Have you been considering whether a Self Managed Super Fund is the way to go for your Super?
If so, we are going to break down the basics to help you decide whether an SMSF is the best option for you and cover the basics of how an SMSF operates.
SMSFs are not for everyone. They are a more complex investment option which in turn gives greater flexibility for you as an investor, but also more responsibility.
An SMSF is a superannuation fund set up as a trust and controlled by its members.
This involves setting up a trust deed and appointing trustees. All members of the SMSF are individual Trustees or alternatively, Directors of a company which acts as trustee of the SMSF.
The trustees essentially have control over the fund and make all the investment decisions on behalf of the fund – for the fund. The fund can have up to four members which may increase to a total of six.
What are the benefits of an SMSF?
The main benefit of an SMSF is flexibility and control.
Trustees have control over their investment decisions and can pick and choose where they invest their funds. Investments can vary from shares, EFTs, term deposits, property and managed funds to name a few.
This is the main reason why SMSFs are ideal for those seeking a more hands-on role in their superannuation investment.
Depending on the personal circumstances of the Trustees, there can be tax benefits to having an SMSF which can be discussed with your accountant.
An SMSF is also beneficial in estate planning where the fund states who are the entitled beneficiaries in the event of a member’s death.
What should you look out for with an SMSF?
SMSFs bring with them a lot more responsibility in terms of complying with legal requirements and reporting.
Trustees are responsible for the investment decisions of the SMSF along with managing and administering the day to day activities of the SMSF.
When is an SMSF not for you?
If you are looking for a hands-off approach or essentially a set-and-forget investment option, then an SMSF is not the right option for you.
You are better suited to an industry fund that does the hard yards for you (which they charge an administration fee for). Yet, your investment decisions are looked after. You do have the choice of choosing your investment option, – such as growth or balanced – however, your input stops there.
It is important to note, the administration and day-to-day operation of the SMSF can be outsourced to qualified professionals.
At Fusion Financial Solutions, we have a dedicated SMSF division that can look after the ongoing administration of your SMSF. If you would like to discuss whether an SMSF is right for you, give our team a call today. We can arrange an appointment in-person, over the phone or via Zoom to discuss if an SMSF is right for you.