Planning for your retirement can be a daunting task. However, with the right financial strategies, you can ensure a secure and comfortable future. One such strategy gaining popularity in Australia is the Self-Managed Super Fund (SMSF).

So, why are SMSFs so popular? What are the advantages they offer? This comprehensive guide will answer these questions and delve deep into the benefits of setting up an SMSF.

1. Investment Control

One of the most significant advantages of an SMSF is the level of control it offers over investments. SMSF members have the flexibility to choose and manage their own investments, including shares, property, and managed funds. They can respond quickly to changes in market conditions and personal circumstances, unlike members of larger super funds.

2. Wide Range of Investment Options

With an SMSF, you have a broader range of investment options compared to traditional super funds. Apart from shares, bonds, and term deposits, SMSF trustees can also invest in direct property, including business real estate, and even artwork or collectibles.

3. Tax Control

SMSFs offer more control over tax than other super funds. For instance, SMSFs have the flexibility to determine the timing of buying and selling investments, which can significantly impact the amount of capital gains tax paid. SMSFs can also structure pension payments to minimise tax effectively.

4. Estate Planning

Another significant advantage of SMSFs is their effectiveness in estate planning. SMSFs can offer better control over the distribution of assets upon death, providing a degree of certainty and flexibility that may not be available in other superannuation structures.

5. Consolidation of Super Assets

For families, an SMSF can allow the consolidation of super assets into one fund, which can reduce costs and increase the fund’s investment capabilities. An SMSF can have up to six members, which can all be from the same family. Also see family super funds

6. Cost Efficiency

While SMSFs do have set-up and ongoing costs, they can potentially be more cost-effective than other super funds. Particularly for larger balances, the costs of managing an SMSF can be less than the fees charged by a public super fund.

Q: Who should consider setting up an SMSF?

A: SMSFs are ideal for those who want greater control over their superannuation investments, have a sizable super balance, and have the time and knowledge to manage their own super fund.

Q: Are SMSFs protected in the event of bankruptcy?

A: Yes, similar to other super funds, the assets held within an SMSF are generally protected if a member becomes bankrupt.  However if you become bankrupt you are no longer eligible to be a trustee.