Self Managed Super Fund (SMSF), when compared to its peers like retail or industry funds, offers greater degree of choice and control. For some time now I have been a lobbyist of SMSF and I have firm reasons to back it. In time, I expect to be vindicated. I don’t mean for a moment that SMSF has not drawn its fair share of brickbats from conservative readers of the game but then even they are warming up to it now. Before I establish why you should invest in SMSFs, let me give you a brief overview of what it is and when can it represent your true interest.
What is an SMSF?
SMSF is a kind of super fund which has up to four members as its trustees; those who have together created a fund for the sole purpose of investment and subsequent profit-making. While four is the upper ceiling, you can also set up an SMSF all by yourself. You can make investments into shares and exchange traded funds, properties, derivatives and collectables, among other things, through your SMSF.
Greater control over your investment
As a member and trustee, the onus of making decision falls squarely on you and your partners. However, keeping time constraints and advantages of expert advice in mind, you can always look for an administrator and a financial advisor to help you with your investment management.
The many benefits of SMSF
Now, moving in a linear fashion, the next question I should answer for you is “Why should I set up a self managed super fund?” Thankfully, I will not have to delve too deep to answer this one for you. SMSFs come with a host of advantages.
As a first, you get perceptibly greater control over your investments. You have plenipotentiary powers of decision making (with an eye towards law) and you can choose where your money goes.
Of course, there can be cases when your disposition towards artwork (lets say) may collide with another trustee’s inclination towards derivatives but then that is a different matter altogether.
Choose your expenses and their degree
Right of decision-making also allows you to put a more logical cap on your investments and see for yourself which services you need and exactly how much you are willing to pay for them.
Borrowing leverage
While you can buy a property through your super fund outright, you can also opt to borrow money against the Super from any lending institution (of course assuming that you meet its criterion).
I have only touched upon the proverbial tip of the iceberg here. There are insurance benefits and tax concessions aplenty which I will discuss in greater detail in topics that I cover in near future.
How have you patterned your SMSF investments?
