Self managed super fund or SMSF is a type of superannuation scheme and its main goal is providing retirement income for the members of that fund. This fund is a trust where the beneficiaries are also treated as its members. Basically, superannuation is a long-term saving arrangement which is used to provide income after retirement. This fund has the contributions in trust for the members and it also invests all the funds to increase the fund’s asset. All these assets are then used to give profits to the members when they retire or suffer a genuine and serious inability or to the member’s families if the member passes on. Taxes taken by government on the superannuation investment funds are quite lower than other typical savings or funds if the superannuation fund follows some specific conditions. When approaching retirement, superannuation can prove to be an incredibly tax effective vehicle for owning and retaining income producing assets.
An SMSF Investment Strategy is an extremely important part of your overall retirement planning strategy. All investments within the SMSF must be made as per the investment strategy because through that SMSF provides multiple lucrative advantages such as greater investment freedom,potential to cut costs, flexible estate planning, tailored tax management and so on.
SIS or the Superannuation Industry Supervision Act has extensive rules which enforce certain requirements on trustees such as the requirement to act honestly in all the matters, develop and implement an investment strategy,act in the best interest of all the fund members, use skill and diligence as any ordinary prudent person, exercise the same degree of care,retain control over the fund, keep the assets of the fund separate from other assets and so forth. Under the Superannuation Industry Supervision act all SMSFs are required to have a proper investment strategy for their self managed super funds.
Few Main Advantages that many Australians are seeing from an SMSF are mentioned below:
1. It provides the ability to invest differently as it empowers all the members to invest in a way that is generally not accessible in most large super funds. Also SMSFs can hold direct commercial and residential property,various appreciating assets and artworks, unlisted shares and different other exotic or not so common investments. Additionally, SMSFs can invest in their choice of managed investment funds and direct shares.
2. SMSF also provides the capability to quickly buy or sell assets, as SMSF member can right away change their investment or the asset allocation of their portfolios. There is possibility of lag time within larger managed superannuation and traditional funds between two conditions; when investment changes are asked for and when those changes are actually executed. The execution time on investments within an SMSF can often prove to be quicker.
3. Self managed super funds have a general strategy which is subject to the investment conditions of attempts to minimize the sale of such assets as real estate and shares until their funds start to pay pension. This is because no capital gains tax (CGT)is payable once an asset is backing the payment of the pension and hence SMSF becomes beneficial.
Whilst there are significant differences between self-managed superannuation funds and traditional retail or industry funds, It is important to note that statically comparing them against each other can be problematic as it is sometimes an apples and oranges. SMSF provide greater control but also come with greater responsibility in both administrational and compliance obligations. Therefore it is vitally important that you discuss the possibility of an SMSF with a licensed financial adviser before proceeding.
Future Assist is a fully licensed financial planning firm that specialises in self-managed super fund administration and investment advice and can provide you with accurate information and advice regarding self-managed super funds and their suitability to meeting your desired retirement planning goals.
All information is provided as GENERAL INFORMATION and may not be suitable to you because it may contain general advice that has not been tailored to your personal circumstances. Please seek personal financial and tax advice prior to acting on this information. Opinions constitute our judgment at the time of issue and are subject to change. Future Assist Financial Services Group Pty Ltd does not give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Future Assist Financial Services Group Pty Ltd (ABN 24 151 337 843, AFSL No. 413674)