Saturday 1 September 2007

My SMSF finally Invested some of its Cash

The application form to invest $180,000 of our SMSF in the Vanguard High-Growth fund was successfully sent via eSuperFund to Vanguard. I received an email from Vanguard today advising the Biller code and Reference number to use to send our money to them. I had intended to start off with a $180,000 lump sum, and then dollar cost average (DCA) the remaining balance of our SMSF into the Vanguard fund over the next couple of months at the rate of $5K each week. However, when I went online to transfer some of the $330,000 I'd previously moved from the ANZ SMSF bank account into the trading account held by E*Trade I found out that funds transfers take 1 business day to process, IF you make the transfer request before 1pm. It was 4pm when I read this, so the $180K won't be back in our SMSF V2 bank account until next Tuesday. Meanwhile we only had a little over $6K available balance in the V2 account, so the initial BPay transfer to Vanguard was only $5,000. I'll transfer another $175K to Vanguard when the funds are available next week.

Meanwhile I finally managed to reconcile the amounts paid by our employer for SGL and salary sacrifice in July with the amount deposited into our SMSF in mid-August, so it looks as if everything is working fine from a contributions point of view. As no tax had been deducted from the contributions, I assume that the SMSF tax return next August will tell us how much to transfer to the ATO for this financial year. There will be 15% tax on our pre-tax contributions and any income, so I'm keeping track of how much to put aside for the eventual tax bill. I think it's better to leave this amount sitting in the ANZ bank account earning a reasonable amount of interest, rather than transferring the entire contribution amount to Vanguard each month and ending up having to make a withdrawal from Vanguard next August to pay the tax bill.

Copyright Enough Wealth 2007

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