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How to set up Investments Mechanism for multiple people?

Discussion in 'General Investing Discussion' started by Tronc, 28th Jan, 2010.

  1. Tronc

    Tronc Active Member

    Joined:
    9th Jan, 2008
    Posts:
    27
    Location:
    ACT
    I am wanting to set up a mechanism for myself and my younger brother to buy shares collectively, using an online broker, but where we both share the returns and losses and have our own tax requirements. Is there such a structure that is worth setting up - partnership, etc... I am thinking a bit like an Investment Club may be structured, but only for 2 people. Would only be for low value $500-$1000 trades initially - any starting points or hints would be appreciated.

    I will be able to contribute more, as my disposable income is more, but I assume benefits in pooling our resources, plus it will get him involved and learning about investment - risks and returns etc...
     
  2. Superman

    Superman Well-Known Member

    Joined:
    6th Nov, 2007
    Posts:
    343
    Location:
    Gold Coast, QLD
    You could use a unit trust which would enable the income to be distributed proportionately between yourself and your bro, however any losses would be trapped or quarantined within the structure until future income or gains are made.

    A partnership would typically mean everything would be 50/50

    A discretionary (family) trust would give you some flexibility to distribute any income, capital gains and franking credits in the most tax effective way however like the unit trust any losses will be trapped in there.

    I understand that you want to pool the funds, but just ensure you have an exit strategy if either one of you wants to leave.

    Also, any structure will typically require you to pay to set it up and then pay to get an extra tax return completed. Record keeping should be pretty easy if you are using an online broker.

    Hope this helps
    SM