For people who are committed, a SMSF can be a very powerful way to save for the retirement. The self managed superfunds sector is the largest segment in Australia and its growth over the past years has been astounding. SMSF has become a very popular retirement fund because it offers greater control over investment decisions, flexibility in estate and tax planning and more. The basic requirement for setting a self superannuation fund is that it cannot have more than four members and all members are also trustees. Self managed superfunds are not designed and suitable for everyone. Their suitability depends on the money available for investment and the abilities and skills of the members. Below are some of the many advantages of self superannuation fund.
Control – Self managed superfunds give you complete control over fund’s investments. However, you must maintain and develop an appropriate investment strategy and objective.
Flexibility – Having complete control over your self superannuation fund means you are able to invest in a range of assets including direct property, bank deposits, pooled investment trusts, shares and managed funds. You are also able to modify or switch the investments as you see fit.
Control Over Operation And Design – Because you are also the trustee of your self superannuation fund, you have complete control over the fund and its operations. .
The SMSF Can Still Be Valid Even After Death – The self managed superfunds can provide benefits to you, your wife and even your kids. This means that the superannuation fund can continue after your death which allows many estate planning benefits.
Cost Savings – In most cases, the cost of managing a self superannuation fund doesn’t increase as your investments grows. Because of this, the better your account balance is, the more cost effective the super fund is. Also, SMSF doesn’t have the same economical regulation and doesn’t have to be licensed.
Tax Concessions – The self managed superfunds can also provide tax concessions like the lump or deferral sum tax in the pension phase. There are also some opportunities to use credits from dividends to reduce the 15 percent tax rate.
Advantages For Small Business – Usually, many owners of small businesses are able to utilize super rules which permit self superannuation funds to invest in business real property either directly or through warrant trust or non geared unit trust and lease back the property to a related party.