Low cost DIY SMSF for an ETF portfolio

Seems on the low side. These are the limits for Macquarie but the $100k can be upped if necessary*.


*Not saying.

 

@Hockey Monkey haven't had a chance to dive into your analysis (or the bogleheads link) yet but is it clear to you what's the primary driver of out performance, the advantage of the US tax system for creation and redemption of ETFs or the impact of compounding from deferred CGT? Just wondering how critical the specific choice of VTS/VEU is to the outcome (vs VGS). Appologies in advance if you've already addressed this.

 

The outperformance is due to compounding effect of avoiding CGT during accumulation. That is more money stays invested rather than going to the ATO.

The capital gains are only deferred until you sell, however are wiped completely when moving into the pension phase.

 

Exactly. This plus the free ESA tilted Macquarie in favour for me.

SelfWealth can accept deposits via BPAY up to the value of $800k
https://help.selfwealth.com.au/hc/en-au/articles/360030951391-Is-there-a-limit-on-BPAY-transfers-

 

Thanks. So greater impact for an asset allocation that favours capital gains (US companies) vs dividends (AUS companies).

 

Correct. AUS companies have another advantage in pension phase. Under current rules, franking credits can be refunded to zero tax when in pension phase. International will always have foreign income tax Eg US 15% even when in pension phase. Ultimately a cost of diversification

 

I am using corporate trustee with Stake SMSF. They do everything for you. Macquarie CMA comes integrated. Very Seamless experience. I agree with high FX for US though.

I am looking forward to invest in ASX for $3 brokerage rate after paying millions to CommSec on brokerage

 

Thanks Chris21. You and SatayKing have me thinking.

Option 1) DIY individual trustee $809 ($220 BGL360 + $259 ATO Supervisory + $330 Audit)
eg These Auditors specialise in BGL360 SF Audits 360 – exceptionally efficient SMSF audits exclusively for accountants

Option 2) StakeSMSF with Corporate trustee $1085 ($770 + $259 ATO + $56 ASIC)

StakeSMSF also use Macquarie so no concerns on transfer limits + SuperStream etc, less hassle both now and in the future when one of us croaks. Might be the best $276 p.a. we ever spent. Stake even automate the W8BEN-E so Mrs Hockey Monkey won't have to remember.

 

If you intend to buy property under this SMSF - go for option 1 with cooperate trustee. Choice of Lender for SMSF Loans could be restrictive within StakeSMSF (if it is possible at all. Haven't checked that). Personally, I would invest in a stable commercial property for better yield.

 

All of my properties are outside of super. No plans to hold property inside, just simple ETF's only

 

Then stakeSMSF case becomes stronger. Only negative is high FX rate like you pointed out.

 

OP - have you ever considered eSuperfund? Cost is cheaper than what you have outlined below:

SMSF Cost
$978 / year + 0.18% MER
$220 - SimpleFund360 Trustee Edition ($440 in the first year)
$259 - ATO supervisory levy
$385 - Audit SMSF Audit | Self Managed Super Fund Auditor Services
$114 - Brokerage (12 x $9.50)

I just onboarded myself a few months back and is trading simple ETFs via Selfwealth, set-up and first is free afterwards it will be 999 per year (inclusive of admin and audit) + ATO supervisory fee + ASIC fee.

 

Aside from the first year which is free, eSuperfund seems to be more expensive and less flexible. Am I missing something? They seem to be the worst, aiming to lock you in with a free first year offering.

Comparing apples with apples above

$1497.40 Total
$999 Admin + Audit
$259 ATO supervisory levy
$239.40 Brokerage (12 x $19.95)

This is with
ANZv2 which requires a fax for large transfers - SMSF Bank Account - Fax Authority | ESUPERFUND
Their own inbuilt broker (EBROKING) which is not fixed fee, so would cost us thousands to transfer over Brokerage - EBROKING | ESUPERFUND

You can opt to use your own bank and broker but then lose the automated data feeds putting more effort back on you so you might as well DIY.

 

Well yeah, no automatic data for me because I am using Selfwealth but trust be told it ain't too bad.

eSuperfund are inflexible though with their international broker - it has to be done via ebroking.

Anyhow wanted to inquire what do you plan to buy as your core holdings?

 

VAS/VTS/VEU is all I plan to invest in. Some details why in my OP.

 

@Hockey Monkey what about option 3) iCareSMSF adminstration at $924 p/a which which includes audit and negates the need for you to seperately pay for adminstration software. Alternatively you could start out full DIY as you'd proposed but transition to iCareSMSF administration at any point as they are already doing your audits, plus will do tax returns and other administration. Also, if you amortise the cost of a corporate trustee over 10 years, it's really not a major cost.

I've been doing the comparisons to my sunsuper index fund baseline and by far the biggest oppertunity is potential compounding of deferred CGT as smarter people than me have already pointed out.

The cost difference between full DIY SMSF with individual trustee as you'd proposed vs iCareSMSF managed administration with a Corporate trustee isn't anywhere as significant - about a factor of 2 in future value terms after 10 or 15 years. The impact of compounding of deferred CGT is a factor of 10 off the same baseline.

 

If your SMSF Portfolio is purely equities/etf based - be sure to check out www.stakesmsf.com
$770/year.

 

Fee assumptions


Fees (all - admin, investment etc) at various balances



Future value opertunity on reduction of fees and deferred CGT through to tax free pension

O - Oppertunity - where the baseline is a Sunsuper pooled fund with index funds (20% AUS, 80% International) - assuming 2 members and a starting combined balance of AUD1M. Deferred CGT impact assumed to be 1% for VTS/VEU and 0.5% for VAS. FV assumes 8% p/a return

 

You still have $259 ATO supervisory levy on top of the $924 from iCareSMSF.

StakeSMSF at $770 ($220 lifetime discount for Beta customers) seems hard to beat for a simple ETF portfolio with $3 flat fee brokerage. I have a 10 min call with their head of product tomorrow for a chat and will pull the trigger after that if no red flags are apparent.

 

I wouldn't want to be locked into the stake platform myself but agree it will be hard to beat on fees if that's the most important consideration.