Investopoly

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A handful of stocks deliver most of the market’s return, and no one can pick them in advance. That’s why owning the whole market wins. The evidence that index funds beat active managers is well established. In this episode, I explain why, through three observations about how markets behave:
In developed markets, what you don’t own hurts you. Just 2% of 64,000 shares studied created all the wealth over three decades.
Volatility is normal. The average intra-year fall is 14% in Australia and 16% in the US, even though most years end positive.
Most of the return comes on a few days, and those days often arrive shortly after the worst ones.
I also cover the gap between fund returns and what investors actually earn, when I’d invest monthly vs as a lump sum, and why emerging markets and smaller companies need a more selective approach.
00:00 Introduction: why indexing works and why it’s hard to beat
 01:02 The SPIVA reports
 02:00 Why investors still hold a few direct shares
 03:10 Eating my own cooking
 04:00 Three observations about how markets behave
 04:52 What you don’t own hurts you: 2% of stocks created all the wealth
 06:08 Australia: eight companies, almost half the wealth
 07:05 FY24: five stocks, two-thirds of the return
 07:59 Could you have picked them in advance?
 08:39 The Magnificent Seven
 09:25 What happens once a stock reaches the top 10
 10:35 Buy the whole haystack
 11:15 Timing and turnover costs
 11:47 Volatility is normal: intra-year declines
 12:59 2025: down 19% by April, up 18% by year end
 13:39 Using falls to your advantage with regular investing
 14:26 Why the first three to four years can mislead
 15:09 Why a 20% fall wouldn’t surprise me
 16:19 Most returns come in a few days
 17:35 Missing the 10 best days in the S&P 500
 18:09 The best days often follow the worst
 19:31 Reframing falls as an opportunity
 20:42 The behaviour gap: 9.9% vs 8.7%
 21:36 Why “this time is different” is always the headline
 23:10 Monthly investing vs lump sums
 24:04 The value of optionality
 24:33 Emerging markets and small companies: what you do own can hurt
 25:46 Factor-based investing in those markets
 26:37 Summing up: three reasons indexing wins
 27:55 How many active managers fail to beat the index
 28:10 Coming up: does indexing distort markets, and does factor investing pay?
Related episodes:
 Ep 403: Lump sum share market investing: risky or rational
 https://investopoly.buzzsprout.com/2005600/episodes/18951456-ep-403-lump-sum-share-market-investing-risky-or-rational
Ep 433: ASX 200 or global shares: Where to put new money
 https://investopoly.buzzsprout.com/2005600/episodes/20053844-ep-433-asx-200-or-global-shares-where-to-put-new-money
Ep 430: Is financial advice worth it? What rules can’t fix.
 https://investopoly.buzzsprout.com/2005600/episodes/19923707-ep-430-is-financial-advice-worth-it-what-rules-can-t-fix
Q&A - ETF portfolio construction at 28: is 8.4% too low?
 https://investopoly.buzzsprout.com/2005600/episodes/19978320-q-a-etf-portfolio-construction-at-28-is-8-4-too-low
Read Stuart's latest book? He's only got 19 reviews on Amazon so far, if Wealth by Design helped you, leaving one would mean a lot: https://www.amazon.com.au/review/create-review?asin=192318654X
Run your own business? 
Check out Business by Design, Stuart and Mena's show on starting, growing and exiting a business, at https://www.businessbydesignpodcast.com/
Our most popular free guides:
Over the years we've written hundreds of articles. These three bring our best thinking together on the topics that matter most right now: choosing a super fund, debt recycling, and navigating the new tax changes.
Download them here
Got a question for the podcast?
Email us at questions@investopoly.com.au
Subscribe to my weekly blog:
Stay connected here
Important
This podcast provides general information about finance, tax and credit. It doesn't take into account your specific objectives, financial situation or needs, so you need to assess whether it's relevant to your circumstances before acting on it. If you're not sure, speak to a licensed, trustworthy professional.

I wouldn’t rush to repay an SMSF property loan before retirement. I’d switch it to interest-only and put spare cash into growth ETFs.
In this listener Q&A, Gary is 56 and plans to move his property wealth into his SMSF before he retires. I explain why growth ETFs beat income ETFs when unrealised gains disappear in the pension phase. I also explain why I’m wary of a Perth medical clinic on a 5.5% cap rate, and why you shouldn’t extrapolate one good commercial property result. Dominic is 55 with $1.2 million in offset and needs to self-fund until 60. I’d draw on the offset rather than sell property into this market, and plan a window to sell rather than a date. A retiree with about $8.75 million asks what withdrawal rate is reasonable. I cover a perpetual portfolio, three years of living expenses in cash, and what I’d do if the trust tax becomes law. Finally, Angus asks about contribution splitting to even up super balances under the transfer balance cap.
00:16 Gary: moving property wealth into super at 56
 03:18 Reading between the lines: the commercial warehouse story
 04:10 Episode 412: a 5.5% cap rate vs a 5.5% bond
 04:50 Why commercial property values could fall
 05:28 Don’t extrapolate one good result
 06:35 Why being 56 demands more diligence
 07:22 Quality first, then price: would I buy it?
 09:03 The Darwin property
 09:44 Buyer’s agents and selling what’s popular
 10:20 Don’t rush to repay the SMSF loan
 11:20 Growth vs income ETFs before pension phase
 12:23 Using the offset and getting money into super
 13:40 When to exit the medical property
 14:14 Dominic: self-funding five years until 60
 16:09 Is $1.2 million in offset working hard enough?
 17:08 Why I wouldn’t sell property into this market
 18:23 Which property to sell first
 19:15 Plan a selling window, not a date
 20:42 Retired at 60: what withdrawal rate is reasonable?
 22:36 A perpetual portfolio and roughly $300,000 a year
 23:46 Why going too conservative is a risk
 24:16 Three years of living expenses in cash
 25:50 The trust tax rules: don’t react yet
 26:40 If they become law: an investment company
 27:37 Angus: contribution splitting with your spouse
 28:15 When equalising balances matters: the transfer balance cap
 28:55 How contribution splitting works
 30:15 An indexed transfer balance cap
 30:50 An each-way bet: two different super funds
 31:46 How and when to split each year
 32:24 Coming up: why index investing works
Related episodes:
 Ep 412: Beware: Commercial property values look stretched
 https://investopoly.buzzsprout.com/2005600/episodes/19306940-ep-412-beware-commercial-property-values-look-stretched
Ep 409: Super contribution strategies to consider before 30 June 2026
 https://investopoly.buzzsprout.com/2005600/episodes/19170620-ep-409-super-contribution-strategies-to-consider-before-30-june-2026
Ep 419: The best super fund for 2026? You’re asking the wrong question
 https://investopoly.buzzsprout.com/2005600/episodes/19551766-ep-419-the-best-super-fund-for-2026-you-re-asking-the-wrong-question
Ep 429: How much do you need to retire & are you on track? Work it out here.
 https://investopoly.buzzsprout.com/2005600/episodes/19893951-ep-429-how-much-do-you-need-to-retire-are-you-on-track-work-it-out-here
Q&A - Sequence of returns risk retiring early: bridging to super
 https://investopoly.buzzsprout.com/2005600/episodes/19885744-q-a-sequence-of-returns-risk-retiring-early-bridging-to-super
Q&A - Bucket company asset allocation: trust or company?
 https://investopoly.buzzsprout.com/2005600/episodes/20011909-q-a-bucket-company-asset-allocation-trust-or-company
Ep 425: Family trust investing: Are trusts still worth it under proposed tax changes?
 https://investopoly.buzzsprout.com/2005600/episodes/19764156-ep-425-family-trust-investing-are-trusts-still-worth-it-under-proposed-tax-changes
Optional:
 Q&A - Moving wealth from property into super, planning in retirement, benefits of two separate super funds and so on
 https://investopoly.buzzsprout.com/2005600/episodes/16725766-q-a-moving-wealth-from-property-into-super-planning-in-retirement-benefits-of-two-separate-super-funds-and-so-on
Read Stuart's latest book? He's only got 19 reviews on Amazon so far, if Wealth by Design helped you, leaving one would mean a lot: https://www.amazon.com.au/review/create-review?asin=192318654X
Run your own business? 
Check out Business by Design, Stuart and Mena's show on starting, growing and exiting a business, at https://www.businessbydesignpodcast.com/
Our most popular free guides:
Over the years we've written hundreds of articles. These three bring our best thinking together on the topics that matter most right now: choosing a super fund, debt recycling, and navigating the new tax changes.
Download them here
Got a question for the podcast?
Email us at questions@investopoly.com.au
Subscribe to my weekly blog:
Stay connected here
Important
This podcast provides general information about finance, tax and credit. It doesn't take into account your specific objectives, financial situation or needs, so you need to assess whether it's relevant to your circumstances before acting on it. If you're not sure, speak to a licensed, trustworthy professional.

Read Full Blog Here
I wouldn’t sell your Australian shares, but I’d put most new money into global shares. The ASX is concentrated, expensive, and slow-growing. The ASX 200 returned a solid 9.4% a year over the past decade, but that came mostly from banks and BHP, and the top 10 stocks now make up half the index. In this episode, I look at what’s likely to drive future returns: valuations, high dividend payout ratios, oligopolies, a 2% technology weighting, and weak per capita GDP and productivity growth. I also cover the case for keeping your existing Australian holdings, including franking credits, income, and population growth.
00:00 Introduction
 00:40 Not anti-Australia, just an investment view
 01:15 Past returns: the ASX vs global shares over 10 years
 02:48 The real question: where should new capital go?
 03:25 How concentrated the ASX 200 has become
 05:04 Valuation: ASX vs global shares
 05:40 CBA vs Alphabet: similar PE ratios, very different growth
 07:06 An economy built on digging and shipping
 08:40 High dividend payout ratios and the cost to growth
 09:47 Franking credits and the case for retaining profits
 11:04 Where’s the innovation?
 13:39 Oligopolies and the lack of competition
 14:34 The supermarket example
 16:04 Where shareholder returns actually come from
 17:07 Technology: 2% of the ASX vs 40% of the S&P 500
 18:41 The wealth equation and compounding growth
 19:16 Why Australia produces few large startups
 22:51 Summing up the observations
 23:10 GDP growth per capita: Australia vs the US
 24:46 Labour productivity
 26:54 The positives: reasons to keep Australian shares
 29:41 What to do: keep existing holdings, direct new money globally
 31:49 Next week: where share market returns come from
Related episodes:
 Ep 397: Australian vs International Shares: Why the 45:55 split does not add up
 https://investopoly.buzzsprout.com/2005600/episodes/18714304-ep-397-australian-vs-international-shares-why-the-45-55-split-does-not-add-up
Ep 432: Bond ETFs vs 10-Year government bonds: Lock in or not?
 https://investopoly.buzzsprout.com/2005600/episodes/20012238-ep-432-bond-etfs-vs-10-year-government-bonds-lock-in-or-not
Q&A - Bucket company asset allocation: trust or company?
 https://investopoly.buzzsprout.com/2005600/episodes/20011909-q-a-bucket-company-asset-allocation-trust-or-company
Optional:
 Ep 318: Why does Australia’s share market always underperform?
 https://investopoly.buzzsprout.com/2005600/episodes/15604297-ep-318-why-does-australia-s-share-market-always-underperform

Read Stuart's latest book? He's only got 19 reviews on Amazon so far, if Wealth by Design helped you, leaving one would mean a lot: https://www.amazon.com.au/review/create-review?asin=192318654X
Run your own business? 
Check out Business by Design, Stuart and Mena's show on starting, growing and exiting a business, at https://www.businessbydesignpodcast.com/
Our most popular free guides:
Over the years we've written hundreds of articles. These three bring our best thinking together on the topics that matter most right now: choosing a super fund, debt recycling, and navigating the new tax changes.
Download them here
Got a question for the podcast?
Email us at questions@investopoly.com.au
Subscribe to my weekly blog:
Stay connected here
Important
This podcast provides general information about finance, tax and credit. It doesn't take into account your specific objectives, financial situation or needs, so you need to assess whether it's relevant to your circumstances before acting on it. If you're not sure, speak to a licensed, trustworthy professional.

Moving into a rentvested property no longer dilutes your CGT because of the 1 July 2027 deemed disposal. I’d keep one property CGT-free.
In this listener Q&A, I explain why Daniel’s plan to move into one of his rentvested properties won’t work under the new rules, and why every rentvester should protect at least one CGT-free home. Steve wants to sell his investment property to buy a $2 million home. If the original decision was sound, I’d stick with it, because the real risk is executing a sell-and-rebuy in a low-supply market. A 40-year-old asks whether to keep investing through a family trust or top up his wife’s super. I’d do both, and not react to the proposed trust tax yet. Dave asks about internally geared ETFs outside super, and I explain why I’d wait for a correction. Finally, a couple weighs a second investment property against debt recycling. Without an immediate interest deduction on new property, I’d debt recycle.
00:00 Intro and the Wealth by Design audiobook
 01:14 Steve: sell the investment property to buy a $2M home?
 03:27 Why I expect the property tax changes to be reversed
 05:00 The risk of selling in a low-supply market
 06:07 Being picky vs finicky: no property is perfect
 06:57 Execution risk if sentiment turns
 07:34 Stick with a good original decision
 09:08 Adding some regular share investing
 09:46 Daniel: moving into a rentvested property
 10:59 How the partial main residence exemption works
 11:39 Rented first vs occupied first
 12:44 Why the 1 July 2027 deemed disposal breaks the strategy
 14:01 A defensible market value on 1 July 2027
 14:21 The biggest downside of rentvesting
 14:36 Using the six-year rule
 15:35 Listener feedback: building wealth predictably
 17:44 Family trust ETFs or super contributions?
 18:53 Will you really work for another 20 years?
 19:31 Evening up super balances
 20:05 Why the trust tax proposal shouldn’t drive this decision
 21:00 ETFs outside super as a bridge to earlier retirement
 21:48 Rollover options and multi-class companies
 23:05 Don’t react yet
 23:54 Dave: geared ETFs outside super?
 24:14 Internal gearing vs an investment loan
 25:46 My own GEAR and GGUS trades
 26:57 Second investment property or debt recycling?
 28:50 Waiting years for an interest deduction on new property
 30:10 Why property growth rates have to ease
 31:02 Shares: a higher pre-tax return and an immediate deduction
 31:39 Debt recycling and getting the structure right
 32:48 When a bigger property budget changes the answer
 33:12 Coming up: has Australia become uninvestable?
Related episodes:
 Q&A: Upgrade or rentvest, home equity loans, and going non-resident
 https://investopoly.buzzsprout.com/2005600/episodes/19862011-q-a-upgrade-or-rentvest-home-equity-loans-and-going-non-resident
Q&A - ETF portfolio construction at 28: is 8.4% too low?
 https://investopoly.buzzsprout.com/2005600/episodes/19978320-q-a-etf-portfolio-construction-at-28-is-8-4-too-low
Q&A - Debt recycling when you sell your home: keep the deduction
 https://investopoly.buzzsprout.com/2005600/episodes/19934965-q-a-debt-recycling-when-you-sell-your-home-keep-the-deduction
Ep 423: Negative gearing deferred - here’s how to manage the cash flow gap
 https://investopoly.buzzsprout.com/2005600/episodes/19680010-ep-423-negative-gearing-deferred-heres-how-to-manage-the-cash-flow-gap
Ep 425: Family trust investing: Are trusts still worth it under proposed tax changes?
 https://investopoly.buzzsprout.com/2005600/episodes/19764156-ep-425-family-trust-investing-are-trusts-still-worth-it-under-proposed-tax-changes
Ep 429: How much do you need to retire & are you on track? Work it out here.
 https://investopoly.buzzsprout.com/2005600/episodes/19893951-ep-429-how-much-do-you-need-to-retire-are-you-on-track-work-it-out-here
Ep 411: Should you invest all your super into an internally geared ETF
 https://investopoly.buzzsprout.com/2005600/episodes/19251945-ep-411-should-you-invest-all-your-super-into-an-internally-geared-etf
Read Stuart's latest book? He's only got 19 reviews on Amazon so far, if Wealth by Design helped you, leaving one would mean a lot: https://www.amazon.com.au/review/create-review?asin=192318654X
Run your own business? 
Check out Business by Design, Stuart and Mena's show on starting, growing and exiting a business, at https://www.businessbydesignpodcast.com/
Our most popular free guides:
Over the years we've written hundreds of articles. These three bring our best thinking together on the topics that matter most right now: choosing a super fund, debt recycling, and navigating the new tax changes.
Download them here
Got a question for the podcast?
Email us at questions@investopoly.com.au
Subscribe to my weekly blog:
Stay connected here
Important
This podcast provides general information about finance, tax and credit. It doesn't take into account your specific objectives, financial situation or needs, so you need to assess whether it's relevant to your circumstances before acting on it. If you're not sure, speak to a licensed, trustworthy professional.

Read Full Blog Here
10-year bonds near 5.2% look good, but I’d rather use subordinated debt ETFs. They pay about 1% more with almost no interest rate risk. A listener asked whether it’s time to lock in long-dated fixed-rate bonds now that yields are at their highest in about 15 years. In this episode, I explain duration and credit risk, why it’s hard to earn more than your starting yield, and how to measure the term premium properly. I then compare long-dated government bonds with subordinated debt ETFs such as SUBD and BSUB, and cover their risks: thin credit spreads and the money flowing in as bank hybrids wind down. I also explain the difference between running yield and yield to maturity, using the PIMCO global bond ETF (PGBF) the listener asked about.
00:00 Introduction
 00:39 Listener question: Is it time to lock in duration?
 01:31 What duration means
 02:51 Why interest rates have become harder to forecast
 04:35 10-year bonds at 5.2% vs a 4.6% cash rate
 06:25 Spoiler: why I’d look elsewhere
 06:47 Term premium explained using term deposits
 08:03 Duration risk
 10:02 Credit risk and credit spreads
 13:05 Why holding to maturity doesn’t remove the risk
 13:58 Why it’s hard to out-earn your starting yield
 15:32 How to measure the term premium properly
 17:50 Is today’s term premium above average?
 19:47 What’s changed: the options now open to investors
 20:59 Subordinated debt ETFs: BSUB and SUBD
 24:54 Subordinated debt vs government bonds: an extra 1% or more
 27:15 Why bank hybrids are being phased out
 28:36 The risks: thin credit spreads and contagion
 30:46 Moving up the credit scale: QPON and AGVT
 31:02 Do bonds still protect a share portfolio?
 32:24 Why we focus on absolute return
 32:40 PGBF: running yield vs yield to maturity
 34:41 Summing up

Read Stuart's latest book? He's only got 19 reviews on Amazon so far, if Wealth by Design helped you, leaving one would mean a lot: https://www.amazon.com.au/review/create-review?asin=192318654X
Run your own business? 
Check out Business by Design, Stuart and Mena's show on starting, growing and exiting a business, at https://www.businessbydesignpodcast.com/
Our most popular free guides:
Over the years we've written hundreds of articles. These three bring our best thinking together on the topics that matter most right now: choosing a super fund, debt recycling, and navigating the new tax changes.
Download them here
Got a question for the podcast?
Email us at questions@investopoly.com.au
Subscribe to my weekly blog:
Stay connected here
Important
This podcast provides general information about finance, tax and credit. It doesn't take into account your specific objectives, financial situation or needs, so you need to assess whether it's relevant to your circumstances before acting on it. If you're not sure, speak to a licensed, trustworthy professional.