Hi AllThanks for everyone's thoughts here.I can definately see a...

Hi All

Thanks for everyone's thoughts here.

I can definately see a place for Netwealth type services as it is very tempting

The one issue I have with using an external fund (i.e. not an SMSF) is the way tax is allocated at the time of contribution or capital gain and not later down the track.

For example:

I make a salary sacrificed $10,000 contribution today to Netwealth and they will immediately deduct $1,500 for tax and add to my balance the remaining $8,500 to invest.

If I make that same contribution to a SMSF and I can invest the whole $10,000 until such time as the Fund's tax return is due for payment which through a tax agent is not until May of the year following the end of the financial year. That means the $1,500 that is payable on the contribution made today is not actually paid until May 2012 (which is another 15 months away!).

If I were to contribute in July then I can effectively use the extra amounts to invest for nearly 2 years before any tax is paid (compared to immediately when the funds are contributed).

The same issue arises with crystalised capital gains.

In most cases as well there would be more than enough franking credits to offset the tax payable in the fund at any rate meaning that I can continue to have the funds invested without needing to crystalise any investments.

I hope this makes sense to people - but that is why after consideration I think I will go down the SMSF option (using something like Esuper). I have about $60k to play with and as I'm only young I will see how it goes - I'll just need to make sure I stick with my own diversification rules and investment rules (i.e. I will only play in the ASX 300 with only small amounts to be allocated to spec stocks) to ensure I don't get burnt in a down turn (I've learnt that lesson already!!).

Cheers

Hevlet.