You might be wondering, what is a self managed super fund?
A self managed super fund is an alternative investment strategy for your retirement. This type of fund is managed and run by the trustees, yourself instead of a super fund.
It allows you to choose how your money is invested in property, shares and other methods. You can in fact borrow money from your superannuation fund to purchase an investment property that can be rented out before you retire.
A self managed fund does require more management and compliance with taxes and legal elements, so it’s recommended that you speak with a financial advisor to get help in setting up your fund.
You will need to carefully consider what level of income you will want and require when you retire and choose investments that will provide this to you.
You can have up to four (4) trustees managing the fund. All four are responsible for the funds management, taxation obligations and legal aspects.
What are the benefits of an SMSF?
There are a number of benefits in having a SMSF and how you choose to invest for the future.
The following will detail considerations as part of your SMSF:
Control Of The Investments
As mentioned, you can control how and where your money is invested. There is the option to invest in property as well as shares and fixed interest portfolios. You have the option to borrow from the fund to invest in these things.
Flexibility and Speed To Change
As you have control of the fund, you can quickly sell or modify your investments. If the share market is showing signs of change, a loss, you can sell and move those funds before a loss.
Ability to Pool Your Super
You can collectively pool your super with other trustees. This may be your husband or wife or anyone else you have as a trustee. This can significantly increase the pool of funds you have.
Estate and Insurance Planning
If the deed allows it, you can make binding death benefit nominations that will not expire or need to be updated. You can then control how the benefits are paid out and to whom.
The current tax rate on earnings within a superannuation fund is 15%, however, if the income is produced via assets supporting the income stream such as a pension payment, there will be no tax payable on that income.
Investing in Property
As previously mentioned, you have the option to borrow against the fund to buy and invest in property. This can be residential and or commercial property that is leased out to others who are unrelated to you.
Property is a good long term investment strategy that has less risk than shares and cash. We can assist you with exploring the option in property as part of your SMSF.
As noted, as a trustee, you will be responsible for managing the fund and all related aspects of the SMSF. We recommend that you seek advice across taxation, compliance and related legal elements.
Contact us today to buy property with SMSF.