There are many potential benefits to a self-managed superannuation fund (SMSF), especially for those who want greater control over their retirement savings.
What is an SMSF?
An SMSF is a type of superannuation fund in Australia, used to save funds for retirement. Where other funds are reliant on fund providers or financial institutions, an SMSF is managed by an individual or family as trustees.
Here are some of the key advantages:
1. Control and Flexibility: SMSFs provide you with direct control over your investment decisions. You can choose a wide range of investments including shares, property, term deposits, and even more complex assets like certain collectibles.
2. Tailored Investment Strategy: You can tailor your own investment strategy to align with your specific goals and risk tolerance. This means you can be more strategic in your asset allocation and investment choices. Fund providers typically have extremely limited options to tailor an investment strategy.
3. Tax Benefits: Superannuation offers potential tax advantages, such as concessional tax rates on income and capital gains. For instance, the tax rate on investment income within an SMSF is generally 15%, and it can be as low as 0% during the pension phase.
4. Cost Efficiency: For larger super balances, SMSFs can be very cost-effective. You pay for the services you use, which can be more economical compared to the fees charged by some retail or industry super funds.
5. Estate Planning: SMSFs offer flexible estate planning options. You can direct how your superannuation assets are distributed after your death, potentially allowing for more tailored and effective estate planning strategies compared to retail and industry funds.
6. Direct Ownership of Property: SMSFs can directly invest in residential and commercial property. This can be advantageous for those looking to include property in their superannuation strategy and investment portfolios, though it requires careful planning and compliance with strict regulation.
7. Borrowing Opportunities: SMSFs have the option to borrow for investments in certain assets, including property, through a Limited Recourse Borrowing Arrangement (LRBA). This can amplify your investment potential, though it also involves greater risk and regulatory complexity.
8. Investment in Business: If you own a business, you can potentially use your SMSF to invest in it or its premises, subject to certain conditions and regulations.
9. Transparency: With an SMSF, you have complete visibility of where and how your funds are invested, offering a clear view of your superannuation portfolio with no surprises.
Along with all the potential advantages, it’s important to note that self-managed super funds carry responsibilities and potential risks. They require significant time and expertise to manage effectively and to maintain compliance, and are best handled with professional guidance.
If you’re interested in taking control of your super and setting up your own SMSF, our experienced team can help you. Our dedicated SMSF accountants assist over 250 SMSFs with their compliance obligations and we make the process as seamless as possible. Contact us today to discuss the best opportunities for your situation and get the most out of your super.
For more information on how Optima Partners’ services can help your business, contact the team at info@optimapartners.com.au or click here.
