If you’ve been contemplating taking direct charge of your retirement plans, opting for self-managed super funds (SMSF) is a practical solution if you want greater control of your retirement savings. As the name implies, a self-managed super fund is a pension plan that allows you to take direct charge over how your superannuation contribution is invested.
To set up an SMSF, you need to create a legal trust with other individuals or corporate trustees who will all be responsible for making investment decisions and ensuring the fund’s legal compliance. While an SMSF requires 100% commitment and understanding of investment, it offers several advantages. Here are the top five benefits of a self-managed super fund:
A broader range of investment options
The number one strength of an SMSF is that it provides you with complete investment control. Access to a wide range of investment options is the pathway to making smarter choices, a strength that you can leverage. Primarily, you can invest in virtually anything right from artwork and collectibles to listed shares and property, provided it adheres to regulations. A particular point of interest is the ease of buying an SMSF property as you can borrow to invest in these assets.
Enhanced flexibility and control of the fund
Would you like to be in a position to make the right adjustments regarding your portfolio? An SMSF allows you to practice those great investment strategies as you are responsible for decision-making as a trustee. You will also appreciate that you have greater control of the fund as the trustees can create rules to suit their needs and interests.
Better tax management
The flexible structure of an SMSF allows trustees to time their contributions and allocate earnings in ways that will minimize their overall tax. This is different from public pension funds that do not allow for these flexibilities as all members have to adhere to the set rules and deadlines. As an SMSF member, you will love the ease of making financial decisions that do not negatively affect your tax position.
Lower transaction costs
In most retail funds, you have to part with brokerage fees, capital gains tax, and buy/sell costs when moving from an accumulation phase to the pension phase. This will not be the case with an SMSF, as you do not have to sell your shares or assets when moving to the retirement phase. You will retain your investment and start withdrawing your balance as an income.
Ease in transferring wealth to the next generation
An SMSF is a smart way to secure your future while taking into account the next generation. The ease in controlling your estate plan is a foolproof way of ensuring the funds go to your dependents at the right time. You can structure these income streams and benefits in a tax-effective way, creating a better future for your loved ones.
Self-managed super funds are getting popular by the day as more people realize their immense advantages. You can also make the smart decision and take direct charge of your pension to enjoy these benefits.
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