For an ever-increasing amount of Australians, the self-managed super funds or SMSF is quickly becoming the retirement home Sydney plan of choice.
The main reason behind this desire to DIY fund is that it offers the complete ability to maintain responsibility over your own funds and super assets; rather than leaving it in the hands and dictations of fund managers. A SMSF allows individuals to control their own investments, while having control over the tax position and funds related with a super fund.
For those considering a SMSF setup, there are anumber of benefits and advantages in controlling your own retirement plan.
Flexibility and Control
Self-managed super funds allow you to have total control over your entire investment plan. Unlike other super funds, a SMSF allows trustees to have a much wider span of choice in what assets they choose to invest in to their SMSF (property, bonds, shares, hedge funds, etc.) As a SMSF trustee, you are in complete control of your own investment strategy.
The benefit of self-managed super funds is also the significant flexibility trustees have over the tax of the SMSF. SMSFs are subject to income tax, however can be made at concessional rates. SMSF also have lower tax on investment earnings compared with other commercial super funds, and in certain circumstances members can qualify for Government contributions.
Better Long-term Costs
In most cases, self-managed super funds are a more cost-effective option in the long term. This is because the SMSF does not increase as your investment grows. However it does pay to take into consideration the amount of money or assets you have to invest to begin with. Unless you have a decent amount to invest, the costs associated with a SMSF setup may end up eating away at your invested assets within a couple of years. It is recommended that you should already have a nest egg worth around $200 000 to reap the full long-term benefits of a SMSF.
Variety of Investment Options
Self-managed super funds are unique in the sense that they allow you to invest in assets such as direct property, business premises, shares in private companies, managed funds, and other assets or specialist investments such as artwork. However, there are strict rules and guidelines associated with this.
Having control over your retirement needs through use of a SMSF can be a well worthwhile option, particularly if you already have a base knowledge of investing and financial planning. Self-managed super funds offer a range of benefits, and allow you to have a more ‘hands on’ involvement with your investment and retirement strategy; ensuring that you get out exactly what you put in to your retirement nest egg.