What is a Self-Manged Superannuation Fund?
Every worker in Australia has a superannuation fund that their employer contributes to by law. A SMSF is a legal tax structure that operates under similar rules and restrictions as ordinary super funds but is run by the individual, not the superannuation provider. Therefore a SMSF gives control of investing to the individual.
Why choose a SMSF?
Many people who choose to begin a SMSF do so because of disappointmentin the results of their traditional superannuation fund.They may also choose to set up a SMSF as there are wider investment options. There may also be lower fees with a SMSF, but this depends on the balance of the fund.
SMSFs allow a wider choice of investment options including:
Property: An SMSF can invest in residential or commercial property. A SMSF also allows for borrowing to invest to occur and using their balance to complete renovations.
Small Business: small business owners can use their SMSF topurchase commercial premises for their business to operate from.
Is a SMSF effective?
A SMSF is not for everyone. Set up costs and annual running expenses can be high, while a large balance of super (usually over $200,000) can make the fund efficient and cost-effective. There are a lot of legal and financial implications that must be acknowledged.
If you plan on operating your own SMSF you must:
- Carry out the role of trustee or director
- Set and follow an investment strategy
- Keep comprehensive records and arrange an annual audit by an approved SMSF auditor
Hausing Mortgages can advise on whether a SMSF is effective based on your personal financial situation.
Hausing Mortgages’ finance specialists look forward to discussing your individual finance situation and investigating relevant opportunities to ensure your SMSF is set-up appropriately and delivering on its investments.
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