Ep. 227 You Are Losing Money Every Day, The Banks Don’t Want You To Know This

Welcome back to another episode of the Ben and Bergs podcast. I'm Ben, your favorite high school dropout and founder of Collective Shift, alongside Ms. Bergs, your favorite MBA and CEO of Collective Shift. We're here to bring you world class crypto research strategies and insights to help you crush this crypto bull market. Plus, get an exclusive behind the scenes look as we scale Australia's leading crypto research company. If you like the podcast, we'd love you to share it around with a friend or family member. It's how we grow the podcast each and every week and we love hearing from you. The podcast continues to grow. About three years in Bergs, which is crazy. Mate, you've been, you, you're looking old, man. Not gonna lie from the start, mate.

Look at yourself. Jesus, those ears are getting bigger. Your head's shrinking.

Jesus, mate, when you look satellites, do.

You know what you look like in your little beanie? When we first started, you were just like, you hadn't left your basement for like four years. You're pasty as and now, mate, I don't know, I think it's just the stress of working with you. That's all I can put it down to, mate. I've aged about 50 years in the last three years.

Well, I think you've actually started to do some work, which is actually funny. I think that's why you might be feeling that, you know, compared to you.

Didn'T even know how to work before I started in the company. You were just farting around, traveling, didn't have a house. You're like, whatever, mate, I'm an entrepreneur. I'm living on the beach. Isn't this amazing, mate? Come on, mate. And now look at your company. Complete 180. Turn around. Highly profitable. Mate, this is what happens when you hire people like me, bro.

I don't know why.

Keep you accountable, mate. Keep you on the path. Could you imagine if I wasn't here? All the you would have built out in this company, mate, we'd be broke in five seconds, mate.

I'm just glad you, you know, I'm just glad I was such a nice person to hire you when I first started. Because looking back, mate, no wonder you got stopped at security points at the, at the airport. You might look like you were carrying some stuff on you, mate.

You said, you said, look, I was, let's be honest.

And you're like, oh, it was so nice, mate. You were hunting me down, mate. You, you thirsty? The thirst was real.

Oh, we, I, I needed, I needed someone to, to Join the, join the pain, mate. Can we come the trenches and, and cry with me?

You needed another sicko by your side, mate and I was happy to join. I love the pain.

Speaking of pain.

Let's get into it, bro.

Speaking of pain. Today's episode is a rant about the banks and how.

This stuff is not taught to you. And it's becoming more and more evident to me. I mean this is the reason I got into Bitcoin. But yesterday Bergs, I went to move a couple hundred thousand dollars in our, in our bank account to more like basically was in like you know, just a, everyday account into a high savings account and I had our finance manager go and have a look at some, you know, options, what that looks like and it's been a minute since I've even looked at this because like you know, I don't care about the, the few percent interest we're going to get on our money but you know we've got a little bit of, a little bit of money there now we want to make sure, you know, try to optimize as best as possible. Anyway, get back from the finance manager that the bank is offering 3% interest or 3.5% interest in a term deposit. So not only do they give you basically square root of all on your return, you can't take it out.

Yeah, you get penalized, you get penalized. And we all know how the banks work. They're giving you 3%, they're lending it out at 7, they're rehypothecating your money. And Bergs you reminded me this morning that you also have to pay tax on that interest.

Yeah. So inflation is above 3% no matter what the government tells you. And then on that 3% you have to pay tax because it's income that you are earning. So you earn next to nothing. You are not escaping inflation by putting your money in a high interest savings account. And this is the scary thing.

Yeah. And people like are saying oh you know, inflation's only 2.5. No, that's what the, that's what the government reports. It's a two to two and a half percent if you look at like real inflation like not just the cpi, look at like something like a tray of eggs in Australia in 20, $24.50 last year on average close to 7, $9. Right up over 50 to 100 in, in a couple of years.

Same with petrol.

Yep.

Petrol's not up 2% mate, petrol's a.

Lot more than 2%. Lettuce was 2.50 now $6 beef mince, $10 a kilo. Now 17 a kilo.

Oh, mate's gone nuts.

Mate, meat's gone nuts. Fuel, like you said, it's gone from A$30 to $2. $10. Electricity bills, rent, two bed units in Melbourne from 2021. They're about 450 a week. I remember when I first moved to Melbourne, paid 360 bucks a week a few years ago. Now 700 to a thousand dollars a week. Like you do look across everything. It is haircuts. I pay, I think I paid 90 to get my hair cut.

Like mate, you need a refund. Look at that hair.

It's wild.

No, it's astonishing. I got. Okay, so I've. I shaved my head, I got no hair. Once I went to Melbourne and just for like literally a crew cut and two little on my beard was like 60 bucks and I'm just like. You what mate?

Literally so crazy. And the fact the banks man are taking you for a ride and no one teaches you this stuff. No one teaches you that by saving money you're actually just getting further and further behind. Now I'm not saying don't save money. Cash is king. Don't get me wrong. But like this, this argument I was having yesterday and I went on a bit of a rant on my Instagram was that like you need to understand how money works and investing works and inflation works because just by saving dollars in your bank, you are losing probably closer to 7, 8% every year in purchasing power.

Exactly right. So and just to simplify that, if you've got 100 grand in your bank, you could buy 100 grand worth of stuff. Let's say you could buy a car for 100k. You're buying a very fancy car. In a year's time you can only buy $92,000 worth of car because prices would have inflated and your money is worth less. Which is super, super crazy. And this comes back to don't put your money in the bank, buy the bank. So if you've got a fat sack of money, at least offset your mortgage because it's a higher interest rate and that's actually pre tax. Or if it's 6%, you add your marginal rate of tax on top of that. But consider buying bank shares instead because then you get a dividend and you get to share in the profits that the bank is making.

This is. And you're bang on bugs because this is wild. Right? Let's say infl. The real inflation is at 10%. Your money halves in purchasing power every seven years. Your million dollars in cash you have today or $100,000 in cash today, that's worth half a million dollars in seven years. It's worth a quarter in 14 years.

That's crazy. That is so, so crazy. And like your money is just getting. And this is what eroded. Yeah, this is what the top 40% of people in terms of wealth understand that you need to invest your money and you need to beat inflation. You need to be higher than whatever that hurdle rate is. And investing in things like crypto, property, ETFs, different shares. This is what people have to do. And so back in the day, you just used to be able to save your money. Now you need to be. Now not only do you need to work hard, you need to save, but you also need to invest that money if you want to get ahead.

Yes, this is. Inflation is hidden tax. You don't know it is silently killing you and stealing your money.

The function of inflation is to erode capital. That's what it does.

It melts like ice in another way. And when you think about that, that's when you need to start thinking about, okay, cool, how can I convert my depreciating shitty fiat currency into more scarce assets like Bitcoin, property, etc. Etc. Now again, I think the point here is not to not have cash. Like we're sitting on a bunch of cash. Because you need cash to do things. Cash gives you flexibility. But you need to understand what's actually happening to that cash and you need to make it work for you, otherwise you're just getting eroded away. That's the kind of point of this episode.

Yeah. And just be aware of it. Like I have a bit of cash, but that gives me comfort and I'm happy for that to get eroded away over time. I'm not too concerned because I have other investments and more cash that's deployed elsewhere that's earning me income, it's growing. And then I have that safety net as well. And the reason I had that safety net is because if there's, let's say two or three down years, I don't want to have to sell the assets that I have at a much lower price in order to fund my lifestyle. I've got that cash sitting there and that's its function.

Totally. And, and I, and I think, I think also looking at tax efficient strategies, Bergs who invest that cash, like I talked to a lot of platinum clients that are business owners that have money on their, you know, in their businesses you can look at investing, you know, on your balance sheet. It's something we do, you know, rather than taking money out personally as, as, as, as income where you're getting post tax dollars, you know, you're probably in the top marginal rate. So you're giving 47% to the taxman. You can only invest 53% of that. You can use pre tax dollars, invest on your company balance sheet to buy Bitcoin, for example, instead of drawing dividends and you're getting 43% more Bitcoin, 53% more Bitcoin.

Yeah, it's pretty crazy. Like when you look at purchasing through tax efficient structures versus your personal name. Absolutely. Have a conversation with your accountant. Very easy to set up a couple of signatures and you do that once. And as time goes on, 10 years, 20 years, 30 years, if you model that out, buying in different struct structures, how much more money you will have, it is insane. And then also tax efficiency on the way out where you need to take that money out of that structure and distribute it.

Yes.

This is really, really important and that's what we're.

Yeah, sorry again.

Yeah, you go. Because I'm going to change topic in a sec.

Well, it was, you know, I'm looking at investing, right? I'm buying mum another house. You know, I've just you know, looking at buying more, more crypto. I'm looking at accumulating, you know, property over the next few years. I'm looking at building up my crypto stack. I've got my company and you know, you take out dollars, you know, when you're earning in the top marginal tax rate, you're giving essentially 50% of it to the tax man. So how can you look at different structures? And I'm not a tax account by any stretch of the imagination, but we've got, you know, a lot of good contacts and people we work with to look at. Okay, what does a trust look like? What does a company look like? How do dividends look like? How do bonuses look? How to, you know, how can you optimize your salary, how can you write off things against different entities, how can you set up different structures? Like this is very, very important to learn and understand. As you make more money, you will eventually pay a lot more in tax. So there is certain things you can start to pull and then look at to, to save and, and optimize. Because once you're talking bigger numbers burgs, it just multiplies, right. Like at $10,000 it doesn't really matter a hundred Thousand dollars maybe doesn't matter. When you're in the millions, tens of millions, that number is just bigger and bigger and bigger.

And even if you're, you're just an investor and you earn 100 grand, whatever it may be, I know a lot of people that earn upwards of 400k that still do their own tax. I'm like, why an accountant is so cheap. You tell them what you want to achieve and they'll go and do it for you and they'll return 10 or 20x for you. Like pay for your accountants, pay for your lawyers, pay for your financial advisors. Like get the right advice from the right people and you will just go into the stratosphere. Do not be afraid of engaging.

And also the other thing as well, Burgs is like as our company has grown and I've kind of like, you know, continued to learn things about being a business owner and things you have to spend money on the government here in Australia, and I love Australia, but they like to take their fair whack. You know, you've got company tax, you've got GST pay, YG withholding superannuation payroll tax. So once you start paying more than $700,000 in, in, in wages in Victoria, New South Wales, you gotta pay another payroll tax. What for? Who fucking knows? You got fringe benefits tax, you got CGT capital gains, your workers comp, public liability, cyber insurance, ASIC fees, accounting, you've got employment cost pay. Super. Like it just goes on and on and on and on.

It is, it's crazy. And this is just a one example, a company versus a personal income. So let's say you earn $100 from your work, that $100 is taxed, let's say at the top marginal rate you get $53. When you spend that $53, you have to pay an extra 10% GST plus whatever excises are built in. Your purchasing power is now under 50% of what you earned from your gross. If you have a company and provided that expense can run through your company, you take $100, you can spend $100 and you get, well, roughly $9 worth of GST back. So it's $109 purchasing power versus under 50% purchasing power. That's a huge disparity between owning a company and not.

Dude, owning a company is a cheat code. And I think for you as listeners that are just plain simple investors, I think the big one is having a strategy to know where you're investing, what structures, knowing what and how to invest. And Then also looking at if you've got a business hey can optimize Your tax structures 12 month capital gains discounts looking at different entities. You know there is a lot of things that you can get some advice on that are going to really help you as you grow your portfolio and it's hard to unwind Bergs isn't it like once you start. That's why I'm kind of the starting point of like I'm ready to go on mum and dad's house but I'm like if I this up and do it in the wrong entity it the unwinding and the cost it's going to cost me in 10, 15 years time is, is, is, is unfathomable.

So what Ben's talking about here is accumulating assets in an inefficient structure and this is what happens like Adrian Forza from Crypto Tax Australia. Shout out Adrian Yugi. He does my Crypto Tax. Absolute legend. He says so many people come to him and they got fat gains. We're talking like millions of bucks and they're like great, can we, we'll just put it in a trust and then you know we'll distribute the income. He's like well no, you've already sold it. The gains are locked in, you've disposed of the asset Are little things you can do but you need to set up your structuring beforehand. You can't just pop it in because there's different you know gains events and mate just bringing this back to the banks. So we started off with banks and we wanted to put money in the bank and we're like no, we need to beat inflation. This is how you beat inflation by investing and then you know, keeping the lion's share of the money through efficient structures. This will bake your noodle. So most of the money in our economy is created by banks in the form of bank deposits. So the numbers that, these are the numbers that appear in your bank account. So when you want to go buy that property Ben, that money doesn't exist. You say I'm going to buy that property and the bank gives you whatever a million dollars. A million dollars just appears as a deposit in the bank in your bank account to buy that property that million dollars didn't exist. So banks, yeah banks create new money whenever they make loans. So 97% of the money in the economy today exists as bank deposits while just 3% is physical cash.

It's actually sickening. And once you start to figure this out you realize that like the Property market is basically a Ponzi scheme and so big to fail that you kind of realize I need to go, I need to get on board. You know, this is not like a. Yeah, it's like a government Ponzi scheme. Like there's not enough money. I was watching a podcast the other day. There's literally not enough supply of property for superannuation funds and you know, you know, massive institutions in Australia to invest their, their capital. Like there's not enough.

Yeah. So think about this. Every worker in Australia is getting 11% or whatever it is, superannuation that's on top of your wage. So all these super funds get money thrown at them all the time and they need to buy things. Make no mistake, the superannuation superannuation funds are on the buy side. They need to buy things. Same with ETFs. They need to buy things. So who creates things for them? It's either property or some fancy new financial instrument. Soon it will be Bitcoin they're going to start buying. We've already seen that in pension funds over in the States. It's going to be different companies that are created or buckets of companies. And the thing is, like we've said this before on the podcast where if you have a think about superannuation, that's for people's retirements. The majority of retirees today, and it's like, it's like over 70 something percent do not have enough superannuation to take them through to retirement. They got their pension.

Right.

But people like us, that'll have super since they were started working when they were 16, 17, 18, they will have 50 years worth of super and that will then take them through to retirement. It's unlikely they'll get the pension depending on their income. Now that superannuation is invested in property, it's invested in companies, it's invested in a little bit of cash. What happens to all of these people if property prices go down, companies go down in price, what's going to happen? Do you think the government will just pay out all these pensions? No, they're going to prop up property with stimulus. They, they'll print some more money or they'll offer incentives so property prices stay high or they'll restrict supply or they'll let more immigrants in that need more property. There's lots of levers they can pull. And with companies, do you think they're going to let all these companies fail and have lower profits? No, they're going to do helicopter money, fiscal stimulus, they're either going to buy parts of the businesses, give them crazy incentives so they prop that up so super stays high so you can have your retirement rather than paying out a pension on the back end. That is just the way the system works. And once you appreciate that and you understand banks, their roles and investing, you're like, okay, I get the system now. Let's go, let's start investing. Let's get my team together and take advantage of the system.

Hell, man, it, it, it, it's. I, I, I, I kind of get speechless when I, that the further and further you go down the rabbit hole of, like, learning about wealth, investing, how the world works. This is the exact reason I got into Bitcoin and ultimately comes back to the world is fucking against you. And you need to learn this shit or you're just going to be left behind. And I think about, like, I feel bad, I feel not bad. I feel sorry for, like, I mean, even, you know, what I'm doing now with being able to help my mom and dad out, like, you know, we're from Tassie. None of this shit is. None of my mates know any of this stuff. Mom and dad probably don't, actually. They don't?

Yeah.

Like, no one, like, I've, I'm only like, like when you get to these levels, when you're in this sort of, you know, echelon, the wear we're at, it's, it just unlocks more and more insights that you're like, wow. Like, this is, this is why so many people get left behind. Because.

Yeah.

Who teaches you this? Like, not like schools aren't teaching you this stuff. That's why I quit. There's no, no one's teaching this stuff. Yeah.

And you think about it like.

As.

Much as we don't like to admit it, everything in this world is a competition, even survival. We are competing for resources, for food, for land, for everything with everyone else in the world, because there's so many people and it's just what humans do. And if you want to compete for wealth, these are the things that you need to understand. If you want a more comfortable life, you want more wealth, or is it same as if you're an elite athlete and you want to go to the Olympics, you're competing with the best athletes in the world, what is it that you're going to do that the other people aren't? To get to that top.01% so you can go to the Olympics, you need to do what the others don't.

Yeah, you need to get. Yeah, yeah. My Sister plays national women's basketball league. She's got a coach for everything. There's a, there's a, there's a main coach, assistant coach, there's a guards coach, defense coach, there's a physio, there's a dietitian, there's like these like athletes are surrounded by the best, the best to get the ultimate performance like.

And what's. Yeah, exactly. And what's wild is people work their whole lives for money but they don't put in the time to understand money. And honestly folks, it doesn't take that long. You can 8020 the hell out of this. And if you set up, I reckon in under.

Going from understanding it to setting it up and doing everything under 50 hours worth of work, I reckon which you could do five hours a week for 10 weeks, you will be way ahead of everyone else. And it's just setting up these boring automated structures, setting up automation with your money. Every time I get paid a little bit goes over here, gets invested there and then you've got the luxury of time where you can compound over time you will be in the top quartile of investors and that is phenomenal. Think about the effort you have to put in to be like the top like quartile of your job or your industry or an athlete or whatever it may be. That takes way more time than understanding this. And just having those systems in place and working for you will put you and your family on a completely different trajectory. Don't listen to what you're told in school. Don't listen to the banks. They are not your friends. Take it away, think about something else. The other example was you were listening to a mortgage broker, Ben.

Yep. And yeah mortgage brokers saying one thing, my accountant will say another thing. I've got my rich business mates will say another thing. I'm speaking to now, property advisory people. But I think the big thing that I learned burgs, we did an episode on this on the on coaches is I want to learn from people that have done what I'm trying to do. There is so much advice that you'll get from people that have not done what you're trying to do. And I believe I'm my dream, my goal where I'm heading is like I want to, I want to be in the top 1%. So I don't want to get advice from people that are not in that level. I mean sorry, let me be clear. I want to get experiences from everyone but I ultimately want to hear from someone that is done or doing what I'm trying to do. And that's what I've always done. Hire coaches, hire people, hear from the people that have done it before and copy that.

Yeah, you don't want the person that's heard about the movie or watched the movie. You want the person that starred in the movie that has the scars that can tell you about it. And I will go through the example you gave me with, you know, the, the mortgage broker where you know, you're going for. You want to work out how to structure things right? And they're telling you kind of how much money to put in all these kind of things. Don't put in this amount, that amount. And really what they came to, I was like, hang on a minute, like, why are you doing it that way? Like. And we did the numbers and it's like, well, if you put this money here or if you take the money out again and then invest it over there and you're like, oh yeah, but they've said this and they're like in the numbers, just like in Excel. It's like, this is where you would be here, this is where you'd be if you deploy things like, you know, debt recycling or investing elsewhere. And it's like, ah, I should be putting it over there. Whereas the mortgage brokers just got one lens. Whereas you're a crypto investor, you understand how much money you can make and the amount of money you got in and how much you're saving versus what you could earn is astronomical.

And I think the core point here is bergs. And you nailed this is like, it's like you as an investor, listen to this podcast, you're doing crypto and you've just gone to an exchange and you're just going to buy something or you've spoken to the OTC and they've just, they're just going to give you a quote of the price. They're not there to help you on the strategy side. Now what I'm looking for is the platinum collective shift platinum that we do for crypto for property. I want to speak to the ME of Property to follow them and see their guidelines. I don't want to speak to a financial planner that's read the book fucking ten years ago that does nothing like God, man, that's going to sell me some insurance. I want to speak to someone rich that's made all these mistakes and copy that model, bro.

My 23 year old nephew, he was getting, he works in like the financial advice space. Just starting out, talked to a Financial planner. And he was essentially telling him not to get a loan to invest even though this loan was super cheap because he was a student at the time. And he's like, oh, okay, I shouldn't do this, I shouldn't do that. And I was like, what the actual. So I got an Excel did like if he used his cash post tax or if he used a loan to invest and the numbers and he's like, this is what I thought, what the hell? Goes and talks to the financial advisor who's in his 40s and he is so risk averse, he's got next to no investments. Check this out. My 23 year old nephew's net worth is more than that financial advisor because he's been investing for like, I don't know, five or whatever years and he really got into it. And can you believe that these people are out there giving advice on what you should do. And then he looked at that financial advisor's portfolio and it was all speculative mining stocks. I'm like, what the bro?

This is what I mean. Don't tell me your advice. Show me, show me proof of work, tell me experiences. Don't tell me what to do.

What the book says yes, don't tell me, show me. I don't want to look at your cv. Show me what you can actually do.

Great. Oh, that is that. End of story. Like Damon business advice. Same with anything. Show me. I want to hear from someone that's done it before and I will pay a lot of money to get that advice. Because guess what? That advice or that experience share is going to get me far greater than someone that hasn't done it before. That's telling me it's the platinum experience. You come to us and you work with us, you're going to get all the experience shares on fast tracking all the you're about to go through.

I love watching the group where people come in and they ask questions. They're like, oh, sorry for the new kind of question. And we're like, no, don't worry about it, ask away. And we're like, oh, this happened to me. Set it up this way so you don't get scammed or go talk to this guy because you'll structure it in this way. You know, he's a professional, he's licensed. Or go look at this article. It's just. Oh, it just accelerates your journey, mate. I love seeing it.

So good. My great episode. I really enjoyed that. Hopefully listeners, you got a bit of value out of that. If you want to get fast tracked in your crypto. The Platinum is very, very much tailored towards busy, career oriented business owners. You need at least a quarter of a million in assets to apply. But check it out. Go over our website, you know, check out the Platinum. Otherwise, keep on your investing journey. Keep learning. This stuff is important. It's going to save you a lot of money and make you a lot of money over time.

Absolutely, mate. Love this episode.

Thanks, champions.