Self-Managed Super Funds (SMSF) are giving Australians more control than ever before over their superannuation. Is an SMSF right for you? Adelaide financial planner Kym Nitschke explains the benefits.
In years past, it was common practice for people to invest their Superannuation in retail or industry super funds. Employers would also contribute an amount that equaled a percentage of the employee’s salary.
Things were straightforward and the system was reliable.
So fast-forwarding to 2017, why are we seeing more Australians going the route of a Self-Managed Super Fund?
For the most part, it’s because these funds are flexible, have lower fees and provide greater control. You’re controlling your very own fund instead of paying into a group pool.
Let’s now take a look at some of the biggest perks of opening a SMSF.
1. Direct Investment Choice
A SMSF will provide you with more investment options than any other kind of super fund. You can directly invest your own selected grouping of investments including (but not limited to):
– Managed funds
– International markets
2. Tax Planning
Because you’ll manage your own super with an SMSF, you can reduce your tax liabilities. This works by opting for tax-friendly investments. With a cap on investment income at 15% and no tax at all in the pension phase, your super will grow as you transition to retirement.
SMSF trustees have a few financial obligations:
– Lodge an annual tax return
– Have an annual audit
– Pay ATO fees
Keep in mind that the more your SMSF grows, the more cost-effective it becomes. The total cost of running a SMSF will depend on the related investments and any costs associated with hiring some expert advice.
Speaking of which, if you feel that you have enough in your super to justify setting up an SMSF, you should talk with a financial planner.
Let’s say you like the idea of steering clear from traditional group retirement funds. You want the freedom to set your own terms, but you’re also interested in reducing costs.
Welcome to the option to consolidate!
A SMSF allows you to combine your assets with up to three other members of your choosing. This consolidation will help you generate a larger fund balance while limiting the costs, seeing as you’ll only need to share the one set of fees that come with the single account.
Before Opening Your Own Fund
Managing your very own SMSF is a major responsibility. With all that extra control and freedom comes more risk. You must be prepared to give it the time it needs to function smoothly. Setting up a SMSF isn’t for just anyone.
Importantly, everyone’s circumstances are unique so it is crucial to seek the advice of an experienced financial planner, such as the team at Nitschke Nancarrow.
Want to brush up on your SMSF knowledge and find out whether it’s the right option for you and your family?
Contact Nitschke Nancarrow today to schedule a meeting with our financial planning experts and learn about your superannuation options. Call us today on (08) 8379 9950 or send me an email.
– Kym Nitschke