped me identify where the leakage was and where surplus could potentially be. But as well, it became an obsession and it was just another obsession that was very similar to the online shopping obsession. It was just a flip version of that. And for me, balance is something that I really seek and everything that I do these days, you know, in terms of making my way out of it. It was that process of education. And I can't speak more strongly about the value of financial education. And, you know, obviously I love what you guys are doing. I think it's fantastic. I was sharing a story with you with these guys just before we started recording. And I had spoken to a number of financial advisors trying to find somebody that I wanted to work with. And the person who I finally landed on refused to work with me because she said, you don't need me. You actually have the ability to learn this yourself. Your financial situation is not that complex. And actually what you're doing is just replicating the mistakes that you've made before. So I read books, I listened to podcasts, I attended seminars. And there's heaps of free seminars around. You just kind of got to go into them with a with an open mind and not just accept what they're saying is the gospel truth. And, you know, there's a lot of resources out there. I had conversations with my friends. I spoke to those friends of mine who were good with money and my perception of them being good with money. For me, it was really about education and then it became about trusting myself. I realised that after that education piece, it was about trusting myself because I didn't trust myself and had never honestly really trusted myself. [00:18:36][131.8]

Bryce: [00:18:37] Couldn't agree more. I think there is no excuse to not really at least try to educate yourself in some form. There's so many free resources out there now. So let's move into the superannuation side of things. As we mentioned at the start of the show, FF7 very much focuses on superannuation for women. And obviously it's not only for women when we'll get into that a bit later. But I guess the first question is, what is wrong with superannuation at the moment when it comes to women? [00:19:04][26.3]

Rachel: [00:19:05] The current superannuation system is really set up for starting work when you're 17, 18, working full time, contributing to your super and, you know, increasing your salary as you go throughout your life and then taking no breaks, no gaps and that whole thing, and then retiring at the age of 65 to 67 depending. And there are very few women in Australia whose lives actually reflect that. Women, traditionally, the ones who take time off to have a child when they do return to work after having children and after taking that caring break, they will often be coming back as a part time worker and often fall under the four hundred fifty dollar threshold for employers to contribute super. So they're not earning super when they do go back to work or they start their own businesses because they don't. They want that flexibility. They don't want to go back into a role that is significantly more junior than what they left. So they start their own business and then it becomes the round of paying wages, paying suppliers, paying that, you know, in the last person you pay as yourself, you don't pay yourself super. And that's really common with a lot of self-employed women that I speak to. We are the ones that that will take breaks for caring. We care for elderly parents. We are the ones who take time off work to look after children. It really is about that. But there are probably a couple of things that contribute more than just that. And one of the really fascinating stats for me, because, you know, I'm sort of an amateur psychologist. I think I love the psychology and the I guess the social psychology around what happens with this. And social conditioning plays a huge part in what's happening with the female superannuation gap. Studies have shown that women are conditioned to focus on transactional. Spending, whereas men are more conditioned to look at investment, so, you know, a boy child in a girl child should be taught how to go shopping with mom. She'll be taught how to find the troops spread in the supermarket, how to get the cheapest rate on her energy bills. You know, those kind of transactional daily things, whereas he's being conditioned to provide for the family to make sure that we're saving for home, to make sure that we've got retirements, wooded. You know, the average age of a woman having a child in Australia is 31. So that's when you would think that that would start. But actually, the statistics show that the superannuation gap by the age of 30 is ten thousand dollars on average. So there's not really anything in terms of life events separating men and women between the ages of 18 and 30. But men are more likely to have more money. [00:21:44][159.3]

Alec: [00:21:44] Do you know what that ten thousand dollars is as a percentage or how the actual numbers compare? [00:21:49][5.1]

Rachel: [00:21:50] It's around about 30 percent. [00:21:51][1.1]

Bryce: [00:21:52] Oh, well, quite significant. [00:21:53][1.2]

Alec: [00:21:54] Which broadly correlates to the Paga. Is that what we're attributing that to? What's leading to that? [00:21:58][4.9]

Rachel: [00:21:59] Look, women at that age are more likely to have more superannuation funds, so they're more likely to have more than one fund. And with that comes the likelihood because they're less engaged with their super. And of course, these are gross generalisations, but women are generally less engaged with their super. So they're more likely to just join the default fund that their new employer, they've changed jobs three times in those ten years and they will just accept the default superannuation fund of their employer and get a whole new found and get a whole new set of life insurance and pay a whole new set of fees. Whereas generally men tend to be more engaged with that. They go, you know, actually, no, I need to understand this. No, this is money. This is investment. This is the future. And yes, the pay get 100 per cent the pay that comes into it. But we tend to see as well that the pay gap is really only hitting home after that age group, you know. [00:22:49][49.9]

Alec: [00:22:50] I was just going to ask. So when we think about the retirement age, which is 67 now in Australia, how big is the gap at that point? [00:22:58][7.5]

Rachel: [00:22:58] Look, it depends on the stats that you look at and it really depends on the projections. But at this point in time, if I was 67 and you were 67, I would have half the support that you have. Wow. Well, it's the projections for people now, you know, round about I think it was based on the age of 35. Those projections are more like 30 per cent, which is better, but it's not. But, you know, men, a man retiring at the age of 67 these days still doesn't have enough super money. [00:23:28][29.3]

Bryce: [00:23:28] That's another conversation. [00:23:29][0.5]

Speaker 3: [00:23:31] I mean, the [00:23:31][0.3]

Alec: [00:23:31] follow up question there is what is enough [00:23:32][1.3]

Speaker 3: [00:23:33] that we do? We will address that, I guess, to keep us on track. This is the [00:23:38][5.3]

Bryce: [00:23:39] perfect opportunity for us to ask the question. Then what is fair vion do to address those issues that you just mentioned for women? What are some of the key differences between yourself and, you know, host plots of your average industry fund? You know, that little thing [00:23:55][16.8]

Speaker 3: [00:23:56] that I do, [00:23:56][0.3]

Rachel: [00:23:58] I have no desire to take on the industry funds. So look what we do that is different. I was referring before to the consolidation of funds. So, you know, people having several funds and I'm going to refer to as the Money Smart website where they talk about the three things that that we can all do about women specifically can do to improve their superannuation outcomes. They say that you should understand and engage with your fees, your returns, understand your insurances, make sure you're not over insured. So that's number one. Number two is consolidate your super. And, you know, honestly, if I leave this podcast today with only one message to your listeners, it would be consolidate your super, have one super, [00:24:41][43.0]

Alec: [00:24:42] consolidate your super at 15 is probably [00:24:44][2.1]

Speaker 3: [00:24:44] also just highlight what [00:24:46][1.7]

Rachel: [00:24:46] we do. Make it easy. I mean, and the one thing that that I think surprises most people is, you know, when I've asked how long do you think it takes to consolidate your super people like, oh, like ten days or three weeks or multiple forms and then the other it doesn't it takes five minutes. We do the search for you. So we are licenced by the ATO to perform something called a super match, where we search the system and return all of the super funds that you may have in your name that you may not even know you have in your name. Generally, the balances of those funds are available as well. And then you can consolidate those. You can bring them all into the one fund with FF7. It's easy. It's literally all online. All you need is your tax file number. So it's super easy. You've got to stop selling [00:25:31][44.5]

Speaker 3: [00:25:31] everything [00:25:31][0.0]

Rachel: [00:25:33] from. And look, the third thing is to contribute more to your super regularly. You know, the the current nine point five per cent that is the super guarantee that that is enforced by law is not going to be enough. It's not going to be enough for most people. You do need to contribute more to your super and women are less likely to contribute more to. I guess the tax breaks that you receive for contributing to super, nearly 70 per cent of those last year were taken up. I mean, so, you know, it's about women. So contribute more to super. And that's that's what we've done. We have, I guess, leveraged financial technologies, banking technology, where banks and other companies have encouraged people to save more money into the bank savings account. We have used that technology and those ideas to put them all in one place. And then you use that to contribute to your super. So it doesn't go into your savings. That goes into your superannuation. You don't even notice it around. [00:26:34][60.9]

Bryce: [00:26:34] The fees topic I know of under some specific things for women who take time off and that sort of stuff. Can you just explain how that works? [00:26:43][9.2]

Rachel: [00:26:44] Well, look, you know, we are definitely designed for women. And the reason we're designed to run is that we we researched because that's where the biggest gap is. And, you know, we'll probably get into that a little while. But that's where the gap is in the superannuation industry for women. So that's who we researched. We looked at the spending and the saving. I think really, when you look at contributing more to super, everybody needs to do that. Everybody does. So in terms of the fees we refer to parental leave, we don't refer to maternity leave because we understand and want to encourage men to take time off for their children equally as women. And so, you know, we offer a rebate on fees for while you're on parental leave. And that obviously applies to men as well who take parental leave. And I think it's probably worth talking about why we've chosen women. Really? [00:27:38][54.1]

Speaker 3: [00:27:39] Why is that a softball question again? Yeah, why [00:27:43][4.3]

Rachel: [00:27:44] women? Women are as I say, they're the ones who who have got this this issue. We are the ones who are retiring with currently 50 per cent less than men. It's predicted to be around about 30 per cent less than men for women, you know, in that sort of mid thirties age group. And we wanted to look at what it was that actually women and men were doing differently. And that's where we've discovered a lot of the things that we've discovered about that. But what we have found as well is that, you know, about 30 per cent of our membership is men. It's not specific to women. It doesn't have you don't have to be a woman to belong to a given. One of the things that many people don't get or don't understand about superannuation is that you can actually split your contributions with your spouse. You're non earning stuff. So when you are on parental leave, the earning spouse can split half of their control, you know, a percentage of their contribution, this contribution with you to cover that period. Well, and, you know, it's about fairness. We call it fair share. So, you know, we've made that system really very, very easy. It's literally a couple of clicks of a button. But there are tax benefits to that. [00:28:47][62.9]

Alec: [00:28:47] Yeah, it's going to cost. So if you're a couple and you do that, does that mean you get the cup is cumulative? Yes. Yeah. Okay. [00:28:54][6.6]

Rachel: [00:28:54] I think the thing with it's often the conversation that's challenging. I talk about this and I talk about, you know, the contribution splitting when one person is not earning. And a lot of people say, how can I have that conversation with my partner? Because it's like, well, in the event that we break up, you know, in the future. Then it makes it easy, but it's actually more than that because it's about it's about the tax incentives to do that, the tax benefits of splitting the super. And obviously it varies depending on your personal situation. But a way to start that conversation with your partner is to say, I have heard that there are tax benefits to us co contributing so that we could save a significant amount of money. Let's look at it. Let's talk to an accountant. It's research. That's it. [00:29:41][46.8]

Bryce: [00:31:04] Are you as a millennial thinking about extra contributions or even someone who's just started their working journey and then thinking about what happens when you're 67 and you want to get access that? Firstly, how do you know how much is a good amount to contribute above the government sort of regulation at the moment, if that's something that you could answer? And also, how do you kind of know how much you're going to need? You said, you know, that even males are retiring on average with less than is actually required. Scary thought, Ren. And I actually thinking of using it as part of our marketing. But, um. But yeah. So how do you know how much is enough? And also at this age, you know, you don't want to be putting 20 percent in your super. I would imagine your money could be used on other things. Right. You're not going to be touching it to 67. How do you know what that additional contribution should be? [00:31:59][54.7]

Rachel: [00:31:59] That is quite a specific to your circumstances answer. But speaking generally, there are some tools out there and I'll come back to those. But speaking generally, the recommendation is six hundred and forty thousand dollars saved for couples to retire comfortably. And for a single person it's five hundred and forty five thousand. But there are some provisos with that. They assume you own your own home. They assume you don't live in Sydney or Melbourne, which I'm sure you understand, and they assume you won't live for more than 20 years. And they assume that the pension will still be available. And it may not because, you know, obviously the ageing population is growing. There will come a point within the retired population is about the same size as the general population as we live longer. And, you know, that's a very, very expensive thing for any government. [00:32:49][49.4]

Alec: [00:32:50] Unless the next Tony Abbott comes in and tries to raise the retirement age again, [00:32:53][3.0]

Speaker 3: [00:32:54] we'll be retired or retire at eighty four a. [00:32:58][3.6]

Rachel: [00:33:00] That was my that was my retirement [00:33:01][1.2]

Speaker 3: [00:33:01] plan for a little while. [00:33:02][0.5]

Rachel: [00:33:03] I'll circle back because I did say that there are some really good tools and if you haven't been on the money smart website, do yourself a favour and go on there. And it's run by Essiac and they have some amazing calculators on it. So it answers so many questions. You can put a lot of your own, I guess, personal details in there and it can give you some really good guidance about what that might look like. You know, it talks about salary sacrificing, talks about extra contributions. Yeah, there's a lot of information on that website that is really, really helpful. [00:33:33][30.3]

Bryce: [00:33:34] Nice where you throw a link in the show, notes to that website following sort of on from that question, fair line of a balanced portfolio and a growth portfolio. Pretty standard across most superannuation funds. I think they also offer some options to do ethical investments. [00:33:49][15.7]

Rachel: [00:33:51] We only have ethical investments. [00:33:53][2.3]

Bryce: [00:33:54] Oh, yeah. So you're one hundred percent ethical, [00:33:57][3.1]

Rachel: [00:33:58] 100 per cent ethical, which is a very subjective term. But yes. [00:34:01][2.8]

Speaker 3: [00:34:01] Yes, yes. [00:34:01][0.4]

Alec: [00:34:02] So what? We'll ask you the same question we asked Adam Barway, who is the co-founder of Future Super is Woolley's ethical. [00:34:08][6.2]

Rachel: [00:34:11] Wow. [00:34:11][0.0]

Speaker 3: [00:34:12] Could consider selling out poker machines. His answer was no. [00:34:16][4.0]

Rachel: [00:34:18] Look, we obviously don't invest in fossil fuels, gambling, [00:34:21][3.2]

Speaker 3: [00:34:22] cigarettes, cigarette smoking. [00:34:24][2.3]

Alec: [00:34:25] And that's how Bryce makes all this money [00:34:29][3.7]

Speaker 3: [00:34:29] for cigarettes and games like [00:34:31][1.5]

Rachel: [00:34:32] good plan. Yeah. Look, it's interesting, actually, looking at Woolworth's, I actually have a lot of time for both Woolworths and Coles in different ways. I really respect the employment strategies at Woolworths, [00:34:46][14.5]

Alec: [00:34:47] underpaying the staff, the hundreds [00:34:49][1.8]

Speaker 3: [00:34:49] of millions of dollars. [00:34:50][0.6]

Rachel: [00:34:51] I'm more speaking about the diversity and the inclusion of aged people. Yeah. You know, I've got a personal story about a Woolworths employee who helped me to, I guess, wake up to my own situation and wake up to myself. But, you know, certainly I respect the employment of a lot of older people who can't necessarily work anywhere else. [00:35:11][20.1]

Speaker 3: [00:35:12] Good to hear. Still unethical just to close out. [00:35:16][3.7]

Bryce: [00:35:16] So all ethical but balanced first growth. I know generally speaking, we can't sort of say how much we should be contributing to Super. But how would you be thinking about that if you were sort of back 20 years ago as a millennial putting money into a super fund? We often get asked, should I be balanced? Should I be growth? Obviously, we can't answer, but how would you approach that? [00:35:37][21.2]

Rachel: [00:35:37] Yeah, the general thinking and look at is obviously a very general. The reason we have a balanced fund, this is a growth fund. We've got those two options is because if you have longer to retirement, you can potentially take more risk. And that's where a growth fund comes in. So, you know, the fundamental principle is high risk can potentially mean higher return. And because you've got longer to go, you can deal with the fluctuations in that market. That said, every individual has different appetite for risk. Some people will go with growth, their entire investment journey because their appetite for risk and their personal circumstance allows for it. Other people will never go with the growth option. They will always go with that balanced, more diversified, more exposure to bonds and that kind of thing. And cash likes exposure to shares. [00:36:35][57.8]

Alec: [00:36:36] I know we can't give specific advice, but I think we can say we're in our 20s and there's a reason this podcast is called Equity Mates, not Bond. [00:36:43][6.9]

Speaker 3: [00:36:44] Friends go to term deposit, so I couldn't possibly comment. [00:36:48][4.7]

Alec: [00:36:50] So I'm interested before we close out this conversation around Super, we started by talking about career trajectories and how super is a system that's set up for the start in your 20s work till you're in your 60s, retire, earn more throughout that period and contribute more to super as you go. And you sort of talked about the career trajectory of women where they stop working in their 30s to have children. But I think these days it's a lot more general than that one because, you know, men are taking a more active role in raising children, but also people are choosing a lot more less structured career paths away from family obligations. The, you know, trying to be an entrepreneur and do their own thing for a while or they're just, you know, taking a mini retirement in their 30s and dropping out of the workforce for a while. And the structured career trajectory that super has been built around is being disrupted by people taking unconventional paths. When you think about how they should relate to their super and any changes, they should make, what obviously in general, but what are some things that they should be thinking about or being aware of, whether it's for family reasons or whether it's because they just want to do something different with their lives. How should they think about structuring their super to still be ready for retirement, [00:38:02][71.5]

Rachel: [00:38:03] make sure they pay themselves? Yes, you know, I don't know that that sounds like an incredibly simplistic answer. But, you know, I obviously know a lot of people who own their own businesses through the networks that I move in and the number of people who say I haven't contributed to my super for 10 years, 15 years, five years, pay yourself first. There's been a bunch of changes that are around protecting your super balance that make it even more important to contribute to your super and keep your super from becoming inactive. And, you know, these are things that we need to get out there. That's certainly my job to get that out there and make sure that our members know about it. We have programmes where if you own your own business, for example, we've got a programme called Fair Awards which leverages those kind of cashback programmes that currently are out there, affiliate programmes. So basically you go online on our portal and you say go on the iconic. So the Iconix, one of our affiliate partners. And you just you know, it's been one hundred dollars on a pair of. Trousers and a percentage of that, I think is about seven percent with the iconic so what percentage of that they pay us the commission because we've directed you there, right? So they pay five on a commission because we're not a cash that programme. We don't take any of that. So we put all of that that seven per cent commission, the whole amount of that goes into your superannuation. So for people who are running their own businesses or for people who are entrepreneurs, you will have chaos. And we've got 300 rewards partners. You know, you will have costs that are a part of your business. You can potentially use the rewards programme to actually continue to contribute to a suit that keep your superannuation active, keep your life insurance active, contribute more to your super [00:39:53][110.3]

Alec: [00:39:54] even if you're not an entrepreneur or someone who's dropped out of the workforce. If you just love online shopping, that seems like [00:39:59][5.4]

Speaker 3: [00:40:00] a pretty good deal. [00:40:01][0.9]

Rachel: [00:40:02] Yeah, and look, I think as well, you know, understanding that you are doing this for you, this is something that you actually need to do for your future self. And, you know, it's a wise thing to do. It's about wisdom. It's about saying, you know what, my business may succeed. It might not. But I actually need to look after my future self as well. The government does co contribute to people who are low income earners, and many entrepreneurs and business owners have structured their businesses so that their actual personal income is quite low. You know, why would you not contribute to your super and get 500 bucks from the government? [00:40:39][36.9]

Bryce: [00:40:39] Yes. So what is the co contribution for from the government? Can you explain [00:40:43][3.7]

Rachel: [00:40:43] that? Yeah, sure. So basically for low income earners, any sort of concessional contributions that they make, which means anything that they put in to their superannuation, they will receive up to five hundred dollars back in addition to that from the government. So the government can do for you any cap. Five hundred dollars. [00:40:59][15.5]

Bryce: [00:40:59] I mean, like we won't just be consistent if they keep earning a below wage, can they just do five hundred five hundred year on. Yeah, yeah, [00:41:06][6.7]

Rachel: [00:41:06] yeah, [00:41:06][0.0]

Bryce: [00:41:07] yeah. Absolutely. It's not like the savings scheme or whatever it is where it's like a 30000 [00:41:10][3.4]

Rachel: [00:41:11] are the first time set aside to scale [00:41:12][1.3]

Bryce: [00:41:13] a super service scheme. Yeah. Perhaps it's 30 grand. [00:41:15][2.1]

Rachel: [00:41:15] It does. It does. And that's from your own contributions. You know, the first time supersaver scheme is actually quite a funky idea because it allows I guess the thing I love about it is that it actually makes young people engaged with this because it's actually it's attainable. They can see something. It's not like 50 years into the future. We're talking about something that is attainable for them right now. And so I actually quite like the scheme. [00:41:40][25.0]

Bryce: [00:41:41] So, Rachel, final question before we wrap, and I just want to bring it back to the phase, and that's because obviously it's incredibly important we talk about it. [00:41:49][8.1]

Alec: [00:41:50] We have an official policy on this podcast. We're very active phase. Yes. [00:41:53][3.4]

Speaker 3: [00:41:54] Sell one policy, an MTV tattoo. Interesting. Yes. Yes. [00:41:59][5.4]

Bryce: [00:42:00] And it is something that, you know, superannuation's market themselves against each other. How does Fairline stack up? Is there anything a bit different when it comes to face structure of FF7? [00:42:10][9.8]

Rachel: [00:42:10] Look, I talked about the fact that we're an ethical super fund. We only have ethical options. So, you know, by comparison to the superannuation funds that offer ethical options, you know, we stack up very well. I think it's important to note that we are a very socially conscious company in the way that we started was because we were concerned about a lot of the stuff that happens broadly in the financial services sector. And certainly superannuation was the most overwhelming area that that we wanted to look at. And one of the things that happens, I think, is that there are fees upon fees upon fees. So it goes you know, we've got fees of 25 per cent plus a dollar fifty weekly fee plus an admin fee plus a 35 dollar annual statement fee, which you can't opt out of. I have to tell you, I was charged thirty five point for an annual statement that I could not get shifted to an email. And I was hoping for at least a chocolate bar when I got my letter and there was nothing. So, you know, it's all of those kind of things. So what what we actually focussed on was how to, you know, in through leveraging automation and being a very lean organisation, we're able to charge only one point two per cent, which is certainly amongst the lowest of all the ethical funds. And as I say, we've got no other fees other than that. It is literally just the one point two per cent. Obviously, that doesn't include the insurance premiums. That's a different thing. But yeah, one point two per cent is all we charge. And if you have a balance of less than five thousand dollars, we rebate all the few fees and we read that you face when you're on maternity leave or parental leave, should I say seek to correct myself. [00:43:44][93.6]

Alec: [00:43:45] There you go. Well, I'm sure people will look at it and compare it to what they're paying at the moment. So, Rachel, thanks for your time today. It's been great to chat. Try to think about super. We always finish the interview with the same three questions. The first one is, do you have any must read books? [00:44:00][15.7]

Rachel: [00:44:01] I do about money, [00:44:02][1.3]

Alec: [00:44:03] whatever you consider Masra, it doesn't have to be about money. [00:44:06][2.2]

Rachel: [00:44:06] I actually think, you know, I don't know your position on this, but I actually think that the barefoot investor is a. Great book, and you're like, [00:44:12][5.9]

Speaker 3: [00:44:12] oh, you're like, oh, my God. [00:44:13][1.1]

Alec: [00:44:14] I've no problem with that. Bryce is throwing his head back in disgust. [00:44:16][2.3]

Rachel: [00:44:18] And, you know, I'm I'm certainly not aligned with everything that's in the barefoot investor. But I think, you know, I guess it kind of circles back a little bit to what I was talking about before is I think there's been a whole industry built on opacity and confusion and saying, you know, the average person can't understand this. You know, don't don't worry your little heads about this. And that's one of the things that I quite enjoy about the barefoot investor concept is it explains in plain language for your average Joe who's not working in the financial services sector. That explains that. Do I recommend any of it? I can't recommend that because I [00:44:53][34.7]

Speaker 3: [00:44:53] cannot I cannot [00:44:54][1.0]

Rachel: [00:44:54] give personal advice. Another book which I love. And this got me through some very dark periods and really helped me, I guess really understand myself and my issues around money and the things that contributed to my situation is a book by a woman called Lois Frankel, who's a psychologist. She's not a financier. It's called Nice Girls Don't Get Rich. And it's like if you read one chapter a day, you do a bit of work if you need to. You answer some questions. It really helps you understand the areas in which you are letting yourself down. Because I was rich and I let that go. And it's because I was a nice girl, because I've been conditioned to be a nice girl and not really stand up for myself. So that's a really critical one for me. [00:45:39][45.3]

Alec: [00:45:40] We'll get those two books up on our website, Equity Mates, dotcom books [00:45:44][4.2]

Speaker 3: [00:45:45] and most of them. Are you sure? Yeah. [00:45:47][1.2]

Alec: [00:45:47] So and we should clarify for any barefoot fans out there, the reason the Bryce threw his head back is just because we haven't been able to get barefoot on the show. Oh, Scott, baby, if you're out there, you're always welcome, [00:46:01][13.9]

Speaker 3: [00:46:02] but also not true. [00:46:03][1.2]

Alec: [00:46:05] So the second question that we like to end the interview with is what's your go to source for investing information? [00:46:11][5.5]

Rachel: [00:46:11] I actually am deliberately quite broad, so I read a lot of industry newsletters. It's part of my job to understand what's happening in the industry. But I do also use some of the amazing minds that I work with. [00:46:24][12.6]

Alec: [00:46:25] And then the final question, if you think back to your early days when you're just starting out in the world of investing, you know, working in New Zealand and getting the company to match your super, which is a great arrangement. And can we just say if there are Australian companies that get on board, they don't do it now? [00:46:42][17.3]

Alec: [00:46:42] No, but if you think back to that person, what advice would you give your younger self? [00:46:46][3.9]

Rachel: [00:46:47] Oh, look, I think it's probably obvious, you know, don't relinquish your responsibility for your own future. You know, I think if there's any phrase that I use more than anything, it is nobody cares about your money more than you do. Nobody. [00:47:01][14.0]

Bryce: [00:47:02] Nice, great way to finish. I think taking control of your finances in any way as early as possible is incredibly important. So a good way to finish the interview, Rachel, and to echo Ren statements. Thank you for your time today. It's been an awesome chat, not only about superannuation, but more broadly about, I guess, how to think about money as a millennial and going into the important stages of life. So appreciate you sharing your your stories and a bit of your personal background. And if anyone wants to find out more about Fair Vyn and what you guys offer, what would be the best way to do so? [00:47:36][33.5]

Rachel: [00:47:36] Definitely head to the website, which is on dotcom you. It's not complex. We like to keep it simple. [00:47:43][6.8]

Bryce: [00:47:44] Yeah. Now, look, I love what you guys are doing. I think it's filling a great gap in the market and I'm very interested to see how it all sort of goes over the next few years. So, again, thank you very much for joining us. [00:47:55][11.3]

Rachel: [00:47:56] Absolute pleasure, guys. [00:47:57][0.8]

Speaker 6: [00:47:57] Thanks for listening to Equity Mates investing podcast production of Equity Mates Media. Please remember that everything you hear in Equity Mates investment podcast is general advice. Only the content has been prepared without knowing the personal objectives, specific financial circumstances, goals. The host of Equity Mates investment podcast may maintain positions in the companies discussed before considering any investment. Please read the product disclosure statement and consider speaking to a licenced financial professional. [00:47:57][0.0]

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