Did you know that self-managed super funds (SMSFs) now control over $876 billion in assets, representing nearly 25% of all superannuation assets in Australia?
This stat shows us that Self-Managed Super Funds (SMSFs) are becoming increasingly popular among Australians looking to control their retirement savings.
But why are so many people choosing SMSFs over traditional super funds?
This blog will highlight 10 major benefits of choosing an SMSF, giving you a clear understanding of why it may be the right choice for your retirement planning.
Full Control Over Investments
One of the primary benefits of an SMSF is the ability to have full control over your investment choices. Unlike retail or industry super funds, SMSF trustees can invest in a wide range of assets, including:
- Shares
- Property
- Managed funds
- Collectables
This flexibility allows you to tailor your investment strategy to your specific needs and risk tolerance.
Investment Flexibility
Unlike industry or retail super funds, SMSFs provide flexibility in choosing specific assets like direct property, unlisted shares, or managed investments. This enables members to respond quickly to market changes or emerging opportunities, helping optimise their retirement savings.
Cost-Effectiveness For Larger Balances
While SMSFs can be more expensive to run for smaller balances, they become cost-effective for larger funds, generally over $200,000. This is because the cost of managing an SMSF does not necessarily increase in proportion to the fund’s size.
With larger balances, SMSF members can spread fixed administration and auditing costs over more significant assets.
Tax Advantages
SMSFs can offer significant tax benefits when structured correctly. In the accumulation phase, earnings are taxed at a maximum of 15%, while in the pension phase, earnings can be tax-free. A SMSF tax return accountant can help you navigate these complexities and maximise your tax efficiency.
Consolidation Of Family Super Accounts
SMSFs allow up to six members to consolidate their superannuation accounts into a single fund. This helps to streamline the management of super funds for families and also reduces overall administration fees. By pooling funds, family members can also increase the fund’s overall investment power.
Estate Planning Benefits
SMSFs provide greater flexibility in estate planning. You can implement strategies such as binding death benefit nominations to ensure your superannuation assets are distributed according to your wishes after your passing.
Ability To Invest In Property
The most significant advantage of SMSFs is the direct investment available in property, whether residential or commercial. You can also lease commercial properties to your business for a very unique investment opportunity as you are also going to benefit your business operations .
Traditional super funds do not allow you to invest directly in property, making this one of the unique features of SMSFs.
Asset Protection
An SMSF affords strong asset protection, particularly for business persons or professionals likely to be sued. By placing your super into an SMSF, your retirement savings are not available to creditors in the event of a business winding up or litigation against you. That can give much peace of mind than the other types of investment structures.
Tax Benefits In Pension Phase
In the pension phase, the SMSF becomes 100% tax-free. There will be no tax levied on investment earnings or capital gains.
This is why the SMSF is very attractive to close retirement people; you can get the maximum retirement income without having anything to be deducted through taxes.
Having a specialist SMSF accountant in Melbourne will see that you are compliant with those tax breaks.
Professional Oversight
While you maintain control over your SMSF, you do not have to do everything. SMSF auditors in Melbourne and others can assist to ensure your fund is done according to the rules but also in an efficient manner.
Such an SMSF will, therefore, benefit any individual seeking flexibility and control in retirement planning. However, you must first understand that managing an SMSF is a massive responsibility and needs time, knowledge, and a strong commitment.
Want To Take Control Of Your Super With An SMSF?
Do you wish to enjoy the benefits of having more control and flexibility over your retirement funds? Now is the time to think about setting up your SMSF. Here at LTE Tax, our experienced SMSF accountants will walk you through each step – from setting up to managing it going forward.
Whether it’s just preparing business tax returns, auditing, or just general compliance, our long experience in this sector has allowed us to ensure that your SMSF operates with as little fuss as possible. Let us hear from you today and discuss your case to start the optimisation process of your retirement plan with an SMSF.
