SELF MANAGED SUPERANNUATION FUNDS (SMSF)
The SMSF is a niche area in Australia. Currently they are growingly rapidly due to the increased level of control you have over your assets and the ability to pool your funds together with your family members. SMSF’s allow you to invest in a variety of assets that otherwise would not be accessible to your retail or industry superfund, such as direct property. The Australian Tax Office recommends a balance of at least $200,000 to make this option more viable. SMSF's are run by you, for you and any other members of your SMSF and are established for the sole purpose of building retirement savings.
Benefits of SMSF:
1. CONTROL:SMSF assets are controlled by you (the trustee/s), who can choose exactly what the fund invests in as set out in the Trust Deed for the fund. This can include direct residential or commercial property, direct equities, cash, gold and many other asset classes.
2. FLEXIBILITY:Trustees have the flexibility to make decisions regarding investments quickly (for example when the market is moving), and select options for securing your retirement income streams.
3. FAMILIES:SMSFs may provide advantages in a family situation where up to four members are trustees and contributing towards your family SMSF. The higher balances with additional members than the traditional one member superannuation account can make running a SMSF a more affordable option.
A self-managed super fund enjoys one of the lowest rates of tax of any entity structure in Australia. This can prove very advantageous when investing for the purposes of retirement.
5. DIRECT ASSET INVESTMENT:
A large motivating factor of setting up an SMSF for a lot of Australians has been the possibility of direct equity and property investment. Residential and commercial property investment is one direct asset class which is not available inside retail and industry funds. Nor is the ability to use your superannuation as leverage to borrow funds and invest in residential or commercial property. Many Australians prefer to invest in property because they are comfortable with it. Chances are they own or are paying off their own home and know and understand the market better than equities, precious metals, bonds or any other investment class.
The costs of setting up and running an SMSF vary depending on the balance and the investment options and structure that you select. In certain cases, SMSF’s can have lower associated fees compared to other structures.