If you are in Australia then DIY super is a way to financially secure your life after retirement. When your accountant or financial adviser suggests for setting up a SMSF make sure you make a profitable decision. Before you start your DIY super you need to know that it involves a lot of money and it is not beneficial for everyone as the cost of operations is high. Last but not the least SMSF audits is important, it will tell you the negatives of your fund. You can then work with them to ensure decent returns.
If you are careful while setting up a SMSF then there are fewer chances of loss and your DIY SMSF will indeed prove beneficial for you. Here are some of the benefits of the SMSF:
Control:
Whether it is SMSF property or just any DIY SMSF you have complete control over it, you take decisions and select strategy for your fund. Under certain guidance you can even invest in artwork, collectable and property besides investing in shares and fixed income options. If you own a business then you can even purchase SMSF property and use the same for your business. You also control how the benefits should be distributed. While there are laws to govern this aspect of SMSF, you still have the power to do it in some certain way.
Tax Benefit:
When setting up a SMSF you need to surely look at this aspect of the DIY super. Though it is not completely exempt from taxes there are surely ways you can minimize your tax. You can select to invest in companies offering imputation credits or franked dividend. The best part about an SMSF is that the fund accumulated at the end is not subject to any capital gains tax as there is no beneficial ownership in this case. When the SMSF property is sold during the pension phase so that it is able to pay the pensions then such asset is also exempt from capital gains tax.
Save Money with SMSF:
That is true after all you thought of setting up a SMSF to be able to save money. But when we say you can save money with your SMSF we intend to say that you save money during the entire process of setting up a SMSF to running it successfully. As a trustee to your own fund you will save money as then you will be not paying any entry or exit fees, no investment manager fees, no financial adviser fees and no administration fees.
Impressed with the benefits of DIY super you might be all willing to start an SMSF as soon as possible. However as said earlier it is not for everyone, for everyone might not benefit the same from it. Here are a few things you need to consider before setting up a SMSF. SMSF is little complicated you need to think whether you want to do it on your own, if yes then whether you will be able to give it sufficient time and do you have the financial knowledge to be able to manage it profitably. If you are still willing to go for it, then last you need to think of is whether you have $200000 and if not then can you manage the sum from some other super fund.