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Self-Managed Super Funds (SMSFs) are becoming an increasingly popular choice for Australians looking to take control of their retirement savings.
Recent statistics show that there are just over 620,000 SMSF’s, with 1.15 million members in those funds, an increase of 4.2% from the previous year.
What is a SMSF?
What is a SMSF?
A Self-Managed Super Fund (SMSF) is a private superannuation fund that you manage yourself. Unlike industry or retail super funds, where investment decisions are made on your behalf, a SMSF puts you in control of your retirement savings. SMSFs are still regulated by the Australian Taxation Office (ATO) and must comply with the same regulations as other super funds.
A SMSF is run solely for the purpose of providing retirement benefits to its members.
Why set up a SMSF?
Why set up a SMSF?
Many Australians choose to set up a SMSF for greater control over their investments and greater flexibility to help grow their retirement savings.
Before committing, it's important to understand the complexities and responsibilities involved:
Managing a SMSF involves significant administrative responsibilities, including:
Establishing the Superannuation Fund, which includes setting up a trust deed and ensuring it complies with the relevant superannuation laws.
Following an investment strategy aligned with risk tolerances of the members.
Ensuring compliance with tax laws and superannuation regulations.
Keeping records and lodging annual financials and tax returns with the ATO.
Getting your SMSF Audited each year.
Running a SMSF involves significant administrative duties to ensure the fund complies with the relevant laws and operates efficiently. This includes proper record-keeping, reporting to the ATO, annual audits, tax filing, managing contributions, paying benefits, and making sure the fund's investments align with the approved strategy.
At DS Financial Partners, we can simplify the process and help you navigate the complexities to ensure your SMSF runs smoothly.
With a SMSF, you have the flexibility to invest in a wide range of assets, including:
Shares and managed funds - This can be in the Australian Stock Market (ASX) or a range of International Markets.
Property – which can be residential or commercial. Different rules apply to the type of property.
Cash and term deposits.
Cryptocurrencies - Bitcoin, Ethereum etc,
Collectibles (such as art and wine, with strict rules)
Commodities – such as Gold or Silver
SMSFs offer significant flexibility in terms of investment options, from shares and property to more alternative investments like collectibles or cryptocurrency.
However, all investments must be made in accordance with the fund’s strategy, ATO rules, and the overall goal of providing retirement benefits to the members.
Proper management and regular review of investments are crucial for the SMSFs success.
Comparison to Retail Super Funds
Comparison to Retail Super Funds
The major difference between a SMSF and other types of super funds (such as industry or retail funds) is that SMSF members are having to make investment decisions, meaning they run the fund for their own benefit.
While this offers greater flexibility, it also means greater responsibility, as members must ensure compliance with super and tax laws.
Before starting an SMSF, consider the following factors:
Financial Knowledge: Do you have the knowledge or want to learn more about running your own SMSF?
Time Commitment: Are you prepared to spend time researching investment opportunities and maintaining compliance, or paying a broker or financial advisor on what investments may be suited to your goals?
Legal Responsibilities: Do you understand the added responsibilities of running your own superfund; from record keeping, contribution limits and pension rules, all while complying with ATO regulations?
The money in your super fund is for retirement only, so setting up a SMSF should be a carefully considered decision. While a SMSF can offer greater control and investment flexibility, it also involves greater responsibility. Determining whether a SMSF is the right choice for you requires careful evaluation of your financial situation, goals, and willingness to manage the associated duties.
If you're unsure or need expert guidance, ask us at DS Financial Partners – we can help you assess whether a SMSF aligns with your retirement objectives and provide professional support every step of the way.
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