I won't recommend to you as that would be giving you advice, but after much consideration and research, I went with this option.
INSURANCE BONDS
Insurance bonds combine tax benefits with the investment choice and flexibility of master trusts, making them the most tax-effective savings vehicle outside super.
Investment earnings in insurance bonds are taxed at 30 per cent but dividend imputation can reduce the rate to 24 per cent or less. This means they are tax efficient for anyone on a marginal tax rate of 30 per cent or more.
Insurance bonds are essentially a life insurance policy. If you nominate a child as the life insured and an adult as the policy owner, then ownership of the bond is transferred automatically to the child at a nominated age, generally between 10 and 25, without any capital gains tax payable.
Until the nominated age is reached, the trustee has control.
You can invest a single lump sum or make regular ongoing contributions and select from an underlying menu of managed funds and investment options.
For example, Austock imputation bonds offer 27 investment choices in shares, property, cash, fixed interest and hybrids from well-known fund managers and investors can switch between options.
The minimum investment is $2000 and the minimum ongoing contribution is $200 a month. Other providers include AMP, ING, Commonwealth Bank, IOOF, Australian Unity and Over Fifty.
You receive the proceeds of your investment tax paid if you hold it for 10 years or more.
Tax on the investment earnings are paid within the bond at the company rate of 30 per cent, so investors are not required to declare any income or capital gains on their annual tax return.
The bond is dated from the time of your first investment and you can make additional contributions provided they don't exceed 125 per cent of contributions made the previous year.
If you exceed the 125 per cent rule, or don't make any contributions one year and then make a contribution the following year, the 10-year period will restart from the year you make the excess contribution.
You can sell the bond within 10 years and receive the full unit price but you will be liable for capital gains tax. However, you can reduce tax payable with a 30 per cent tax offset.
