Is an SMSF Right For You?
With Superannuation being the second largest asset outside of the family home, it’s no wonder 1Australians are becoming more engaged with their superannuation and educating themselves on what options are available.According to the Australia Taxation Office (ATO), In June 2021 the total number of SMSFs was 579,000. This number has continued to increase over the last decade as more Australians see the benefits of taking control of their financial future.
So what are the benefits?
- Investment Choice & Control
- Flexibility
- Cost
- Pooling Ability
- Estate Planning
- Tax Management
Investment Choice & Control
An SMSF allows for a greater selection of investments including shares, property, term deposits
and precious metals to name a few. You have the ability to tailor your investment strategy to your
long-term wealth accumulation objectives and better-align your strategy to what’s important to
you, such as investing your superannuation in ethical options.
With having the ability to control where your super is invested comes responsibility. Choosing an
SMSF administrator who provides that can provide you access to daily online reporting, will help
you to make better informed decisions.
Flexibility
Volatile investment markets? No worries, you choose if and when to buy and sell investments and
because of this you can react far more swiftly to changes in investment markets, with direct access
to cash and trading accounts of the fund.
Cost
There are some aspects of managing your SMSF that need to be delegated, such as accountancy, audit and you may even want to appoint a Financial Planner. Depending on who you choose to partner with and how much of the work you choose to delegate, operating costs for the SMSF can still be far more affordable than traditional superannuation options.
Pooling Ability
Another benefit and cost consideration is the ability to pool your super with up to 5 members.
The opportunity to pool, may allow you to access investment opportunities that may not have been an option previously. [More information about Pooling? + Example Image]
Tax Management (Or Tax Efficiencies?)
The Structure of an SMSF helps for more pro-active management of you superannuation tax affairs. Decisions with Tax implications can be thought out and implemented with the individual member (you) in mind. For example, when selling shares in an SMSF, specific parcels can be sold in order to minimise or maximise capital gains depending on your objectives.
Although there are many benefits to an SMSF, they are not suitable for everyone. We encourage you to do your research and review not only the benefits but also the disadvantages of an SMSF.
If you’re thinking an SMSF is right for you, you might be interested in the following articles:
– Is an SMSF right for you?
– Looking to establish an SMSF?
