For many Australians, superannuation forms their second largest asset after the family home – yet so many people have no idea what their superannuation balance is even worth – let alone how their super fund is performing.
With less than impressive performance by many superannuation alternatives, more and more Australians are actively trying to gain more control over their retirement nest instead of leaving it to the masses.
Self managed super funds are a significant, growing sector within the superannuation industry with many Australians making the decision to establish their own fund and take charge of their financial future.
There are a number of benefits in running your own super fund, and these are some of the most popular.
You are in control
- With an SMSF you choose your own investments which can include domestic or international shares, property, options, bank bills, etc.
- You choose if and when to buy/sell.
- You can react far more swiftly to changes in investment markets as opposed to fund managers.
- You can be a more active investor.
- You are not investing for the average – you will have a more focused portfolio (individually managed if you select).
- You have accountability – so you’re likely to make the most out of your retirement savings.
You have access to a greater range of investment opportunities
- These include shares, property, managed funds and a range of assets allowed under superannuation legislation.
- SMSF trustees have access to initial public offerings and corporate actions not available to other super vehicles.
- SMSF business owners are able to lease their premises (classed as business real property) from their self managed superannuation fund to their business.
You can transfer in Private Investments
SMSFs have the ability to accept “in specie” contributions which allows a member not only to contribute cash but also other investments they may hold personally such as listed securities and “business real property”. This potentially allows a member to transfer income generating assets from an environment where the income is potentially taxed at up to 46.5 per cent to one of just 15 per cent, and tax exempt up to $1.6 million once the fund is paying a pension.
You can make use of pension strategies
For individuals that are approaching retirement, the SMSF structure provides the easiest transition from accumulation into flexible income streams. As with many other super products, there is no requirement to sell down assets or convert to a different product when you decide to commence a pension.
SMSFs have the ability to borrow funds. This has enabled greater opportunity for SMSF trustees to increase their investment in their SMSF.
In closing, when asked, ‘Why SMSF?’ I say, ‘Because ultimately, nobody is as interested in your retirement savings as you!’
By Olivia Long – Managing Director – Strategy and Operations
The information in this article contains general advice and is provided by Primestock Securities Ltd AFSL 239180. That advice has been prepared without taking your personal objectives, financial situation or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation and needs. You should obtain and read the Product Disclosure Statement (PDS) before making any decision to acquire any financial product referred to in this article. Please refer to the FSG (available here) for contact information and information about remuneration and associations with product issuers.
This information should not be relied upon as a substitute for professional advice, and we encourage you to seek specific advice from your professional adviser before making a decision on the matters discussed in this article. Information in this article is current at the date of this article (15 Apr 2019) and we have no obligation to update or revise it as a result of any change in events, circumstances or conditions upon which it is based.