Financial planning

Self Managed Super Funds (SMSF)

Taking a more proactive approach to retirement planning and superannuation strategies is the option of self managed super funds (SMSF). Of course, just like all investment strategies, it is important to understand how SMSF works and whether you have the time and financial skills to manage it.

When you set up an SMSF you become a trustee of that fund, which means you will be managing the fund and making investment decisions, in accordance with its deed and relevant regulations and superannuation law.

Essentially, SMSFs are set up with the sole purpose of providing financial retirement benefits for its members and their dependents. SMSFs are for long term strategies, they can’t be used to purchase current and everyday items like holidays or cars.

SMSF - What's involved with an SMSF

Understanding the costs involved in SMSFs is an important consideration, as they can be more than you would incur with a general superannuation scheme, such as;

  • Annual independent audit,
  • Annual supervisory levy,
  • Preparation of annual SMSF statement of return,
  • Valuation of assets,
  • Financial advice,
  • Legal fees (if trust requires amendment),
  • Insurance for members.

The key benefits of SMSFs are,

  • Increased control over your super strategy,
  • Opportunity to hold business premises in SMSF for tax effectiveness and asset protection,
  • Ability to make and implement investment changes,
  • Access to more diverse investment options,
  • Improved transparency over fees,
  • Minimise capital gains tax implications,
  • Pool resources (up to 4 members) for large purchases,
  • Flexibility in estate planning

However, on the flipside, awareness of the challenges is important,

  • Time consuming,
  • Requires indepth financial knowledge,
  • Strict non-compliance penalties,
  • Fund structure can impact investment diversity,

High costs (for low super balances).

Loan Studio Financial Advisor, Brendon Honeyford, can take you through the SMSF option in comparison to your current superannuation scheme to ensure it aligns with your overall retirement goals and investment strategy.

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