A Guide to Self-Managed Super Funds (SMSFs)
If you’re looking for a more flexible and tax-effective way to manage your superannuation, you may want to consider setting up a self-managed super fund (SMSF). SMSFs offer a range of benefits over other types of super funds, including greater control over your investments and lower fees. In this guide, we will outline the basics of SMSFs and how you can set one up yourself by engaging a professional SMSF advisor.
What are self-managed super funds (SMSFs)?
A SMSF is a type of super fund that is managed by its members, who are also trustees of the fund. This means that you have complete control over how your super is invested and can tailor your investment strategy to suit your specific needs and goals. SMSFs are subject to the same rules and regulations as other types of super funds, but the key difference is that you are responsible for managing the fund yourself.
As a trustee of your SMSF, you will need to comply with a range of duties and responsibilities, including ensuring that the fund is operated for the sole purpose of providing retirement benefits for its members. You will also need to develop and implement an investment strategy that is consistent with the fund’s objectives, and take steps to ensure that the fund’s assets are protected from loss or theft.
The benefits of SMSFs
While SMSFs can be more complex to manage than other types of super funds, they offer a number of advantages that make them an attractive option for many people. These advantages include:
- greater control over your investment decisions
- the ability to tailor your investment strategy to suit your specific needs and goals
- lower fees than many other types of super funds
If you’re considering setting up a SMSF, it’s important that you understand the responsibilities involved and seek professional advice to ensure that it is the right decision for you.
How to set up an SMSF
The first step in setting up a SMSF is to appoint a trustee. The trustee can be an individual or a corporate entity, and must be over 18 years of age. Once you have appointed a trustee, you will need to register the fund with the Australian Taxation Office (ATO).
Next, you will need to develop an investment strategy for the fund. This strategy should be consistent with the SMSF’s objectives and take into account the needs of all members. Once the strategy has been developed, you can start investing in a range of assets (which we’ll explore in a moment).
It’s important to remember that as a trustee of a SMSF, you have a legal responsibility to act in the best interests of all members. This means that you need to carefully consider all investment decisions and ensure that they are made in line with the fund’s objectives.
What can you invest in with an SMSF?
The type of investments that you can make with a SMSF will depend on the fund’s investment strategy. However, some of the most common types of investments made by SMSFs include:
You can also choose to invest in a range of other assets, including bonds, managed funds and international shares. It’s important to remember that all investments made by a SMSF must be in line with the fund’s investment strategy.
How to manage your SMSF
Once you have set up your SMSF and started investing, you will need to ensure that the fund is managed effectively. This includes keeping accurate records, preparing financial statements and lodgement returns, and ensuring that the fund complies with all relevant laws and regulations.
You will also need to monitor the performance of your investments and make changes to the investment strategy if necessary. This is important to ensure that the SMSF continues to meet its objectives and provide benefits for all members.
There you have it – a beginner’s guide to self-managed super funds. SMSFs can offer a number of advantages, as long as you have the right professional guidance from day one. Get started today!