For some people, hands-on control of their superannuation through a self-managed super fund (SMSF) is a rewarding and financially fulfilling alternative to work towards their retirement needs.
However with added control comes added responsibility and workload.
SMSFs are set up under strict rules regulated by the Australian Taxation Office (ATO) and may only be suitable for people with an understanding of super and financial and legal matters.
You must be prepared to research and track your super investments regularly if you want to manage them yourself.
Having a SMSF can also provide the best vehicle to grow your superannuation to ensure you have financial freedom in your retirement.
With widespread media coverage and attention on the potential shortfall of many Australian’s retirement savings, self-managed super funds are growing in popularity.
According to the ATO there are now over 500,000 SMSFs in existence and over 1 million trustees.
The reality is, how you manage your superannuation and retirement savings today will have a significant impact on the choices you will create for yourself in retirement.
Which is why SMSFs are rapidly becoming a favourite for Australians who want greater control of their retirement plan.
So why are so many Australians choosing SMSFs and why should you consider setting up a SMSF?
Here are a few of the benefits MRD clients have experienced utilising a more hands on approach to managing their superannuation:
For many Australians, superannuation is their largest investment asset behind their family home – so naturally they want to have more control and direct influence over its investment decisions.
With a SMSF, you can decide how and where you would like to invest your retirement savings.
With growing technology in the SMSF space, in many cases you can view your retirement savings in real time and control payments going out and investment income coming in.
SMSFs typically open up a wider range of investment options than traditional retail or industry super funds.
With a SMSF, you can invest in direct Australian and international shares, cash accounts or term deposits, direct residential or commercial property, unlisted assets and more, and have the ability to borrow funds to invest in assets.
Under current legislation, SMSFs have the ability to utilise their current balance and borrow funds, with the objective of investing in certain asset classes.
This can be very advantageous, as it allows you to increase and control a larger asset base through leveraging your existing balance.
Similarly to investing outside of your superannuation, for example buying your family home, you can use a cash deposit (in this instance, your superannuation balance) to invest in direct residential property that is owned and run by your SMSF through a trust structure.
This strategy requires specialised expertise in both the administrative setup and finance arrangements and should be considered in the context of an overarching investment strategy so it’s suitable and relevant to your retirement goal planning.