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Self-Managed Super Funds: What you need to know

Happy Middle Aged Couple

We all know how important your superannuation fund is. It’s an essential part of your financial portfolio, but do we really understand it and all it has to offer?

Today we’re going to explore Self-Managed Super Funds, or SMSFs.  They’re not nearly as confusing as they may seem — we just need to take the time to understand how to make them work for you. Let’s get started:

What is the difference between an SMSF and other types of funds?

An SMSF is of course, self-managed, so this means the members of the SMSF are also the trustees and run it solely for their own benefit.  Yes, you’re in charge. You decide what to invest in, you decide how much and when to do it. That sounds great, but with that freedom also comes great responsibility.

One of the major draws for people selecting an SMSF is the ability to purchase items such as property or collectibles as investments. Remember though, these items must meet the ‘sole purpose test’ meaning their sole purpose must be to provide retirement benefits to members of your SMSF.

Whilst an SMSF is great if you’re interested in having complete control of your finances or investing in antique cars, it also requires a great understanding of superannuation and taxation laws. Let’s be honest, this is not necessarily an easy feat, which is why most individuals who decide on an SMSF choose a financial advisor to assist them. It’s better to be safe than to suffer severe penalties or tax consequences.

What you should know about SMSFs

If you’re interested in gaining outside help to manage your SMSF here are a few things you should ask about:

  • Preparing the SMSF annual return
  • Valuations of assets
  • Actuarial Certificates for SMSF’s payment income streams aka pensions
  • Legal fees
  • Fund administration
  • Insurance
  • Financial Advice

It may sound fun to be in charge of your own super, but you’ll need to develop your own investment strategy and constantly review it. Remember, you work hard for your money, so you need to do everything you can to make sure it works hard for you.

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