How to Put Your Super Fund in a Self-Managed Super Fund
A Self-Managed Super Fund (SMSF) is a type of super fund that is self-administered by the members. The SMSF allows members to save, invest and borrow money on their terms.
A Self-Managed Super Fund is like a regular super fund, but without the need for an external auditor. It can be run by the members, and it’s often called a DIY super fund.
A Self-Managed Super Fund has some key differences from other types of super funds:
*It doesn’t have to be audited by an external auditor;
*It can borrow money against its assets;
*It cannot make compulsory contributions or charge fees for its services;
*The members can choose what investments they want in their SMSF; and
*The assets can be invested in any business or asset class that the members wish (except real estate).
What Are the Main Benefits of Using a Self-Managed Super Fund?
Self-Managed Super Funds (SMSFs) offer several benefits to individuals looking to manage their retirement savings. Here are some of the main benefits of using an SMSF:
- Greater control: SMSFs allow individuals to have more control over their retirement savings and investments, as they are responsible for making investment decisions and managing the fund.
- Increased flexibility: SMSFs have the flexibility to invest in a wider range of assets and strategies, including residential property, shares, fixed-income investments, and alternative investments. This allows individuals to tailor their investments to their unique investment goals and risk tolerance.
- Lower costs: SMSFs can have lower fees compared to other types of superannuation funds, as members manage the fund themselves rather than paying for a professional trustee or fund manager.
- Potential for higher returns: By making investment decisions that are tailored to their own investment goals and risk tolerance, SMSFs have the potential to provide higher returns than other types of superannuation funds.
- Estate planning: SMSFs can also provide benefits for estate planning, as members can direct their superannuation benefits to a specific beneficiary in the event of their death.
It’s important to note that while SMSFs come with several benefits, they also come with additional responsibilities, including compliance with all relevant laws and regulations and the requirement for members to have a good understanding of investment principles and strategies. As such, it is recommended that individuals seek professional advice from a financial advisor or accountant before establishing an SMSF.
How to Set Up Your First Self-Managed Super Fund?
Setting up a Self-Managed Super Fund (SMSF) can be a complex process, but it can also be a rewarding way to take control of your retirement savings. Here are the steps you need to follow to set up your first SMSF:
- Determine if an SMSF is right for you: Consider your investment goals, risk tolerance, and other factors to determine if an SMSF is a right choice for you.
- Choose a trustee structure: Decide whether you want to be the sole trustee of your SMSF or have multiple trustees.
- Establish the SMSF: This involves setting up the legal structure of the SMSF, registering the fund with the Australian Taxation Office (ATO), and obtaining an Australian Business Number (ABN) and Tax File Number (TFN) for the fund.
- Prepare a trust deed: A trust deed outlines the rules and regulations that will govern the SMSF. You can obtain a standard trust deed from a professional services provider or have one customized to your specific needs.
- Fund the SMSF: You can transfer existing superannuation benefits into your SMSF or make contributions to the fund.
- Invest the SMSF assets: Once your SMSF has been established and funded, you can start making investment decisions and managing the fund.
- Comply with laws and regulations: SMSFs are subject to a range of laws and regulations, including the Superannuation Industry (Supervision) Act 1993, the Corporations Act 2001, and the Income Tax Assessment Act 1997. You must ensure that your SMSF is managed by all relevant laws and regulations.
It is recommended that individuals seeking for an SMSF setup seek professional advice from a financial advisor, accountant, or legal expert to ensure that the process is completed correctly and by all relevant laws and regulations.