When you’re a trustee of a super fund, you have control over where you can invest your money and how to manage your funds. It means you have greater visibility on your savings, particularly during retirement. With a self managed super fund, you have a deeper understanding of how your money is doing, enabling you to make smart decisions and confidence in making investments.
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Is It Right For You?
While there are many advantages to SMSF, it also comes with certain risks and considerations when making financial decisions. Some factors to consider are the insurance cover, costs, and responsibilities as a trustee. Being an SMSF trustee gives you the benefits of managing your superannuation and investing your super savings accordingly.
For example, your self-managed super fund will allow you to make an investment in fixed interest, shares, property via managed funds, or a few other assets. These super funds also offer you additional options such as managed portfolios, collectibles like artwork, commodities like physical gold, and direct property, either residential or commercial.
Also, the benefits of SMSFs include the freedom to borrow from your fund when you need it for investing. Some business owners hold their establishments within their super funds for various purposes, such as security of tenancy, succession planning, and asset protection.
Your self-managed super fund gives you great flexibility in terms of your estate planning. As a member, you may create binding nominations of a death benefit that will not lapse. This is quite useful compared to other public offer super funds that often require their members to update their binding nominations for death benefits every three years. With SMSF, you can also specify how to pay your death benefits.
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Add Value to Property
If you add a property to your super fund, it’s another effective way to grow your money. If you own property through your self-managed super fund, it involves using the fund to acquire a commercial rental or residential property. Know that you may only lease your rental property to unrelated tenants because relatives and fund members cannot rent an SMSF property due to an in-house assets test.
Pool Your Super Fund
With SMSF, it is possible to pool your resources to other three more members. The ability to increase your pool gives you the opportunity to access other investments that are not available to your own SMSF.
Effective Tax Management
Considering that you have control over decisions of your investments and assets, you can manage your tax position much better. The earnings with an SMSF currently have about a 15% tax rate. However, there is no payable tax on assets that completely support an income stream, for example, a pension. These tax rate differences allow you flexibility over your asset disposal, which you may eliminate or reduce tax liability.
Higher Investment Flexibility
When you decide to purchase and sell your investments, the self-managed super fund allows you higher flexibility. This hands-on concept helps you respond quickly when market conditions change, such as adjusting your portfolio.
When it comes to a self-managed super fund, always remember the risks. SMSFs follow strict laws and regulations. You are responsible for your own super fund. Being a trustee, make sure you comply with the taxation and superannuation laws. So, before you set up your SMSF, know what the risk factors aside from the benefits it can give you are.