In this blog post, we’ll look at self managed super funds in Australia and why they might be an excellent choice for managing your retirement savings. We will explore the benefits of self managed super funds and how you can take advantage of them as an investment strategy!
Retirement planning can be intimidating and sometimes seem like a distant goal. However, it is something that anyone should start considering as soon as possible, as the decisions you make today can have a massive impact on your lifestyle in the future.
Let’s take a closer look at self managed super funds in Australia and what they can offer you.
What is a self managed super fund, and why are they so appealing?
A self managed super fund (SMSF) is a type of superannuation fund (or ‘super’) that is managed by you, the trustee. This means you have complete control over how your retirement savings are invested and every decision you make about it. With a Self managed super fund, you can choose to use a professional adviser or manage your investments yourself – whatever works best for your situation.
One of the main advantages of having an SMSF is the potential tax benefits they provide. As long as specific requirements are met, the income earned within an SMSF may be taxed at a much lower rate than in other types of superannuation funds. This could make a big difference to your retirement savings and help you achieve your financial goals more quickly.
Another great benefit of SMSFs is that they enable you to have complete control over your investments and how your money is managed, something that can’t be achieved with traditional superannuation funds. You’ll also get access to more investment choices, as well as the ability to tailor your investments according to your individual needs and preferences.
Lastly, you don’t need permission from anyone else when making any changes or decisions within an SMSF – all of the power is yours!
What’s the difference between traditional superannuation funds and self managed super funds?
The main difference between traditional superannuation funds and SMSF is the amount of control you have over your investments. With a traditional super fund, you are at the mercy of the fund manager when it comes to deciding how your money is invested. On the other hand, with an SMSF, you get to make all the decisions regarding where your money goes.
In addition, traditional superannuation funds tend to have more restrictions on investment options compared to SMSFs. For example, most traditional funds will only allow you to invest in certain assets, such as shares and property. With an SMSF, however, you can invest in a much more comprehensive range of assets, including derivatives, managed funds and even international shares – giving you much greater flexibility and control over your retirement savings.
Finally, with an SMSF, you have the potential to benefit from lower fees than traditional super funds. This is because you are not paying for the services of a fund manager or other financial professionals – you can manage your own investments with an SMSF if you choose instead of having to pay someone else to do it for you.
Investment strategies for self managed super funds
When it comes to investments, SMSFs have the same freedom as any other investor – they can invest in anything from cash and shares to property and derivatives. However, when investing with an SMSF, it’s important to make sure that your strategies are tailored towards achieving your long-term financial goals.
The key is to come up with a diversified portfolio that has a mix of different types of investments. This will help to reduce your risks while also giving you access to different growth and income opportunities. Additionally, it’s important to remember that SMSFs are long-term investments – so try to focus on building a fund that will be able to weather any market fluctuations over the years.
What are the 3 most popular SMSF investment strategies?
1. Asset Allocation – This involves diversifying your portfolio by investing in different asset classes such as cash, shares, property and fixed-interest investments.
2. Growth Investing – This focuses on selecting stocks or funds that have the potential to grow over time. It’s important to research the companies or funds you are considering investing in, and ensure that they have a track record of success.
3. Value Investing – This involves buying stocks or funds at a discounted price and then holding them until they increase in value. It’s a good strategy for SMSFs looking to generate income from their investments over the long term.
By considering all of these strategies, you can create an investment portfolio that is tailored to your financial goals and risk profile.
When selecting investments for your SMSF, it’s important to remember that all assets must meet certain criteria set out by the ATO. This includes things like having a market value, being able to be sold or disposed of easily, and not being used solely for personal use.
Setting up your own self managed superannuation Fund
Setting up your own superannuation fund can be a daunting prospect. But with the right advice and support, it can be a straightforward and rewarding process.
What to do before setting up your SMSF
• Do your research – Make sure you understand the rules and regulations surrounding SMSFs, as well as all of your obligations as a trustee.
• Seek professional advice – Speak to an expert who can help you decide if setting up an SMSF is the right option for you, and provide guidance on how to get started.
• Find a service provider – Choose a service provider that can help you set up your fund and provide ongoing support.
• Draft a trust deed – This document sets out the rules of the fund, including how it will be managed, who can be trustees and what assets can be held in it.
• Obtain an ABN – To set up an SMSF, you must have an Australian Business Number (ABN).
• Open a bank account – This is where all contributions to the SMSF will be deposited.
Making sure your SMSF complies with ATO requirements
Setup costs & fees associated with setting up an SMSF
On average the cost of setting up a SMSF can range from $1,500 – $4,000 depending on the complexity of your fund and the services you require. However, these fees can be offset by the savings you make in investment costs (especially if you choose to manage your own investments) and tax benefits over time.
How long does it take to set up an SMSF?
Once you have gathered all the necessary paperwork and chosen a service provider, it typically takes around four to six weeks for your SMSF to be set up. This includes lodging an application with the ATO as well as setting up a bank account for contributions.
What professional advice & assistance are required for setting up an SMSF?
It’s important to seek professional advice when setting up an SMSF. An experienced accountant or financial adviser can help you understand the rules and regulations surrounding self-managed super funds, as well as provide guidance on how to set up your fund.
In conclusion, setting up an SMSF can be a complex but rewarding process. With the right advice and support, you can create a fund that meets your retirement goals and provides long-term security for you and your family.
We hope this has helped give you some insight into SMSFs, the benefits of having one and helped you determine if this is something you could put in place for yourself.
Here at Pinpoint Finance we help you secure finance for your next home or investment property – Schedule a call today to learn more about how we can support you.