Do you prefer to be in the driver’s seat of your finances?

Then starting a Self-Managed Super Fund (SMSF) may be one of the best financial decisions you will make.

Why choose an SMSF?

SMSFs can be a cost-effective way to gain control over your retirement savings, purchase real estate and manage family wealth.

According to the ATO, 1.1 million Australians manage their nest egg through an SMSF.

Now that must mean something.

Just like any form of investment, an SMSF is a long-term commitment and one that requires an experienced portfolio manager to ensure you get the most out of your investments.

Purchasing property through an SMSF

We all know Aussies love property – and purchasing property through an SMSF can bring a wealth of benefits.

Purchasing property through an SMSF allows you to use leverage to help fund the purchase of a property through what’s called a limited recourse borrowing arrangement structure. It is essentially, increasing the purchasing power of the super fund.

Let’s look at an example.

Property A is for sale for $900,000 you are interested in buying as an investment.

You could potentially purchase the investment property with $300,000 in super and $600,000 in debt through pooling super with family members to achieve the required capacity.

It is worth being aware if you invest in residential property, you cannot use it while it is in super. In­house asset rules apply whereby they prevent SMSF members from using the property for their own benefit.

The one exception to this rule is purchasing a commercial property that can be used by your business whereby you essentially pay rent to yourself.

This structure is also beneficial because owning your business premises in an SMSF provides protection against creditors in the event of bankruptcy.

Pooling family super funds through a multi-member SMSF

SMSFs can be an attractive option for family and friends as they can team up and pool their super through a multi-member SMSF.

With this form of SMSF comes economy of scale and the ability to fund property purchases. This setup can benefit younger family members to leverage more substantial investments.

Balancing family dynamics and relationships in this arrangement must be factored in, however, the financial rewards are there to be made.

Our SMSF team assist clients in the set-up and ongoing management of SMSF, taking this element out of the equation by handing it over to qualified professionals to manage for you.

Estate planning

SMSFs can also give individuals flexibility with their estate planning.

Upon a member’s passing, superannuation death benefits do not automatically form part of their personal estate.

The remaining members of the SMSF have the flexibility of designing their superannuation succession planning. Such as retaining the benefits in the same SMSF and then passing them on to beneficiaries free of probate and access by creditors.

Members have a choice to be flexible with their directions in their binding death benefit nomination (BDBNs) which is a real advantage to the SMSF system.

Additionally, assets inside an SMSF can be held for generations. So if a family owns and runs a commercial business through the SMSF,  younger generations can join the business and the SMSF.

For those looking to take the step up to an SMSF, the benefits are there to be gained.

Take control of your current finances and your retirement in a tax-efficient way that can provide for generations to come behind you.

If you’d like to have a chat with one of our SMSF Advisors and Management team, book an appointment today.