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#32 Earning Your Stripes with Patrick Collison. On this episode of the Knowledge Project Podcast, I chat with Patrick Collison, co-founder and CEO of the leading online payment processing company, Stripe. If you’ve purchased anything online recently, there’s a good chance that Stripe facilitated the transaction. What is now an organization with over a thousand employees and handling tens of billions of dollars of online purchases every year, began as a small side experiment while Patrick and his brother John were going to college. During our conversation, Patrick shares the details of their unlikely journey and some of the hard-earned wisdom he picked up along the way. I hope you have something handy to write with because the nuggets per minute in this episode are off the charts. Patrick was so open and generous with his responses that I’m really excited for you to hear what he has to say. Here are just a few of the things we cover: The biggest (and most valuable) mistakes Patrick made in the early days of Stripe and how they helped him get better The characteristics that Patrick looks for in a new hire to fit and contribute to the Stripe company culture What compelled he and his brother to move forward with the early concept of Stripe, even though on paper it was doomed to fail from the start The gaps Patrick saw in the market that dozens of other processing companies were missing — and how he capitalized on them The lessons Patrick learned from scaling Stripe from two employees (he and his brother) to nearly 1,000 today How he evaluates the upsides and potential dangers of speculative positions within the company How his Irish upbringing influenced his ability to argue and disagree without taking offense (and how we can all be a little more “Irish”) The power of finding the right peer group in your social and professional circles and how impactful and influential it can be in determining where you end up. The 4 ways Patrick has modified his decision making process over the last 5 years and how it’s helped him develop as a person and as a business leader (this part alone is worth the listen) Patrick’s unique approach to books and how he chooses what he’s going to spend his time reading ...life in Silicon Valley, Baumol’s cost disease, and so, so much more. Patrick truly is one of the most warm, humble and down to earth people I’ve had the pleasure to speak with and I thoroughly enjoyed our conversation together. I hope you will too! *** For comprehensive show notes on this episode, including a full edited transcript, go to https://www.fs.blog/podcast/ My free weekly Brain Food digest helps you upgrade your thinking. Don't miss out, sign up at https://www.fs.blog/newsletter/ Follow Shane on Twitter (https://twitter.com/farnamstreet)
Airbnb's Brian Chesky in Handcrafted. If you want your company to truly scale, you first have to do things that don't scale. Handcraft the core experience. Get your hands dirty. Serve your customers one-by-one. And don't stop until you know exactly what they want. That's what Brian Chesky did. As CEO of Airbnb, Brian’s early work was more akin to a traveling salesman. He takes us back to his lean years – when he went door-to-door, meeting Airbnb hosts in person – and shares the imaginative route to crafting what he calls an "11-star experience.”
#3 I Have Got Some People Waiting For Me. Aziz’s life has been a story of chance – and choice. As Michael pieces together Aziz’s journey from Sudan to Manus, he realises Aziz has been searching for a safe place for about eight years. So what gives him the ability, and the energy, to speak out? How has Aziz fought for so long, and what makes him want to be ‘the messenger’? ‘I’m pretending like I’m really happy, and laugh, and you know, smiling on the phones and doing stuff like that – so they feel like, “Oh, my son is really living in a good environment”. So they think like that, but the opposite is the truth.’ Aziz Aziz tells Michael, ‘I have got some people ...waiting for me. They love me, they want me to be with them.’ Haltingly, and sometimes with great difficulty, Aziz starts to share stories about his home, the family that he longs to see, and why he fled. Looking to find out more, Michael speaks to Sudan expert Anne Bartlett about the current situation there. As Aziz shares snapshots from his past, Anne talks Michael through the conflict in Sudan, which, despite leaving the headlines long ago, continues to unfold. Michael worries that he’s adding to Aziz’s trauma by digging up painful memories – ever aware of how hard it is to have these kinds of conversations in short, overlapping messages, without the benefit of reading someone’s signals face to face. Meanwhile, Aziz weighs up how much to tell his family about Manus, and explains to Michael why he’s sometimes tortured by regret. Warning: This episode of The Messenger includes graphic content and mentions self-harm. If you or someone you know needs help, you can contact one of Australia’s national 24/7 crisis services such as Lifeline on 13 11 14 or at lifeline.org.au, or the Suicide Call Back Service on 1300 659 467. Transcript Download a PDF transcript of this episode here. In this episode Abdul Aziz Muhamat Michael Green Associate Professor Anne Bartlett, University of New South Wales, President of the Sudan Studies Association Our theme music was composed by Raya Slavin. Music used in this episode includes: 'Blue Milk' by Stereolab, 'Up the Box' by Andy Stott, 'Feld' by To Rococo Rot, 'Firefly' and 'Four-Day Interval' by Tortoise, 'Cutting Branches for a Temporary Shelter' by Penguin Cafe Orchestra, 'Ending' by Kazumasa Hashimoto, 'Remedios the Beauty' by Oren Ambarchi, 'Lazyboat' and 'Vostok' by Triosk, 'Passages' by Bowery Electric, 'Self Seal Mishap' by Tennis and 'Ba Ba' by Sigur Rós. More information The Messenger is a co-production of Behind the Wire and the Wheeler Centre. It’s produced by Michael Green, André Dao, Hannah Reich and Bec Fary, with Jon Tjhia and Sophie Black at the Wheeler Centre.Narration by Michael Green. With reporting by Abdul Aziz Muhamat. Additional fact checking by the Guardian's Ben Doherty; transcription by Claire McGregor, Victoria Grey, Camilla Chapman, Lena Lettau and many more. This episode was edited and mixed by Bec Fary and Jon Tjhia. Thank you Dana Affleck, Angelica Neville and Sienna Merope. Also to Cameron Ford and Heidi Pett, and to Behind the Wire’s many participants and volunteers. Behind the Wire is supported by the Bertha Foundation.
#107: The Scariest Navy SEAL I've Ever Met...And What He Taught Me. Jocko Willink (@jockowillink) is one of the scariest human beings imaginable. He is a lean 230 pounds. He is a Brazilian jiu-jitsu expert who used to tap out 20 Navy SEALs per workout. He is a legend in the Special Operations world. His eyes look through you more than at you. He rarely does interviews, if ever. But a few weeks ago, Jocko ended up staying at my house and we had a caffeinated mind meld. Here's some background... Jocko enlisted in the Navy after high school and spent 20 years in the SEAL Teams, first as an enlisted SEAL operator and then as a SEAL officer. During his second tour in Iraq, he led SEAL Task Unit Bruiser in the Battle of Ramadi--some of the toughest and sustained combat in the SEAL Teams since Vietnam. Under his leadership, Task Unit Bruiser became the most highly decorated Special Operations Unit of the entire war in Iraq and helped bring stability to Ramadi. Jocko was awarded the Bronze Star and a Silver Star. Upon returning to the United States, Jocko served as the Officer-in-Charge of training for all West Coast SEAL Teams, designing and implementing some of the most challenging and realistic combat training in the world. So why is Jocko opening up? Well, in part, we have mutual friends. Second, he is the co-author of an incredible new book — Extreme Ownership: How U.S. Navy SEALs Lead and Win -- which I've been loving. Trust me. Buy it. This is his first mainstream interview and one you won't want to miss. Show notes and links for this episode can be found at www.fourhourworkweek.com/podcast. This podcast is brought to you by Wealthfront. Wealthfront is a massively disruptive (in a good way) set-it-and-forget-it investing service, led by technologists from places like Apple and world-famous investors. It has exploded in popularity in the last 2 years, and now has more than $2.5B under management. In fact, some of my good investor friends in Silicon Valley have millions of their own money in Wealthfront. Why? Because you can get services previously limited to the ultra-wealthy and only pay pennies on the dollar for them, and it’s all through smarter software instead of retail locations and bloated sales teams Check out wealthfront.com/tim, take their risk assessment quiz, which only takes 2-5 minutes, and they’ll show you—for free–exactly the portfolio they’d put you in. If you want to just take their advice and do it yourself, you can. Or, as I would, you can set it and forget it. Well worth a few minutes: wealthfront.com/tim. Mandatory disclaimer: Wealthfront Inc. is an SEC registered Investment Advisor. Investing in securities involves risks, and there is the possibility of losing money. Past performance is no guarantee of future results. Please visit Wealthfront dot com to read their full disclosure. This podcast is also brought to you by 99Designs, the world’s largest marketplace of graphic designers. Did you know I used 99Designs to rapid prototype the cover for The 4-Hour Body? Here are some of the impressive results. Click this link and get a free $99 upgrade. Give it a test run...
Rank #1: Why spring is not the best time to sell. Spring is not the best time to sell a property. If that is the case why is it promoted that way? Cate Bakos joins me to discuss why spring is not the best time to sell.
Rank #2: The non-cash deduction. In the next few months many investors will miss out on big dollars because of one simple mistake. Brad Beer joins me to discuss the non-cash deduction.
Rank #1: EP396- Assessment Rates And Borrowing Capacity. Welcome to the Australian Property Podcast - Hosted by Jonathan Preston In this episode, we talk a bit about assessment rates and borrowing capacity. We will be back with new content for the next episode next week, so be sure to check back soon. Thanks to Blank and Kyatt for their track.
Rank #2: EP371- Sentiment Seems To Be Turning. Welcome to the Australian Property Podcast - Hosted by Jonathan Preston In this episode, we discuss how sentiment seems to be turning. We will be back with new content for the next episode next week, so be sure to check back soon. Thanks to Blank and Kyatt for their track.
Rank #1: Be careful when helping the kids + Signs of a turning market + New home sales increase. Highlights from this week: What not to do with commercial property – Andrew Crossley Why it pays to shop around – David Hyman Older stock levels decline – Louis Christopher Think twice before you help the kids – Miriam Sandkuhler New home sales increase – Tom Devitt
Rank #2: Rents rising + Love thy neighbour + Property ‘smoke signals’. Highlights from this week: Sydney rents slow down – Cameron Kusher Love thy neighbour – Chris Doucouliagos Warning for strata schemes – Grant Mifsud 5 effects of falling interest rates – Shannon Davis Reading the property ‘smoke signals’ – Veronica Morgan
Rank #1: Set up your success. It is one thing to have a good idea about what business will work, but how can you be sure your idea will fly? Topic – Ensuring your business thrives Mentor – David Sharrock
Rank #2: Remaining relevant. It is the definition of insanity – doing the same thing and expecting a different result. The world changes, peoples attitudes and expectations change. Are seeing the need to change to remain relevant? Topic – The difficult questions to ask yourself Mentor – Mark Frater
Rank #1: Renting out your home. Margaret talks about renting out your home.
Rank #2: Investment Journeys: James. Margaret Lomas interviews James about his investment journey. This was the investment journey segment from S08 E04 of Property Success with Margaret Lomas.
Rank #1: The science behind researching a new market. What science is there behind researching a new market and finding the right property for you? The team explores the stages of looking for the right investment property and the steps to consider before buying.In the final episode of Investing Insights Series One, the team from Right Property Group, Steve Waters and Victor Kumar, discuss the changes to their portfolio in the last twelve months, the impact financial constraints, negative gearing, and taxation has had on them.For more insight, tune in now to hear all of this and much, much more in this episode of Investing Insights!From Series 2 of Investing Insights with the Right Property Group, the podcast is now located on the Smart Property Investment Podcast Network, which you can find here on iTunes https://itunes.apple.com/au/podcast/smart-property-investment-podcast-network/id1062491621?mt=2 or listen on https://www.smartpropertyinvestment.com.au/podcasts/right-property-group. Did you like this episode? Show your support by rating us on iTunes (Investing Insights) and by liking and following Right Property Group and Smart Property Investment on social media: Facebook, Twitter and LinkedIn. If you have any questions about what you heard today or any topics of interest you have in mind, feel free to email firstname.lastname@example.org or email@example.com for more.www.smartpropertyinvestment.com.au www.rightpropertygroup.com.auFor tickets to the live podcast in Parramatta, please register here: https://www.eventbrite.com.au/e/be-part-of-a-live-podcast-with-qa-all-of-your-questions-answered-tickets-37936911323
Rank #2: Property versus shares – Where you should really be investing your money. In this episode of Investing Insights with Right Property Group, hosts Steve Waters, Victor Kumar and Phil Tarrant tackle the topic of property investment versus stocks, comparing the pros and cons of each asset class and revealing where they believe that money is best invested.Focusing on a listener question received following the previous episode of the show, the hosts will delve into the importance of diversification across both asset classes, address common concerns surrounding negatively geared property, and bust the myth that shares is a cheaper way to invest than property. Steve and Victor also discuss property renovation revealing the one time that they believe you should never undertake a renovation project, and share why the holiday season may be a great opportunity to buy property.
Rank #1: 17: From Apprentice to Master - Lessons In Bold Action with Andrew Morello. Have you ever got caught up in the drama of an auction? Well today's celebrity guest is an expert at creating auction drama... However, he also shares an insider tip (agents hate this technique) for taking control of the auction yourself. Joining us on today's podcast is the winner of The Australian Apprentice TV show and award-winning auctioneer, Andrew Morello.
Rank #2: 16: How To Find The Best Agent To Sell Your Property with Kevin Turner. Today’s very special guest is a radio announcer, real estate agent and the host of Real Estate UNCUT and Real Estate Talk podcasts, Kevin Turner! Kevin’s going to take us on a fascinating tour into the inside workings of a real estate agency… The techniques, the training, the tricks and the important questions you need to ask in order to find the best agent to sell your property.
Rank #1: John McGrath: What the top 1% of agents are doing right now.
Rank #2: 3 Killer Scripts, 3 Killer Strategies to Kick-start Your Financial Year.
Rank #1: 14 – Clever property development funding tips from a leading finance broker. Finding ways to access funding and being more creative with your cash are two key elements of any successful property developing business, and keeping the money flowing is critically important. Today’s guest is the founder of Australia’s number 1 commercial finance brokerage, Dan Holden from Holden Capital and he shares how elite developers structure their […]
Rank #2: 52 – How to build a multi-billion dollar property developing company (part 1). Does the idea of creating a multi-billion dollar property company sound exciting? How do you create one? We speak to someone who has done just that, and we find out how he did it. Don O’Rorke is the executive chairman of Consolidated Properties Group. Consolidated is one of Australia’s leading development companies with a current work book of more than $2 billion. It is a privately owned company that has delivered more than 200 projects over the last 35 years and is at the forefront of creating places that people love to live, work and shop. As a founding member of the company, Don has successfully shaped the business over the past three decades. Don was only 23 when he knocked together his first commercial deal. This was a fascinating conversation as we look back over the many significant projects that have shaped the company, starting with a small commercial project in suburban Brisbane. Don shares his insight into how they did it, what they learned and how things have changed with property developing over the decades. Don was very generous with his time so this ended up being a long chat, so I have broken it up into two parts. Part one covers the watershed projects that have helped catapult the business into bigger things, and part two covers many of the lessons and tips that Don has learnt along the way. In this part keep an ear out for how Don looks to put deals together, how he did a major deal with the commonwealth government at age 26, and what he does to manage risk. And remember if you are interested in learning how to develop property then email me firstname.lastname@example.org to find out about the mentoring program that is available to help you get started on your journey to becoming a successful property developer. Lessons for Real Estate Developers There was so much gold in the first part of the discussion, and there is so much more to come in part 2, so make sure you tune in to that when it drops. Here are three things I took out of what we have talked about so far: 1. Be ambitious and curious as a property developer Don mentioned how he was always ambitious about growing the company, and curious about exploring how deals could be structured. There are many creative ways to structure deals so why don’t you start exploring what is possible. Don said he was getting advice from people he knew, so go looking for creative ways that could get your next deal off the ground. 2. Manage key development risk through partnerships Don talked about how on their Casuarina project they off set some of the risk through effective partnerships with the land owner and builder. And on the law courts project they partnered with more experienced consultants to off set their inexperience. And this is good advice, if there is a part of your project that needs bolstering then try searching for somebody that can help strengthen it. Whether it be finance, planning, selling or construction. 3. Try to keep property transactions simple I like how Don said he tries to keep things simple. And he does that by trying to put himself in the shoes of the person on the other side of the transaction. This way he can find options to make a complicated transaction simple. For example, with the law courts project he knew the government preferred the location of the land they had, and he just needed to work out how to satisfy the other things they wanted. By working on keeping it simple he has grown a massive business. Okay, that’s it for part one of the discussion with Don O’Rorke from Consolidated Properties Group. Make sure you tune it to part two where we talk about how you can structure your developing business for growth and also discover one of the most expensive lessons Don paid for. He has a framed cheque for $200,000 to remind him. So make sure you listen in when that is available. If you are enjoying this conversation with Don, then go back and take a listen to episode 15 where I speak with another Brisbane based developer, Shane Hiscock, about his rise from IT guy to full time developer. Shane has been partnering with investors to help grow his business. There is lots of great stuff in that chat with Shane so delve in to the archives and enjoy episode 15. Don’t forget to email me if you are interested in learning how to become a property developer email@example.com So until next time, may you be bold, ambitious and curious with your developing career. Links Consolidated Properties Group – https://www.consolidatedproperties.com.au Don O’Rorke – https://www.consolidatedproperties.com.au/people/don-ororke
Rank #1: 10 Tricks For Killer Win-Win Negotiation. Negotiations are the juice that powers all serious property investing. It’s the lube that greases the wheels of the property machine. I’ve heard it said that we negotiate every day for every thing we do… but most people never realise that’s what’s happening… That’s why not many people are actually good at it. …and […]
Rank #2: [PODCAST] The Highest Paying Job For Stay At Home Mums. When I started my property career I was a single mum. I wanted to be there for my kids as that was the most important thing for me. If you are a stay at home mum and you want to be there for your kids, but you also want to earn good money, there are […]
Rank #1: What Are Sophisticated Investors Doing In The Current Market?. It’s a very interesting property market at the moment and today I wanted to talk with Ben Everingham about what kind of things sophisticated investors are doing in the current market. Book a Free Property Strategy Session 0:00 – Introduction0:37 – Why are sophisticated investors coming out of the woodwork?3:00 – This doesn’t feel like […] The post What Are Sophisticated Investors Doing In The Current Market? appeared first on On Property.
Rank #2: Mum-To-Be Buys 3 Properties in 3 Years – Kristal’s Story. It’s always really exciting to see women kicking goals in property and Kristal is a mum-to-be who currently owns 3 properties and is well on her way to financial freedom with the potential for 5 income streams down the line. Book a Free Property Strategy Session 0:00 – Introduction0:36 – Kristal’s situation and portfolio1:19 – […] The post Mum-To-Be Buys 3 Properties in 3 Years – Kristal’s Story appeared first on On Property.
Rank #1: EPI 130 | Brisbane Market Update. Feature – Brisbane Market Update In this episode Kaz and Buyers Agent Lisa Parker talk about Brisbane and Sunshine Coast property markets.
Rank #2: EPI 124 | Getting property smart. Feature – How to get property smart Kaz and Lisa Parker talk about how investors educate themselves about property. Lisa’s first exposure to property was having parents who were commenting on how much a property costs Kaz was a late starter; started with reading money magazines, attending seminars
Rank #1: Scoping Data to Grow a Portfolio with Tommy Segoro. Tommy Segoro has used his background in I.T. as well as his developed passion for property, to become the proud owner of a growing portfolio and a buyer’s agency business in Perth, Western Australia! Not only buy and hold investing, but also renovating, he’s encountered many different successes from property and has even been able to help his clients achieve the same success when purchasing.Join us in this episode of Property Investory as we learn about the big move Segoro made on his own as a young boy from Indonesia to Australia, how he found himself in I.T. and how he made his way into property. We’ll also be delving into the way Segoro utilises his skill set in I.T. to filter and search through data regarding property, how his ego clouded his investing judgment, why a six year hiatus from investing couldn’t stop Segoro from investing later and much much more!
Rank #2: The Three Elements to Succeed In Property Options with Mark Rolton. Mark Rolton has had a rollercoaster of successes and disappointments in his career, first as a builder and now as an entrepreneur and investor. Having built himself up from bankruptcy, Rolton has made millions through the use of property options, and is now teaching other everyday investors how to do the same.Join us in this episode of Property Investory to learn exactly how property options work, the three key elements to succeeding through options, and the best advice that Rolton could give to someone interested in getting started.
Rank #1: Ep. 182 - Expired listings.
Rank #2: Episode 65 - Underquoting.
Rank #1: Debt recycling & leverage - How to turn liabilities into assets. Welcome to finance and fury, the Say What Wednesday editions! Today’s question comes from Dale: “My question refers to a point you and Jayden made a few times about recycling debt or using good, specifically using equity to purchase shares. I understand that you can claim the interest paid on the equity as a tax deduction. So, does that mean you have a second loan to pay down? And also, how does it look at the backend when you want to liquidate your shares? Great questions! Today we will run through each one of these covering off on Leverage. Leverage is when you borrow to invest money, and why do this? Well, is $100,000 more than $50,000? Agree or not? It is! And that is what leverage does. Borrowing fund to invest into something to increase the value of the investment. And it works off getting percent returns, where the greater the value of something, the greater your real return in dollar figures off the exact same percent when compared to a smaller investment. We are all really locked into the same return the ASX can give. If you put money into the ASX300, everyone invested in the ASX300 gets the same return. However, those with more money in it will get more of a dollar value of a return. That’s the whole “Rich getting Richer” saying, where the same percent increase off a greater value will lead to a greater return. Now on to good debt. As Dale said, if you can claim the interest against the debt, it is generally considered good. And to make it eligible to do that it needs to be invested in an income providing asset. More importantly though, good debt is debt that is being used towards something that will actually go up in value. If it is on a personal loan or something that will actually go down in value, that is what it is bad debt with credit cards or personal loans. Plus, no deductions. But for good debt, if you take out $100,000 to invest in shares, the shares should increase in value while the debt shouldn’t. It shouldn’t go up with inflation, so using leverage can help to increase your overall wealth when your starting values are relatively smaller than what you would like. As a warning, when borrowing funds to invest both your positive and negative returns are magnified. This is general information only! But how borrowing-to-invest works in this case is from what is called home equity, where you borrow money out of your home to buy shares or managed funds. Equity it just money you have in the value of your home. If you have a $1m home, you can borrow up to 80% of that value. So, if you don’t have any debt against your property and it’s worth $1m, you technically have equity in that property of $800k which you can borrow to utilise to invest. And even though it is your own personal residence, because you are borrowing funds to invest in something that produces and income, then that will actually become a tax-deductible expense with the interest payments. As opposed to if you took money out to buy a second holiday home. And any investment that you invest in that produces an income, you can claim deductions against it. Either for the cost of the investment (management fee of the platform you are invested on) or the interest that you have to repay on the borrowed amount. Now, the process of borrowing money against the home going back to Dale’s question. You do need generally to get a separate loan if you have bad debt attached to your home. So, if you have a home, again $1m, and there is a $500k mortgage on it, that 500k mortgage is your bad debt. But then you can create a separate loan (or second loan) and borrow money on that. The reason why you have to take out a separate loan is to keep track of the interest components of repayments. Because if you have one loan that is principal and interest that is bad debt, and you take out more money on top of that and invest those funds, it is going to be very hard on a month to month basis (especially if the rate is variable), to work out what component is interest of the repayments towards the investment and your mortgage. Mainly, accountants require a second loan and the ATO requires a second loan to actually make sure the interest being claimed is 100% accurate. And with the separate loan, it does mean that you have to pay it down……if you choose. But you have time! Like all loan you can take an additional 30-year loan on a separate facility on your home. But if you do want to pay it back, then yes, you over time will have to repay it. And the deductible interest you claim that at tax time. The way that works is during the year you earn your income, then when you lodge your tax returns you’ll list on there income earned from investments and personally, and the interest you have paid on those investments to offset the income. Why it’s great to have a separate loan as well, is that you can structure it differently to your bad debt. And one of the best waits to structure investment loans may be on Interest Only payments rather than Principal and Interest, because if you are on a Principal and Interest payments half or sometimes majority if it is a new loan it will be paying off principal which is not deductible. And over time, maybe after 15 years, the majority of your repayments start to become principal with little interest. So, you’ll be paying the same amount on the property, but how much you can claim as interest on that isn’t actually going up, its going down over time. The other thing is flexibility, having an offset account on there against that loan allows you to have a separate offset account which is your cash fund for investment purposes. And unlike margin loans, the home is the collateral for the investment. Therefore, the investments can be independent form the collateral. If you get a margin loan you need to get a loan on every share that you get, in this case you are just borrowing money against the home which is collateral itself, then investing that in really any investment. So, the loan isn’t attached to the investments itself you are making. And that works a lot better as it is safer than a margin loan where you can hold the investments if they go down in value, indefinitely. With a margin loan, if the investment goes down in value but your loan doesn’t decrease the bank will step in. Remember that you loan stays the same as when the investments go up, but you loan stays the same also when your investments go down, even below what the loan is. So in a case where you have a margin loan and the value of the investment goes down, when the value of the investments is below the loan the banks going to tell you need to buy more of the investment, sell investment to repay loan or repay loan using your cash. That is actually a greater risk, because you are forced into a situation where it might not be the right investment to buy, as it is going down! Or you have to sell an investment and crystallise the loss. The second benefit with home equity compared to margin loan is the lower rate. Again, a home is a much less risky collateral for the banks to have, than a share which is much more volatile. So that is the initial proceeds, you borrow money against the home with a separate loan with an offset account generally attached to that separate loan, then you invest the funds. You take money out of that loan and invest the funds. This can be in any asset as long as it produces an income. It should be in certain types of assets to not introduce additional risks, you wouldn’t just borrow $100k and put that into one bank or mining share. The ongoing strategy from there, you can either keep borrowing money as the value of the property increases, you can keep the loan the say, or you can start paying it down. And that is where over time you can choose to do really whatever you want with that loan! And that takes us back to Dale’s question again. If you want to repay the loan at some point, you can do it early, or can wait until the 30 years is up. Either way it will take a bit of planning to do, as if you want to repay the loan without selling the investments, you have to plan ahead and utilise the investment income, to use this surplus income plus your cashflow to use this to repay your debt down quicker. But a bit of a better strategy, if you are looking at repaying debt, pay down your bad debt first. So, use your investment income to pay down your personal mortgage, as that is not deductible. And it isn’t borrowed funds against an investment asset! Therefore, you can over time try to pay down bad debt, and then figure out what to do with the good debt. With the good debt, that should be the last one to pay down if you have bad debt, but if you plan properly over time you can work out over time how much in repayments it will take to pay this down by the time you need to. And the other option is to sell the investments. So, as far as liquidating the shares go, you can do that at any point as well. You don’t have to sell all of the investments, you can just select one investments in the portfolio that does have a large capital value increase to pay out the loan. Because when you sell that investment you will pay capital gains tax on this. And that won’t actually be reduced by the loan in any way. As it is only the ongoing interest payments that you can claim a deduction against. It’s not like you’ve invested funds that are borrowed and what’s invested goes up, that you somehow get a reduced tax on the capital gains tax. It works the exact same as if you bought the investment with your personal cash rather than borrow funds. So, those are the options, but it is probably better to plan over time to pay the loan down. But because it is an equity loan that is against a home, and the home is the collateral for the investments (and not themselves). That is why the investments are independent and you can choose that to do what you want with them over time. So, they are unrelated unlike with a margin loan it is attached to the individual share, so if you want to repay that again, you got to pay the bank back their money or in that case sell the investment. But here, there is more flexibility. So, you can choose to do whatever you want when it comes to when to repay the loan and how to repay it. You can also choose over time to increase the loan as the property value increases, keep the loan the same or choose to pay it back. The last thing is if you choose to sell the property that the loan is attached to. If you have equity borrowed against the property and you sell it, the investments don’t have to be sold, they can stay in place. It just means that when you get the proceeds (or equity) out of the remaining money in the property once it is sold, you will just have less to put towards the next property to buy. If you have a $1m property with no debt, you get $1m of proceeds. If you have a $1m property with $800,000 of debt, then you will get $200,000. I hope that covers everything. The questions were just relating to understanding that claiming the interest as a tax deduction, but does that mean you have to pay down a second loan? So, you do, you borrow a second loan, you don’t have to pay it down on Principal and Interest, you can pay it on Interest Only and transfer savings into an offset account, which technically means you aren’t paying the loan back but still reducing your interest. But at some point, the bank will want their money back. When it comes to winding the investments up at the back end, do you liquidate your share? Well you can but it is probably better not to. Thank you for the question Dale, I’ll do a more detailed episode on this in episode 6, covering off how the rich really get rich! But if anyone has equations, go to financeandfury.com.au/contact and hit us up with something like Dale’s question, or Adam’s last week. I hope you enjoyed it!
Rank #2: Is progressivism the destroyer of equal opportunity?. Welcome everyone to Finance and Fury, the Furious Friday edition. Today’s episode is part 5 of the miniseries. The last part looked at the ‘fair go’, what is fair for some, isn’t for others. Nearing end of series, I want to put forward a case. The constant need to make things ‘fair’ i.e. have an equal distribution of goods = destroys equality of opportunity for a nation. It destroys what makes nations great (no opportunity from authoritarian governments, we covered this in episode 2), and starts to reduce the freedoms of the nation which is the equality of opportunity. Where does this ‘fairness’ mandate come from? Because it’s a relatively new concept in society. The cause is our progressive nature. Progressivism is the support for the improvement of society by reform A philosophy based on the idea of progress, which asserts that advancements in science, technology, economic development, and social organisation are vital to the improvement of the human condition Progress is what separates us from other animals, which is why we are the ‘king of the jungle’ Our desire for never-ending improvement is great! Allows us to better our positions. We are hardwired to do it. However, there are not many inventions from those being coerced into creating verse those people who are passionate This is where reform comes into it, and I have an issue with it. The reform is a type of social movement that aims to bring a political system (in Democracy) closer to the community's ideal Reforms are mandated changes by the government. Reform in a democracy, politicians will pander to the crowd. This is seen across civilisations, like in Rome with Caesar and the mob rule At the core of progressive philosophy is the improvement of the human condition As the human condition is measured on the individual level, progress is great. But when you measure it in collectives (groups), that’s where you can find issues Measure progress: All individuals doing relatively better, but some groups did better than others This is when progressivisms will make any country socialist if left unchecked/or goes unnoticed. This is the focus of today’s episode. Swapping the focus of individual conditions to group conditions, in the nature of progress, seems to lead a nation to become socialist Progress itself: Humans always change, nature is always progressing. Progress is fantastic, only when it benefits everyone Technology throughout history, with fire, the wheel, and the printing press, the internet, and telephones During the age of enlightenment during the 18th + 19th century lead to an explosion in knowledge sharing and technology, and wealth (free market) First adopters got very wealthy through the new industries like banking, oil, and railroads. These are all relatively new technologies and they built empires for the individuals who managed to corner the market In society, up until about the 1600s most western countries were ruled under a monarchy, which people genuinely accepted. It was understood as the monarchy having the divine right to rule. But then, people were given the freedom to do what they want. The feudal system then shifted to more free markets. The wealth of monarchs never helped anyone, whereas, the wealth of robber barons helped millions of individuals Got wealth through providing cheaper oil, heating, steel, and general goods that people use These resources, now available at the turn of the age of enlightenment, helped many people, but also generated a lot of wealth for the owners What happens when equality is now a mandate of the government? Now progressivism is about equalising economic and social conditions The problem? Some people have more money than others. The solution under this mandate? Something is wrong with the system, and you just need to redistribute the wealth Do you want to help those at the bottom? What is help? Give a man a fish to eat, or teach him how to fish? Which is the better solution? Enter in new economic theories for new inequality and how to equalise the wealth distribution. Not let anyone own anything in the first place. 1900’s progressives originally thought the problems society faced could best be addressed by providing good education, a safe environment, and an efficient workplace. This all sounds brilliant, but slowly changed the focus on solutions In the early 20th Century, theories were put into action with ‘reform’ like communist/socialist movements (economic/eugenic) Socialism upbringing across a lot of nations lead to the starvation, from reform, 110 million dead The reforms themselves come from the legislate for compliance in society. That’s with the governmental power over the population. Increased when some of the population want it (Social organisation – One of four Core Components of Progressivism) This all comes back to activism: with groups campaigning for laws as votes equal change Question: Is it better to let people choose to adopt something for themselves, or is it better to force them into adopting it? Well, I guess it depends on the thing Small groups campaign for laws based around the common views, and it is what most of the population (in areas) wanted Plenty of examples in history, like the Jim Crow laws in the USA as racial segregation laws. These laws are why Rosa Parks was arrested for, which is where the Civil Rights movement came out of Put into place by Democrats, they really wanted racial segregation laws in the South. It got removed by LBJ (D) – ‘ill have those N voting democrat for 200 years’ KKK used as the militant wing of Democratic Party. They are both on the left, the KKK, racist socialists like neo-Nazi’s, and the democratic party all have the collective ideologies. It’s just the KKK are far more vocal about their racist views Wanted to improve genetic breeding through extermination of blacks, which is horrible, they used reform for them to achieve this Question: when ‘intellectuals/experts’ do studies, and prove that they can improve the human race and that the government are the only ones who can help A lot of the population get behind it, the active ones anyway, wouldn’t it be great to have the government make these reforms? Worse example: Eugenics was a big movement pushed by intellectuals and put into place by the government – Strap yourselves in, as this is an extreme example of why the government shouldn’t have power over these reform decisions The project of improving the human population through a statistical understanding of heredity Developed by Francis Galton, closely linked to Darwinism and his theory of natural selection (cousins) Galton was a polymath came up with a multitude of concepts in multiple fields, like meteorology (weather maps), statistics (regression and correlation), psychology, biology (heredity), and criminology (fingerprints). He also came up with the concept of eugenics. Picked up interest with the progressive era in the US around the 1900s through to the 1920s or so. This is where it took a dark turn, as 60,000 (1/3 in California) people were sterilized in the United States based on eugenic laws. 32 U.S. states passed sterilization laws between 1907 and 1937 Surgeries reached their highest numbers in the late 1930s and early 1940s. Designed to remove weak genetics from the gene pool against criteria on individuals Things were more direct with surgeries without consent or a person's knowledge Still happens today, from 2006 to 2010 in California 146 female inmates were sterilized Why don’t we hear of Eugenics much today? Hitler was a big fan, in Mein Kampf (My Struggle), Hitler credits American Eugenics as the inspiration for his final solution. ‘Aryan’ comes from Galton and Eugenics, Nazi’s just used the term Progress on the scale, the Nazi’s prefer to commit genocide. It’s horrible, but it was the German efficiency way Joseph Mengele (Rockefeller Foundation funded), before going to Auschwitz, he was conducting more experiments in conjunction with Californian scientists Word got out late in the war. These US scientists had to change marketing strategies now that Hitler had ruined the party Mobilisation and Destruction has also progressed, as seen in Wars WW1: Nobody had seen war in the ‘modern’ era. With machine guns, artillery, UBoats, basic planes, and tanks at the end Biggest in 100 years in EU since the Napoleonic war, where 5m people died (one other war in this period in China with more casualties), the type of fighting was trench warfare WW1 13-14m died in just over 4 years. There have been wars in past that killed as many, but took decades Everyone said ‘never again’ to world wars, until WW2 broke out WW2: War fought over ‘progressive’ ideas at the time, and left 84m dead in 6 years (horrible thing was mostly civilians) Mongols had the gold medal until this with 50m deaths but took 163 years (1206). Comparing the two, we have 200k vs 14m per year (68 times more). Hence, we have come a long way in 700 years in progressive natures of the wars. The countries with most death as a % were by authoritarian governments Russia (32% of war causalities translates to 13.7% of their population), Germany, (8.7% of war causalities and barely a percent of the population) Manhattan Project gave the ability to decimate an empire with nuke bombs End of the war with Operation Paperclip took in 1,600 Nazi Scientists, they started working on NASA with rocket technology Cold war (war of progress and race for more power) Russia made the Tsar bomb in 1961 which was a 50 megaton bomb (of TNT) Little Boy dropped on Hiroshima was 15 kilotons (of TNT) – the Tsar bomb is 3,333 bigger and was meant to be 100 megatons The Tsar bomb created a fireball 8km wide, mushroom cloud 65km up (planes 10.5km), and 95km wide at the top Village 55km away destroyed, wooden hundreds of kms, windows 900km shattered, and a shock wave 3 times around the earth’s circumference Imagine setting a bomb off in Brisbane and shattering windows in Sydney Thankfully, it was decided to be mutually assured destruction. This has kept world powers from another WW but has sparked a conflict by trying to keep them away from some countries. Still hasn’t helped stop smaller wars though What happened? Progress had been going well up until the turn of 20th The focus changed Enlightenment had been about progress for the betterment of the individual. Also, for individuals to have equal opportunity Classical Liberalism from the 1600s. The 10 values are: 1) Liberty as the primary political value; 2) Individualism; 3) Scepticism about power; 4) Rule of Law; 5) Civil Society; 6) Spontaneous Order; 7) Free Markets; 8) Toleration; 9) Peace; 10) Limited Government. This is where the government is needed though, for the law, creating peaceful environments and building infrastructure J Locke, wrote a lot on classical liberalism and is one of the major influencers for the American constitution. From 1680 – 1950: an explosion of wealth from these concepts End of True Monarchy (now Constitutional), this increased freedom of choices. Created a prosperous society. Morphed at the end of the 19th century (1860). Modern/Social Liberalism, the role of the government includes addressing economic and social issues such as poverty, health care, and education. Increasing government size and responsibility, no longer a limited government Changed during the 20th century as influenced by socialism: Social democracy as a progressive modification of capitalism Broadly defined as a project that aims to correct what it regards as the intrinsic defects of capitalism Reducing inequalities through government reform Characterised by a commitment to policies aimed at curbing inequality, oppression of underprivileged groups and poverty. The focus is on groups View of who holds the solution changed. Used to be individuals and small communities to now it being governments (Biggest community of all) When you get everything you want and the problem still isn’t solved, what then? Keep pushing for the government to make it fair, rather than the people. When people are the solution, people build their own wealth and the government helps to facilitate an environment that allows us to be wealthy. But, if the government is the solution, all it has to do is take and then redistribute Socialism: The power of governments is embraced and expanded, we lose the free market as it’s now controlled, collectivist rule. This is the polar opposite of civil society because we lose spontaneous order. Which is the matter of individuals being able to organise themselves properly, rather than being forced to by a government. You also lose toleration, because now society is intolerant of those with wealth. You lose all the foundations, except maybe the rule of law. Now you have entered into reducing equality of opportunity for increased equality of outcome As soon as the government is seen as the solution, society is doomed They paint themselves as the solution. Every campaign is on what they can do for you, they need your vote so they need to sell you what they can do for you What do politicians have? They have power, large groups of them have a lot of power. A recent example is the Anti-Encryption Act that was recently passed Power is addictive, politicians tend to behave like addicts. Do and say anything short term to get what they want With ever-increasing demands from the population, ever-increasing power given to the government We went through examples of importance to limit government powers/involvement with ‘progress’ Authority/Power of governments increased again after monarchy at the turn of the century Governments had conscription and Central Banks. The Fed in 1914 provided almost unlimited funding WW1 should have been the 1000th Balkan war. Austria and Hungary annexed land from Serbia, and the Black Hand shooting Franz Ferdinand. But, thanks to treaties between Russia, France, and the UK they created this global extent of death and destruction. WW2 (less avoidable, however, WW1 set it up) Hitler 1933-1939 he ruled fairly peacefully, but he was seen as the solution for German problems. Because Germany wasn’t doing so well in the 1930s, he even one times person of the year in 1938. All of a sudden, he invaded Poland 6 years later, Stalin and Hitler were to split it 50/50. Once again, all large governments (Communists were seen as the solution there) because they promised people everything. But skip forward, they don’t turn out too good, as they end with a lot of death and destruction. The whole point of ep? That government with too much power end up destroying freedoms. We are what makes it happen I hope that I have been able to explain it properly: Solution = Government, going to lead to the population voting for more government Population driven shift on the political spectrum to authoritarian regimes It’s a cycle: more power (to do) they have, then they start to become the solution for more things = authoritarian May be a secondary consequence of the belief in government solutions for problems. Say for instance you have 2 scenarios: Grow up in a world where the government can’t help you, there’s no social support, or housing. It’s a harder world Government provides social support, the government provides solutions to your problems What scenario would you be more likely to make sure you don’t fail? I think that the more someone else says they will solve your problems, the less you will look for your own solution The world is a scary place, but only if you don’t learn how to prosper in it. Like when the solution is the government. Makes a very easily controlled population, when everyone is reliant on the government Why it is important to have balance, like different policies and what the government should be involved in You either want the government to have more, or less interference in your life. And right now there is nothing that the government isn’t involved with. For e.g. Rego (car), bike (gst, helmet), Owning an animal (getting it registered) The current speed on reforms, takes a lot of time to see how reforms will impact society. If too many changes are done at once, it can be the downfall of freedoms for the individual What is another option? If the government can’t give it to you, then you won’t ask for it. Now, imagine how scary the world would be if the government wasn’t there to help? This is what the final episode will look at, and how would a world like that look What the core classical liberalism models are based on If you want to get into contact with us, you can do so on the contact page here.