We’ve all heard the term self-managed super fund or SMSF. You may even be aware that this is the largest and fastest growing super sector in Australia. But what is an SMSF? In simple terms, an SMSF provides a way to save for your retirement using a trust structure on behalf of the funds members. Unlike a public superannuation fund, an SMSF can have between one to four members, and each member is a trustee. There are a number of features and benefits that an SMSF can provide, that are not available with other super options.
Control and flexibility: Unlike public superannuation funds, trustees of an SMSF have complete control over the fund’s investments and the way the investment strategy is implemented – before and after retirement. Having this control means that the trustees are able to invest in a range of assets including property, shares, term deposits, corporate debt, managed funds, pooled investment trusts and exchange traded funds (ETFs). Trustees also have the ability to modify or switch those investments when it suits, as they are also responsible for monitoring the fund’s ongoing performance.
Pooling family assets: An SMSF can be also be a great way to combine your super assets with other members of your family. Pooling these assets from multiple super accounts creates a larger balance, and the best news is that with one consolidated account, you reduce fund costs.
Tax Benefits and Savings on fees: Depending on your situation, an SMSF holds benefits in the flexibility trustees have over the tax position of the fund, as well as the significant savings in management fees. For example, there are a number of financial planning strategies that can be used to help reduce the trustees overall tax burden, such as starting a pension without triggering capital gains tax when you move into pension phase.
So you want to take control of your investments and live the life you want? Before you set up an SMSF, remember, it’s important to do your research and understand the legal responsibilities involved. If you do decide to self-manage your super fund, it’s possible to invest back into the stock market itself, and a product such as SPA3ETF can help you outperform market indices while minimising risk and volatility.