Little My (our second child) had a good year investment-wise:
His estimated pre-tax return was 20.84%.* The ASX200 had a gross return including estimated franking credits of 11.86%. The MSCI gross world index returned 16.93% and our target portfolio has an estimated return of 10.01%.
Seems like I have finally managed to put together a decent portfolio for him. Currently, we have 33% in the L1 Long Short Fund, 28% in the Dimensional 70/30 fund, 10% in Generation Life Tax Effective Australian Shares, and the remainder in two Magellan fund options.
* 30% tax is deducted automatically from the returns of "investment bonds".
However, there is a trick that could reduce this tax to the recipient's
marginal tax rate when the bond is finally cashed out. By adding an
additional payment the ten year period of investment that is needed to
get the 30% rate will be reset. This makes sense if the recipient has a
marginal rate below 30%. This works because additional contributions have to be within 125% of the previous year's contribution in order not to reset the bond. Given that our additional contributions since the initial investment have been zero...
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