Time is running out to take advantage of the Governments tax incentive to place up to $1 million in your super fund before 30 June. And while there are advantages to doing this, I often find that investors make investment decisions based on tax rather than the investment itself. Remember, a super fund is a simply a tax structure, not an investment vehicle and depending on your investment goals there may be disadvantages to placing all your money in a super fund. This is particularly so if your goal is to use leverage to increase capital gains as a super fund cannot borrow to invest, which could have a significant impact on someone in the wealth generating stage of life.

The other important fact to consider is that any money placed in a super fund cannot be accessed until retirement, which may not provide you with the flexibility you require to grow you net wealth. As a rule of thumb, I always say that if an investment needs a tax incentive to make it attractive, it is probably not a good investment.          

So what is happening on the market?

On of the key mantra’s I use in trading is to always wait for confirmation of a move before acting, and right now this is paying off. After trading sideways for the past month, the All Ordinaries rose strongly on Monday this week breaking above its previous all time high of 6376.90 achieved on 9 May before reversing to trade down over the past three days. False triggers such as these are not uncommon and often catch traders and investors unawares, which is why it is better, at times, to take a wait and see attitude.
  
I still believe it is too early to confirm that the market is falling into its yearly cycle low but the probability increases each day the market trades down. If the market is falling into its yearly low, we need to see it fall for at least two to fours week and more than 10% in price. With the current indecision in the market, anything is possible right now as it is still possible the All Ordinaries could rise up to trade above its recent highs, although I believe the probability of this occurring in the near future is low.

As I have stressed before, investors should take a wait and see attitude until we know for certain which direction the market is heading.