Have you ever thought about switching to a Self Managed Super Fund? Here are 6 ways you could benefit by making the switch.
1. Control over Investments
SMSFs give you more control over where your money is invested. Most funds only allow you to have a range of managed investments, cash and market shares. SMSFs allow you to invest in:
- Direct property
- Direct shares
- Hedge funds
- Managed funds
- Collectibles (e.g. Artwork)
- Other allowable investments
Not only does this give you more options but it also gives you the opportunity to develop a more sophisticated investment strategy, such as borrowing to invest and leasing your business premises from your SMSF.
2. Combining Investments
SMSFs can have up to 4 members. This means you can combine your super balances in one fund, creating a larger balance with which you can invest. This is particularly useful when looking to invest your super in property.
3. Control Over Tax
SMSFs may give you more flexibility over your tax position. Not only can SMSFs receive tax concessions, they give you much more control over your tax than most other super funds. With the right strategy, this can reduce your tax considerably.
Furthermore, if you dispose of an asset held by your super fund in retirement you may not pay any Capital Gains Tax at all!
4. Estate Planning
Your will does not necessarily control your superannuation benefits. SMSFs can leave tax advantaged income streams to dependant beneficiaries. The fund can also make binding nominations that do not lapse, where retail funds may not have this option.
Superannuation funds are now capable of borrowing under certain circumstances. This has limited applications in a retail or industry fund but can be particularly advantageous in a SMSF. Often SMSFs will borrow to invest in property because of the long term benefits of this type of investment.
6. Cost Effective
If you have a large super balance (usually over $200,000) SMSFs can be more cost effective than commercial funds. The costs of administering a SMSF are generally calculated on a dollar basis rather than the percentage basis usually used by retail and industry super funds.
Before switching to a SMSF we recommend you speak with a financial adviser to see if it’s the right choice for you.
Simon is a Financial Adviser at Insight Wealth Planning. He has an advanced diploma and masters in Financial Planning and has a strong technical background.
The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.