Superannuation, more known as super, is a saving plan that offers long-term benefits. This will provide you with a source of income once you retire. Super, however, is not an actual investment. It is a financial structure for holding investment assets. Super funds offer different investment options that include cash, property, and fixed interest.
Managing your super funds gives you greater control of your financial future. If you haven’t thought about self-managing your super funds, here are some of the things that may influence your decision:
With self-managed super funds or SMSF, you have complete control over your investments. You just have to develop and maintain an appropriate investment strategy. Control of your fund means you can invest in different assets that include commercial property, bank deposits, and shares. You’re also able to implement changes in your investments, if needed.
With great control comes great responsibility. As a trustee, all decisions and responsibilities that come with managing the fund is on your shoulders. Additionally, you need to comply with certain rules and deadlines. You’re also accountable for making sure the fund meets the deadlines of all legislative requirements. Failing to do this can lead to a penalty.
Your fund can continue even after your passing. This means you are not the only one who may benefit from it, but your spouse and your children as well.
Fixed cost and tax concessions
Your fund gives you tax concessions such as the suspension of lump sum tax in the pension period. You also have the opportunity to use credits from franked dividends to lower the 15% rate. As for the cost, it remains as it is even as your super investment grows. The higher the account balance, the more economical the SMSF is.
SMSF is not for everyone so it’s best to think things through before setting one up. Don’t rush yourself. As a major financial decision, setting up an SMSF requires time, knowledge, and skills.