Your financial future is greatly impacted by the decisions you make today. And of course this includes any decisions about retirement planning. A choice that more and more investors are making is a Self-Managed Super Fund (SMSF). So, time to explore, what is an SMSF and why would you include it in your retirement plan? Let’s explore the advantages of SMSFs and how they might improve your retirement.

What is an SMSF?

A Self-Managed Super Fund (SMSF) is a type of superannuation fund that you manage yourself, rather than relying on a professional fund manager. An SMSF offers greater control and flexibility over your superannuation investments, allowing you to customise your fund to meet your specific financial goals and needs. On the flip side, you also have the responsibility to make sure you are making sound investments which will benefit you in retirement.

  1. Increased Investment Control

The degree of control that an SMSF provides is one of its main benefits. With an SMSF, you can select from a variety of investments, unlike with standard superannuation funds, which usually only offer a small number of options. The options an SMSF offers are:

  1. Managed Funds: Choose particular ETFs or managed funds.
  2. Property: Purchase residential or commercial property, often with borrowing.
  3. Shares: Directly invest in individual stocks and securities.
  4. Term Deposits and Cash: Keep your money safe in interest-bearing, secured accounts.
  5. Other, specialised investments: Things like art and classic cars have been bought through an SMSF but strict rules apply as to their use and long term viability as an investment

The higher degree of investment control may suit your investing plans, your risk tolerance and your financial objectives.

  1. Tax Advantages

 SMSFs have a number of significant tax benefits. Contributions to your SMSF are generally taxed at a concessional rate of 15%, which is often lower than your marginal tax rate. In addition, the income generated by your SMSF throughout the accumulation stage is a low 15% and in your pension period it is generally tax-free. And any assets kept for more than a year, there is no tax on capital gains.

  1. Retirement Planning

 Managing your retirement savings is possible with an SMSF. You have the flexibility to decide when and how to access your retirement income, as well as the opportunity to invest in assets that may not be offered through traditional superannuation funds. This adaptability allows you to more effectively manage your retirement income and adjust to shifting financial situations.

  1. Estate Planning Benefits

SMSFs let you customise your estate planning. You can designate specific beneficiaries for your superannuation benefits and potentially arrange your fund to reduce tax on death benefits. This ensures that your wealth is more likely to be passed on according to your wishes.

  1. Direct Ownership of Assets

With an SMSF, you directly own your investment assets. This allows you to make informed decisions about your portfolio without depending on third parties. Direct ownership also makes it simpler to pursue specific investment strategies, like property development or direct share investments.

  1. Cost Efficiency

While SMSFs do involve certain costs, like accounting, auditing and administrative fees, they can be cost-effective for individuals with significant superannuation balances. Managing and controlling your investments directly might result in lower overall costs compared to traditional funds, especially if you have a diversified portfolio.

  1. Tailored to Suit Your Needs

An SMSF offers a high degree of customisation. You can structure your fund to match your specific investment preferences and financial goals. Whether you’re interested in niche markets, supporting particular industries, or focusing on investments, an SMSF can be tailored to align with your vision.

 A Self-Managed Super Fund can provide greater control, flexibility, and potential tax benefits for your retirement savings. By understanding the advantages and responsibilities associated with SMSFs, you can make an informed decision that supports your long-term financial goals. If you’re looking to take charge of your superannuation and explore customised investment opportunities, an SMSF might be the right choice for you.

For more information and personalised advice, please don’t hesitate to reach out to us. We can help you navigate the complexities of SMSFs and customise a strategy that’s perfect for your future.