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Emma R.
Emma R.
Gordon, NSW

What are the advantages of a self managed superannuation fund and is it easy to do?

6 years ago


Smsf can be used for shares, art, cars, collectables, property etc I work with some smsf accountants and it makes sense if your balance is high however if you have a low balance the fees are generally percentile based in retail or industry funds so people stay. If you want to discuss further I can put you onto someone who has the right accreditations and experience.

Sorry one more thing you don't need $150,000 balance as stated, if however your lending you need costs to buy the property and 20% to 30% deposit.

Hi Emma,

The advantages of a Self Managed Super Fund (SMSF) is that you manage where your super goes. As mentioned above you can invest in a variety of things. This can be time consuming as its about generating a balance of property, shares, art etc.

Another advantage is that it is a tool to expand on your property portfolio without you having to tip in extra as your super fund makes the home loan repayments. (You may, however, need to tip in extra to superannuation to ensure the repayments are met)

There is a bit of paper work to do to set this up but an accountant / financial planner does all this for you. As there are SMSF trusts and then bare trusts if you wanted to lend against the SMSF.

SMSF is not for everyone. The costs per annum can be high and it may not be as effective as other strategies. That's where getting advice from a financial planner can help you.

Whilst some lenders only required enough in your SMSF to cover 20-30% of a purchase price plus purchase costs such as stamp duty etc having a buffer in there is better for you to cover for costs the property may incur as well as any vacancy for rent.

It's great to research the pros and cons.
Hope this has helped!

Nicole :)

Good morning Emma.
Having had my own SMSF now for 20 years I can tell you that doing so is not for everyone.
Without being negative I want to point out that there is a lot of responsibility imposed by the law on trustees of a SMSF.
Breaches cause fines and other penalties.
Managing your own SMSF can be very labour intensive.
Having said that there are people who can help you with that management..
Whilst there is no lower $ limit, it is not really practical to have a SMSF with assets below a minimum of $150k
It truly is a case of more is better.
I suggest you speak to people with hands on experience before taking the plunge.
Good luck.

Wow that's a big question. For details you need to speak to a licensed advisor but for broad general why do it answer. Because you think you can invest better than a professional investor or you want to buy your business a premises are the two main reasons most people do it who don't have millions in super. If you think you can invest better ask yourself do I have the time to do it?


Advantages are:

You have complete control over the fund's investments, however, you must develop and maintain an appropriate investment objective and strategy.

Control of your fund means you're able to invest in a range of assets incluidng bank deposits, direct property, shares, managed funds and pooled investment trusts. You're also able to switch or modify those investments as you see fit.

Control Over Design and Operation
As members are generally the trustees of the fund, you have a degree of control over the rules of the fund and how it operates. For example, the fund can run both accumulation and pension phases. Specific rules about the payment of benefits can also be introduced, for example, restricting when a child can commute a pension.

The Fund Can Go on After Your Death
The fund can provide benefits to you, your spouse and even your children. This means that the fund can continue after your death which can allow for many estate planning benefits.

Cost Savings
Generally, the cost of managing a self-managed superannuation fund does not increase as your super investment grows. So the greater the account balance, the more cost effective the SMSF is. Also, SMSF's do not have the same prudential regulation and do not have to be licensed.

Tax Concessions
The fund can provide tax concessions such as the deferral of lump sum tax in the pension phase. There are also opportunities to use credits from franked dividends to reduce the 15% tax rate.

Advantages for Small Business
Typically many small business owners are able to utilise super rules which permit SMSF's to invest in business real property either directly or through non geared unit trusts or warrant trusts and lease back the property to a related party.

Setting up can be easy if you appoint the right professional help. It needs to be structured correctly to ensure eligibility for tax concessions, receive contributions and easy to administer.

Kind regards
Jennifer Bachir
Key Finance and Investments

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