Self managed super funds give you better control over organising your retirement funds to yield maximum benefit. They are managed by you as the trustee allowing you to control where you invest your retirement funds.
Benefits of SMSF
- The main advantage of owning a self-managed super fund or SMSF is the control to invest in a broad selection of assets such as direct shares, high yielding cash accounts and property investments. SMSFs can borrow money from a bank to make investments however there are specific rules that the fund needs to follow while borrowing. This sort of borrowing is also known as limited recourse borrowing, and with this type of loan you will be able to purchase an asset such as an investment property. It does mean however that you are buying an asset of much greater value than you have available in your fund getting capital growth at a much higher rate.
- If you are a business owner, you can make use of SMSF’s to invest in purchasing business property and then rent back that property for commercial purposes to your business. Since SMSF can borrow, the limited recourse borrowing can be used to obtain a business property. In short this lets you own your business real property in the superannuation fund, supporting funding and cash flow in your own businesses.
- Super funds in general present you with the advantage to cut down income tax on investment income and capital gains. All superannuation earnings are taxed at only 15% and all capital gains your fund makes are taxed at a flat 10%. In pension phase this tax goes down to 0%. That’s right no tax at all. Compare that with the tax you pay on your personal income and you see why investing through your SMSF makes sense.
- SMSFs can have up to four members in the fund allowing pooling of more resources from others with similar financial objectives. This can allow you to reach your goals sooner than you otherwise would on your own.
Before you open up a self managed super fund, you need to get professional advice and you will have to carefully analyse the SMSF rules to find out if it is the right thing for you.
For more information or to talk to one of our expert, friendly advisers about your SMSF options, please call us on 1800 979 888.
