DAVID SCOLLON | How good is our Superannuation?

· Podcast Episodes
broken image

Who has the best retirement scheme in the world and how do other countries tackle rapidly ageing populations? David Scollon is a senior consultant for JANA Investment Advisors where he researches pension and retirement systems around the world.

David attended the Principles of Responsible Investing (PRI) Conference in Barcelona, a UN-backed initiative that brought institutional investors around the world together to navigate topics of sustainability and responsible investing. He also spent time studying retirement planning in the UK, Germany, The Netherlands and Denmark.


I'm always cautious about perfect systems cuz there aren't any perfect systems and anyone that talks about there being one I'd be very cautious with and we shouldn't let the perfect get in the way of the good. But yeah, the Australian system is really well-placed. I mean, we've already spoken about the fact that many countries look to our system as being a great example. It does rank highly in, in these indexes. And that again is because of its adequacy, sustainability and the integrity of the model.



Get 4 months free on an annual premium plan when you use Sharesight, the award-winning portfolio tracker. Sign up for a free trial today.

Sharesight automatically tracks price, performance and dividends from 240,000+ global stocks, crypto, ETFs and funds. Add cash accounts and property to get the full picture of your portfolio – all in one place.

Sharesight Award-winning portfolio tracker. Save 4 months

Portfolio tracker Sharesight tracks your trades, shows your true performance, and saves you time and money at tax time. Get 4 months free at this link

Disclosure: The links provided are affiliate links. I will be paid a commission if you use this link to make a purchase. You will also usually receive a discount by using these links/coupon codes. I only recommend products and services that I use and trust myself or where I have interviewed and/or met the founders and have assured myself that they’re offering something of value.


Chloe (1s):

Shares for beginners. Phil Muscatello and FinPods are authorized reps of money sherpa. The information in this podcast is general in nature and doesn't take into account your personal situation.

David (12s):

The way I see that we've got three main financial objectives. One is to cover the, now we've also got the future, so we need to plan for that. And that also part of that includes retirement. And then there's a third, which is planning for the unexpected. Of course, the only relevant goal seems now, but we need to think of the other two because at some stage they do happen. And if you're not prepared, you know that's, there's a lot of pain involved. So we need to balance between all three. And so inevitably because of that process, you get this big pot of money and it's really tempting to to access, but it was never designed for that purpose. Housing in Australia has some real challenges. You know, one of the big factors is the supply side.

David (52s):

Releasing super for housing just increases the demand side and it wouldn't be a

Phil (57s):

Solution. G'day, and welcome back to Shares for Beginners. I'm Phil Muscatello. It's not a competition, but who has the best retirement system on the planet? How do other countries look after their oldies so they can run down the beach in white linen like you see on the brochures? Joining me today to discuss this and returning guest is David Scollon. G'day David, go.

David (1m 17s):


Phil (1m 17s):

Thanks very much for coming back in.

David (1m 19s):

Great to be here again.

Phil (1m 20s):

So David is a senior consultant for JANA Investment Advisors, and that's really at the big, big, big end of town, isn't it? And the author of Mission Possible, which we spoke about last time, four Steps to Financial Independence on Any Income. So part of David's role is researching the two big topics of retirement and sustainability as part of this role. He recently researched the retirement systems of various European countries, meeting with pension funds, asset managers and consultants. He also attended the PRI conference in Barcelona. So let's start off by talking about JANA Investment Advisors. What do they do and what do they mean to listeners of this podcast?

David (1m 60s):

Yeah, terrific Bill. Yeah, so JANA is what we call an institutional investment consultant. Yeah. So we help institutions navigate the whole topic of investments. Yeah, so typical clients could be charities, endowments, universities, the big super funds, insurance companies and even advisor businesses and licensees are turning to JANA for sort of more of an institutional offering. We focus on the investment side, and that could be across where to invest, which asset classes and also the topics like regulation, sustainability, retirement. The way I liken it to is, you know, just like an individual would get an advisor, institutions get investment consultant.

David (2m 45s):

And what it means to every, the listeners is that the ultimate beneficiaries of our clients is everyday Australians like you and me, Phil, and, and so, you know, we are very

Phil (2m 55s):

Conscious. via our super

David (2m 56s):

Accounts. Yeah, exactly. And, and you know, endowments, charities, universities as

Phil (3m 0s):

Well, I mentioned before about the pension funds, asset managers and consultants that work in this area around the world. And these are all in pension schemes and they're very similar but different to what we call super in this country, aren't they?

David (3m 14s):

Yeah, I mean you can summarize the three major parties within in any investments is the, the asset owner. So like a super fund, they're the, they're investing the money. Then you've got asset managers who actually take, invest the money on behalf of asset owners. Yeah. And then you've got asset consultants that guide around the, you know, how to allocate and, and, and percentage allocations and all the regulation

Phil (3m 40s):

And that. So the JANA's one of those,

David (3m 42s):

Yeah. JANA's a consultant. And now that sounds like, well it's, it's three parties, but you know, investing is, it's complex. Yeah. When you start to delve into it, it's, there's a lot of complexity around it and hence the need for, you know, different parties doing the area of specialization.

Phil (3m 56s):

So why did you go to Barcelona for the conference? Yes. Was it for the tapas or there was actually important things to

David (4m 2s):

Do? Yeah, well it's a, it's a convenient location. It's great tapas there. The PRI conference is the PRI stands for principles of responsible investing. It's a UN United Nations backed initiative to bring all the investors, institutional investors around the world together and to really navigate the topics of sustainability and responsible investing. So environment, social factors, and to work out how to navigate that, that topic. First time together since 2019, and there's about 5,000 signatories and there's about 2000 in person and, and also others online as well.

Phil (4m 41s):

We were talking off air just before we started the tape rolling on this about sustainability and about issues and the things that they were brought up at the conference. And you were mentioning that ESG is not that well understood, but part of it is, are you going to invest in an airport, for example, that is gonna be flooded in maybe 10 or 20 years time? Is that part of the things that you're looking at when you go to a conference like this?

David (5m 7s):

Actually, you've raised a couple points there. So on the topic of the whole area, it can be misunderstood and it's, I I don't think the industry's done itself any favors by lots of different terminologies that can be confusing. But I mean, ultimately, you know, it's looking at recognition that for sustainable returns you need a sustainable world and investments have impact. And so we need to be clear on what the impact is and, and how to ensure a sustainable world as, as well as as returns. In terms of the topics that PRI, there lots was discussed, it was actually sandwiched in between the COP 27 that was held in Egypt and that covered climate and then it was held just before the COP 15 for biodiversity, which was held in Montreal, Canada.

David (5m 49s):

And so that was one of the, a lot of the topics discussed. And also just the regulation that's going on around the world, things like the Inflation Reduction Act in the US that the Biden administration announced and which has been is, is very significant in terms of the impact of where money gets invested and, and the whole area of sustainability. And then we talked about, you know, the risks of greenwashing and impact of investments as well. So a lot discussed.

Phil (6m 16s):

What was the things that you found the most interesting? What were some topics that just sort of stood out for

David (6m 21s):

You? It's interesting the different jurisdictions and what they're dealing with. So Europe, this whole topic is much more integrated than other parts of the world, particularly, you know, some parts of the US there's a lot of debate that goes on in the US about the whole, the whole area. It's always quite heartening actually to get into environment like that. We, there's actually a lot of really smart good people that are trying to work out a lot of solutions. So it's quite encouraging to know that there's, you know, a lot of good work is, is being done, you know, which is always good to see.

Phil (6m 50s):

So you've done some research around retirement. Can you explain what's so complicated about retirement and why you need to research it?

David (6m 58s):

Yeah, sure. So actually retirement is being, was labeled by a noble prize winner as the, the nastiest hardest problem in finance. And there's good reasons for that. One of the factors with retirement is when you go into retirement, you're effectively switching off your ability to earn in income. Yeah. And that's, and then relying on age pension, combination of the age pension and you, you save your savings. Yeah. And that's challenging. And to give a perspective on that, if you can imagine that you were planning to take a year off from earning an income, what if for whatever reason you wanted to do some study or raise a family or or go traveling, and you can imagine the, the amount of work and planning and saving that would be required to do that for one year.

David (7m 42s):

Retirement's sort of like that except you're doing it for multiple years and in some cases for decades for some people there's a lot of unknowns associated with that. So some of the unknowns is the fact we don't know how longevity, we don't know how long we need income for. Mm. We don't know how the markets are gonna play out the sequence of returns each year. We also don't know the inflation ahead of us and, and how costs will increase. And then lastly, we also don't know like what the big lumpy costs are out there. So you know, for instance, health issues or aged care costs as well. So all together that makes it pretty complex. But there's some, there's actually some good news because there's a lot of work in terms of design around products that help navigate those unknown factors.

Phil (8m 27s):

So the, these kind of factors are being taken into account in planning pension or superannuation style products? Is that the

David (8m 33s):

Case? Yeah, yeah. So in Australia there's been, there's a requirement now under the retirement income covenant, a bit of legislation where funds have to provide a strategy that maximizes income, manages those risks that I talked about, all those unknowns, and then also provide flexibility so you can access the money if needed for lump sum costs. And that was part of the reason for the research and going on this research trip and seeing how other countries are doing it and navigating the, the whole area of retirement.

Phil (9m 2s):

So tell us about these four other countries that you visited and their systems.

David (9m 5s):

Yeah, so we looked at the UK and then also Denmark, Netherlands, and then Germany. Yeah, it was really interesting, I think, I think some of the interesting takeouts were that the challenge is universal, so it's, you know, all all areas are are trying to navigate it. The other thing was actually how good Australia's placed. It was interesting, we, we had say 30 meetings and often whoever we're interviewing or meeting with would suggest that, you know, we, we should be reversed, that they should be asking us questions because of the success of the Australian system. The other interesting thing I think is just trying to get engagement from members, which is really tough because you can have the best system, one of the best systems in the world, but if people don't trust it, then

Phil (9m 50s):

So what do member engagement with members, what people whose money they're putting into the superannuation fund? Is that your, what you're talking

David (9m 56s):

About? Yeah, so engagement with the actual

Phil (9m 59s):

Beneficiaries. Okay,

David (9m 60s):

Yeah. Of the super fund. Yeah, because you can have, yeah, you can have the best system in the world, but if the

Phil (10m 4s):

People still whinge about it,

David (10m 6s):

Yeah. If beneficiaries don't trust it, then you know, it's, it's no good having a really great system because they'll go off and do their own thing and, and that's not always a great outcome because you know, you're more vulnerable to bad investments to scams. Yeah. Whereas, you know, we've got a, a good regulated system that is there to, to provide income in retirement. The final big takeout was the onus on the industry to design, have really good design around retirement solutions so that people can trust it and sort of, you know, I guess enjoy their retirement knowing that they are being looked after.

Phil (10m 41s):

Can you give us some specifics about any of these other systems? I mean, which one would you like to talk about? Uk, Denmark, Germany.

David (10m 48s):

It was inter, so Netherlands and Denmark are actually ranked very highly in global pension systems. So just above the Australian system and there's a real, I guess trust, much more trust in the system. Yeah. There's also I guess a lot of pooling of, of risk as well, so that they've got what's called like a modern taunting system generally, you know, if, if if you pass away your pot of money goes into the, the bigger pool and that, that goes out to the surviving members and

Phil (11m 21s):

There's of your family

David (11m 23s):

Actually the surviving members of the, of the, the fund.

Phil (11m 25s):

Oh, okay. So it doesn't get passed onto your beneficiaries.

David (11m 28s):

The portion you put in the, into that pot doesn't, and it just goes to the great, the bigger pool. Wow. And culturally that's, they're used to that. Wow. And they're comfortable with it.

Phil (11m 38s):

Yeah. Wow. That sounds like a death tax almost. Yeah. Yeah. But that's the way we'd, we'd be characterized here in Australia though,

David (11m 44s):

Wouldn't it? Yeah, that's right. I mean that's, this is the challenge of retirement. Yeah. This of getting people across sort of some of these, you know, these ideas, but Yeah. But,

Phil (11m 51s):

But that's an idea. The idea is that, that it's, it's for the greater good. This is something that the whole of society benefits

David (11m 57s):

From. Yeah. Well it's a way of dealing with that item I mentioned longevity. Yeah, yeah. So when we don't know how long we're gonna need income for one of the, you need a solution that will cater for that. And one approach is to pool money and so that those who survive, yeah. They still start to receive an income. Those who who, who don't, they don't have the ongoing need for income. So that's, that's one approach to it. But you know, it it, it points to the fact that the culture of the country is sort of important in how you design retirement solutions. Yeah. What people are used to, what people think culturally as well. So that, that was really interesting.

Phil (12m 37s):

And what are some of the things in our system that they like to look at and admire?

David (12m 43s):

So I think one of the big things is the fact that we have a defined contribution system, whereas they, they've had a defined benefit where the risk sits with the employer and our defined contribution means it's being in invested into more growth assets, which means, which is why it's become a really large pot. I mean it's the third or fourth biggest pension pot in the world, which is pretty extraordinary when you think of our small population. Yeah. I mean amazing.

Phil (13m 9s):

And our economy's, what about the 13th in there? GDP 17th

David (13m 11s):

In the world, something like that. Yeah. And, and again, which is still great, you know, for a small population. And, and we've been going for 30 years now with compulsory super. And so it's really grown into a, a large pot. And I think the combination of, you know, government pension plus your personal savings plus your superannuation makes for, for a good system which they like.

Phil (13m 32s):

So tell us about Iceland. How did they score so highly with their, their pension

David (13m 37s):

System? Yeah, so Iceland's an interesting one. So there, there are a number of different, it's

Phil (13m 41s):

An inter such an interesting country on so many levels. But anyway,

David (13m 43s):

Yeah, I haven't got there yet. So, but yeah, Iceland's interesting. So there's a number of different indexes for pension funds and one of them puts the, the main one which is the Mercer CFA Global Pension Index puts it as number one. And that's based on three factors, adequacy of the system, the sustainability of the system, and the integrity of it. Now we didn't go there, partly it's super expensive, but also it's less relevant because the population of Icelands 370,000.

Phil (14m 11s):


David (14m 12s):

Yeah. So as a wealthy country and with a small population, it's not too big a challenge to pull off having a, a good retirement system. Not to underplay what they've done there. But we were looking for the bigger systems like Netherlands and, and Denmark

Chloe (14m 26s):

Super is one of the most important investments you'll ever make. But how do you know if you are in the best fund for your situation, head to live sherpa.com.au to find out more Life Sherpa Australia's most affordable online financial advice.

Phil (14m 46s):

You've mentioned to me previously that the Australian system is not perfect, but really well placed. Why is that?

David (14m 52s):

Yeah, so I'm, I'm always cautious about about perfect systems cuz there aren't any perfect systems and anyone that talks about there being one I'd be very cautious with and we shouldn't let the perfect get in the way of the good. But yeah, the Australian system is really well-placed. I mean, we've already spoken about the fact that many countries look to our system as being a great example. It does rank highly in, in these indexes. And that again is because of its adequacy, sustainability and the integrity of the model. We actually went down a couple notches because during the covid, partly because of the early release

Phil (15m 26s):

Damn you Iceland.

David (15m 28s):

Yeah, sorry, actually partly is, and, and a couple new countries came in, but also the early release was there, which suggests that if you have a system that people can access any time, that does, you know, reduce the integrity and the sustainability of the system. And also a lot of the other higher rated countries have higher contribution rates, like 12% and higher. But you know, the, the system is really good in Australia and also there's so much regulation and monitoring of it and improvements on it that it, you know, that it's getting better and better all the time. So Yeah. Yeah. And, and I should add that, you know, in the end it's a bit academic of whether your first, second or third, the fact that you're in the top five is excellent because I can tell you there's some countries over out there that, that a lowly ranked and all other countries that don't have any system.

David (16m 14s):

Yeah. So

Phil (16m 15s):


David (16m 16s):


Phil (16m 17s):

I just wanted to go back to something that you mentioned a little while ago or a little bit ago in the, the interview is about our system invests in growth assets and that's different to some of the other countries. Can you just explain that a little bit for us please?

David (16m 32s):

Our system is, it's been around for a long time. We know that it's what we call sticky money or it's long term capital. And so we can invest it accordingly in growth assets and in unlisted investments like property and infrastructure. Some of the other countries don't have that luxury, partly because of really tight fee constraints and everyone often focuses on just trying to get the lowest costs. But there's a balance there. You know, having two low costs is really restrictive and you actually limit the sort of returns you can get. Also, I mentioned Australia has a defined contribution system, which allows for more growthy investments, whereas when you've got a defined benefit, you've got a liability that you need to match.

David (17m 18s):

And so you need to be cautious around, you know, making sure you match that liability and sometimes caution in investing as well.

Phil (17m 25s):

So what's that, that's a defined benefit. What is that

David (17m 28s):

So defined benefit? There are, there actually used to be actually some, some people still have a defined benefit in Australia, but this

Phil (17m 35s):

Yeah, public service mainly public servants, aren't

David (17m 37s):

They? Yeah. And, and those that have been around in the public service for a long time, not, not people entering now effectively it's an agreement of a payment either at retirement or an agreement of an agreed amount in retirement and they're not really sustainable. So particularly with, you know, people living longer and, and living in retirement for longer. So there's been a move away from that throughout the world.

Phil (18m 0s):

Was there any talk about France and the raising of the retirement age in France?

David (18m 5s):

No, there wasn't. I mean, of course it's pretty topical now. Yeah, it's a, it's really interesting, particularly given that, you know, we know people were living a lot longer, you know, and a lot of, a lot of people would argue that they, they wanna work longer and sometimes it's restrictive of how long you can work for because you know, people wanna stay, you know, motivated and engaged. Yeah. And whe whether that's working just locally or even pro bono work, people just wanna, some people want to be still engaged

Phil (18m 33s):

And keep their brain switched on. Yeah, exactly. Presumably. Exactly. Yeah. So we hear a lot about changing demographics in the future. That will mean that the retirement system won't be able to support retirement at the same levels that we all enjoy. What are your thoughts on this?

David (18m 44s):

Yeah, okay. So demographics is an interesting one. There's two major demographics forces that are happening that are relative to relevant for retirement. One is, I just mentioned life expectancy. So we were in retirement a lot longer. I think the stats used to be many, many decades ago that, you know, you retired at 65 and life expectancy was 67. So it wasn't a really big stretch to, to, you know, fund

Phil (19m 10s):

Retirement. Yeah. Just time. By the time you put your feet up, you're putting your feet up.

David (19m 14s):

Yeah, yeah. And so much longer now. And the other factor is the, the lowering birth rate. So what that means is we are getting a smaller percentage of those that are working and paying taxes relative to those who aren't working. And particularly that retired group, cuz they're living longer. Yeah. And, and this puts pressure on retirement systems. And this is a global factor. Again, Australia's pretty well placed because we're not purely reliant on the government pension. We have this multiple pillars of the pension, the super, your personal savings and even your house as well. Yeah. That you can rely on. Also, you know, Australia's a relatively wealthy country and, and the sustainability of the pension system relies on a health, health economy, which we have.

David (19m 55s):

And also we've got a few levers on the demographics. You know, Australia's an attractive place to come to. People want to come here and live here. And so we can, we are fortunate to be able to draw on that as well.

Phil (20m 5s):

We can import some more taxpayers.

David (20m 7s):

I didn't say that. And, and, and also for essential workers jobs that, you know, not everyone wants to do as well with a lot of people Absolutely. Willing to do and skilled to do those jobs. And the other, I think the other factor is that, you know, people growing up today, there's less expectation or reliance on the pension, particularly if you're starting to get superannuation allocation as a teenager when you first start working. I mean that money is gonna be sort of compounded over 40, 50, 60, 70 years by the time, you know Yeah. With life expectancy. And so I think there's lower expectations, even though the pension will always be there in some form. I think people are aware that, you know, you don't wanna be just, just purely relying on that.

Phil (20m 49s):

I always like to find out all the different areas that money can be invested in, you know, and I, I know I go on a bit too much about fixed income and so forth, but there's also alternative investments. What are they and how are they valued? And is there true value being hidden sometimes in super

David (21m 2s):

Accounts? Yeah, good question. Just for context, when we talk about alternative investments, there's a few things that fall under that. Some of them are unlisted property, unlisted infrastructure and private equity investments in private companies.

Phil (21m 16s):

I always like to look at it in terms of the way Sydney Airport, for example, was publicly listed and then went private and it got into that system. And so normal investors can't access it, but, you know, large superannuation funds can, is that correct if I Yeah, that's right. So characterize it correctly.

David (21m 31s):

Yeah. So super funds have, because of the the scale, they're able to go and, and purchase big infrastructure or big properties and directly, and I should, I mean further context is, yeah, there's two main ways we can access these, you know, property infrastructure and companies is either through a listed exchange like the ASX or directly, and there's pros and cons with both of them and pros and cons in how we value them. So if you're go into the asx, the one of the upsides is the fact that you get daily values and you know what the value is. The downsides of that is you're vulnerable to the fluctuations of the market, you know, and in the extreme cases when there's really poor sentiment in the market, the value of your listed equities comes down even though the long term viability is still just as strong.

David (22m 19s):

And we know that smart investors have taken advantage of this really well and the most famous being Warren in Buffet, knowing the sentiments of the market when there's fear and greed and he's made billions outta that. The other way of going directly and purchasing the comp the property or structural companies is that you're not vulnerable to those daily fluctuations and the sentiment of the market. And that's good because the most relevant valuation for when you own those is what you can get if you want to sell it at the time. It's a bit like owning investment property. You're not really interested in day-to-day valuation. You're interested in what you can get when you sell it. The downside of that is that we don't get daily valuations.

David (22m 59s):

And that's a challenge for a fund that needs to provide daily unit pricing for members. And, and it's mainly a challenge when there's a big dislocation of the listed market. And then private assets, private assets to your question, get valued by professional values specialists. They're usually on a panel and they get rotated and usually quarterly or six monthly depending on the size of the, of the asset. But it relies on recent sales, partly relies on recent sales. And that's challenging when there's not a lot of sales to go by. And so super funds have received attention on this because how do they reflect the latest valuation?

David (23m 41s):

And there's a lot of work going on at the moment about that in terms of how do we set up a better, better policy to cater for that. And for those that really want to go into the weeds is what's called APRA's SBG 530, where, where, where the details are. And

Phil (23m 54s):

We'll download the PDF and put it on the blog poster.

David (23m 56s):

Get, get into

Phil (23m 57s):

It for anyone who wants to be out all the details.

David (23m 59s):

Exactly. And, and that's, that's gonna the detail and that's about to land on, on how, how Superfund's gonna have to navigate that.

Phil (24m 6s):

So as far as superannuation goes, it's a reasonable thing for people to think that Super is my money, why shouldn't I be able to access it when I'm younger and maybe to buy a property for example.

David (24m 15s):

Yeah. I mean I I know it's, it's can be frustrating. That's one of the frustrating aspects. It's sitting there, it's sitting,

Phil (24m 20s):

There's sweating on it, you know, you

David (24m 22s):

Can see the account balance when you get a statement and, and you, you wanna buy a property. No, I, I understand that for sure. I mean actually it's good to give in answering this. It's good to give context. The way I see that we've got three main financial objectives. One is to cover the now. So you know, obviously eating and living and purchasing a house or renting a property, we've also got the future. So we need to plan for that. And that also part of that includes retirement. And then there's a third which is planning for the unexpected. So we need to have a plan, for instance, if we can't work due to illness or injury. And of course the only relevant goal seems now covering now, but we need to think of the other two because it some stage they do happen.

David (25m 4s):

And if you're not prepared, you know, that's, there's a lot of pain involved. So we need a balance between all three. Nowuper was set up for that future goal that that was the original objective. Actually there was recognition about the future demographics and that we need to get people putting away for retirement because of all these, you know, what I spoke about before the, the challenge of retirement. And so inevitably because of that process, you get this big pot of money and it's really tempting to, to access, but it was never designed for that purpose. And each goal has different tools. So housing in Australia has some real challenges and the, the the, you know, one of the big factors is the supply side releasing super for housing just increases the demand side and it wouldn't be a solution

Phil (25m 49s):

To the point. Oh, okay. So there's an unintended consequence from that.

David (25m 53s):

Yeah, yeah. And it's so super is not the idea. Like you wouldn't be des you wouldn't, if you're designing a solution for housing, it wouldn't be a super fund. There's better tools for that, but that doesn't, you know, stop the fact that it can be frustrating to see it there. But there is certainly upsides in also having that money set aside for the future as well.

Phil (26m 11s):

So the really big question is why have all the brochures for retirees got them in white linn running down the beach.

David (26m 17s):


Phil (26m 17s):

Good. Must research well or something.

David (26m 19s):

Yeah, good question. I I, I I should ask you Phil, I can't answer that one. That's outta my remit.

Phil (26m 25s):

Oh, I, I I just think that's a, you know, it's just an image that would most probably stick with certain people of a certain demographic and a certain age and it's like the dream, you know, white linen donates a dream in the future, doesn't

David (26m 37s):

It? Yeah. Walking along the beach. Yeah, yeah. In the sun. Yeah. Yeah. No, it's a nice image anyway.

Phil (26m 41s):

It is, it's a really nice image. So just in general, you're pretty happy with the retirement system here in Australia and that the future's bright for Australians and we're not gonna run outta money in the future?

David (26m 51s):

Yeah, I mean I, I think the, the super system is, is good. Probably more positive than people may realize, but as I mentioned earlier, you know, it's important to, for people to sort of just falsely believe believing it, but to to, you know, recognize and have some trust in the system. It, as I said, there's, there's no perfection, but it keeps improving. So it puts Australia in good stead. And you know, one of the reference points to that is the fact that when you, when I was traveling, everyone keeps asking about, about our system.

Phil (27m 19s):

When younger people are looking at their asset allocation in their super schemes, you know, they often will tick conservative. What kind of advice would you, I mean we can't give advice obviously on this podcast. It bears consideration for a younger person to start thinking about how aggressive their superannuation should be when they're looking at the long term.

David (27m 36s):

Yeah. Like, so yeah, it's definitely, this is definitely general information, but you know, the, the general theory is that the longer you have to invest, the more growth assets so you know, shares and property and infrastructure and private equity that you can invest in. Now the super funds recognize this and so they develop what's called the, the my super. So the default option, which is really set up generally for people with that longer term horizon. And so the best thing to be doing if you're uncertain, is to be checking with your superfund and you know,

Phil (28m 12s):

And talk to them about it. Talk to them, yeah. About what your goals are and what you need to do and what your time horizon is.

David (28m 17s):

Yeah, that's right. And there's a lot of information on the website, sometimes calculators to help you manage that. And if that's not helpful then the call center as well. But it is important to get that, that right, you know, to, to be investing in the right, because it's over so many, so many years.

Phil (28m 32s):

I think, I think a lot of people though, they just think about, they don't even think about the super and where it's really worthwhile to be proactive to see what, how that money is being invested on your behalf.

David (28m 42s):

Yeah. I mean that's right. So doing it right over many years really makes a difference. And I'm, I mean this is a bit naf but you know, mentioning the book, the book I wrote, I mean that was part of the reason for writing it, is to help people navigate this, you know, the, the whole topic of super and investing outside of super knowing. It's, it is challenging, particularly when you're busy and you've got other things, there's more exciting things to do and the book is, you know, really structured to help people understand the systems in Australia, how to understand them, how to use them for your own advantage so that you can, you know, be well set up.

Phil (29m 17s):

So now that you have brought up the book, tell us the name and where people can find more information.

David (29m 21s):

Yeah, I mean, well the, the book's, so it's, it's called Mission Possible, four Steps to Finance Financial Independence on Any Income Available, the Usual Sites. Also there is a website for the book. So mission possible book.com au and there's a discount there for anyone that wants a, a discounted signed copy. Just put in early discount one word and that's available. But you know, really yeah. Set up to help people navigate this topic cuz I know it's, it's not a, it's not an easy topic to navigate.

Phil (29m 52s):

David Scollon, thank you very much for joining me again

David (29m 55s):

Today. Thanks, Phil. Thanks for having me.

Chloe (29m 57s):

Thanks for listening to Shares for Beginners. You can find more at sharesforbeginners.com. If you enjoy listening, please take a moment to rate or review in your podcast player or tell a friend who might want to learn more about investing for their future.

Any advice in this blog post is general financial advice only and does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs before acting on the information. If you do choose to buy a financial product read the PDS and TMD and obtain appropriate financial advice tailored to your needs. Finpods Pty Ltd & Philip Muscatello are authorised representatives of MoneySherpa Pty Ltd which holds financial services licence 451289. Here's a link to our Financial Services Guide.