The economic meltdown of 2008 challenged various norms, no less the financial ones. Traditional fortresses of investments capsized and people started hunting for new means to secure their money and future better. Unitised superannuation funds got the stick and in its place the SMSF investments surged ahead in public perception. The fact that 40% of super funds are held in ‘Self-managed’ today tells its own story.
How will traditional super savings fare?
Experts feel that traditional super savings would not be enough to ensure a comfortable post-retirement life and this may bring to the surface a full-fledged migration to SMSFs. However, any investment needs its fair share of research. So what makes SMSFs a hot property?
Immense control and tax benefits
SMSF’s greatest ability is that it offers you immense control over your investment. What you invest and how you do it is entirely up to you. You can seek alternatives between different assets, including but not limited to, stocks and property. You can also control how your taxation is positioned. Put another way, you can choose the kind of tax concessions you want to enjoy.
SMSF investments also ease out the intricacy of estate planning. In the event of the demise of one family member, the others become direct beneficiaries of tax benefits. There is great flexibility accorded to SMSFs, too. You can manage it from any corner of the globe.
While your commercial unitised super funds may be impacted by decisions of its members, SMSFs allow you to make your decisions and be accountable for it. All these most definitely are advantages of ‘Self-managed’. An unbiased reading warrants that a few demerits are also brought to the table.
Can be time-consuming
SMSFs can take its bit of time to get a hang of- while going through the learning curve and during day-to-day involvement. Also, uninformed (uneducated) decision-making can compromise the initial days of managing super and this can be quite a telling blow. There are also severe penalties for not complying with the various rules and regulations for self managed super funds.
Rates of life insurance
Life insurance, as a rule, offers better interest rates when you are dealing with commercial unitised super funds. When you are on your own at the negotiation table, getting the best rates can get tricky. Yearly auditing is also a fair bit of cost- one that you need to pay to a practitioner to compensate for your lack of expertise.
All said, if you have the knowledge and competence to manage your SMSF and enough money in your super, do not stop yourself from going the SMSF way.
You can get in touch with us in case you need any advice pertaining to your SMSF setup and structuring – so you reap the benefits and stay compliant.