SMSF, page-17

Hi Tulips, we both have big dreams of how we are going to help our future generations but sometimes like the Packer dynasty has shown it does not always go to plan. The old adage the first generation creates the wealth, the second builds on it and the third pisses it up the wall is true most of the time.

I remember fellow students from my time in uni with wealthy parents who's parents bought them their first car that cost more than the average home at the time and gave them ridiculous allowances that they spent without a thought. Every one of them went on to be a failure in life and in business with them squandering their inheritances and running family business into the ground. I am not saying it will happen to everyone but you only have to look at what happened to the future generations of the one of the richest families in America the Vanderbilts. The only ones who made something of themselves were the ones that did not use the family fortune as a fall back and went on to create their own success without family money as a safety net.

I wonder how you convince future generations to make something of themselves if you leave them enough to do nothing. You and me know better but you cant control how your kids are going to bring up your grand kids and future generations thereafter. My father and mother were immigrants to Australia in the 1950's and came with nothing and worked hard on minimum wages to pay off their house and put us through school. I am forever grateful they made the move as Australia is truly the lucky country in comparison to the financial state of most of the countries immigrants came from.

As @h00ts has alluded in the past while the ASX and DOW rise over time the same can not be said about individual stocks. Markets go up yes but today's companies end up being pushed aside or into into dust by new smarter entrants in their space or the space their business in is superseded by new tech a la Kodak. That's why I think its best over time to reinvest excess dividends in ETF's that kick out the non performers and include the new up incomers. It has been proven over time low cost etfs outperform any managed fund once you take into account their fees over time.

To everyone contemplating a SMSF my advice is to find a accountant and do it sooner than later. You are capped in how much you can contribute in a year and over a three year term and have caps in the maximum amount you can contribute. The thing you have to remember the ATO does not include your reinvested dividends in the fund or the capital appreciation of your shares as contributions. You can roll in all your current super funds in one hit as its already in super into your SMSF and then you can roll over personal shareholdings held in your own name into your SMSF being mindful of contributions caps. We maxed out our maximum contributions many years ago but some shares that that turned into multibaggers and then were reinvested again into another multibagger have grown far in excess of what the maximum total contribution for a joint SMSF account.

I can highly recommend two accounting firms in Victoria but there are plenty of firms out there that are quite capable but your have to do your research before making the plunge that it will work and will be beneficial for you and who you go with is experienced in managing for you thereafter.