Investment Journey

Dear All,

Thanks to everyone in this forum which I consider a mine of pure GOLD with wealth of information.

I am newbie just starting my investment journey. So far, I have read peter Thornhill and Super Smart Money by Michael Holmes, forums posts, PT videos, LIC beginner guide and convinced about taking this approach of investing. I have drafted my approach based on my understanding and would like to get some opinions/thoughts. I would have made mistakes or wrong approach; hence it would love to get your feedbacks.

Current Situation:

• Bought PPOR beginning of 2020 now focusing on wealth creation primarily.
• Me & my partner late 30s got do full time work / permanent employee and falls in 37% tax bracket.
• We have a three and half years old kid.

Goals:

• Generate an income stream of 75K when we retire bit early and ideal would be in 15 yrs. time (or earlier if we can achieve that level of income)
• Leave a legacy for our children’s and securing a way of intergeneration wealth. Objective is here not to make them super rich so that they can build on top of that in their life.
• Be tax efficient and structure in an effective so that we can benefit from the earning stream.

Goals (tentative):

• Might leave employment later (mid-term future (5-7 years) and continue this IT consulting business in future (but we not fully committed to this plan yet). But if we do, we will setup a separate company for that. Not sure/thought about how to relate them to investment structure though (for asset protection and tax efficiency). This business won’t need a loan as this IT consulting work and does not require up-front investments.
• Also, I might buy a second property but would take couple of years (4-5 years). But again, still not committed to this plan yet. This is mainly our kid’s education/better school in a suburb.

Here is what my overall strategy is:

• Firstly, have setup a structure with family trust to build share portfolio (corporate trustee). We would re-invest all income as dividends and distribute franking credits each financial year. THIS IS MY PRIMARY FOCUS TO DO ASAP.
• Start with portfolio of LICs & ETFs with initial of 50K (over next couple of months to average out) and then 75K-100K every year gradually building the portfolio.
• I want to keep this non-super-investment structure separate from super as I do not lock the money until 60 as I like freedom to pull money out if I need to take out for any unforeseeable reason.
• And then salary sacrifice full limit 25K each year into Super (or in SMSF when its setup)
• In a year or two setup a SMSF structure and bring all money from super companies and keep injecting money up to yearly 25K limit.
• After a while (once I sort out share investment structure) when I know where to invest then debt cycling of mortgage.
• And when in next 10 years’ time the portfolio grows decent and start producing income, setup bucket company that distributes family trust income to it and the company pays 30% tax. The company then declares some dividends and franking credits to us. The company can give remaining money to back to family trust to reinvest.

Questions:

• First of all, would like to get some opinions/thoughts/feedbacks on my approach.
• Since there is decent cost to run the structure (trust, company etc.) and still 15 years before my kids become 18 yrs to receive income & I am doing SMSF separate anyway (and move all money into it after say 15 years) – should I just start investing in personal names (both on me & partner 50:50). And after 15 years move all money into SMSF?
• What is the best way to transition all money from non-SMSF structure to SMSF structure when we near the retire age from tax and CGT perspective?
• If I invest in both growth & dividend producing LICs/ETFs, should I keep dividend ones in the Trust and growth ones in the company? Can I use the trustee company for that purpose or do I need to setup a separate company for that?
• Can I start with simple structure and then expand later (e.g. add more beneficiary/bucket company) depending on how or when the portfolio grows in the future?

Thank you.

Warm Regards