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No matter how young you are, financial freedom in retirement should be one of your goals. It’s wise to start as early as possible to prepare and save for your retirement as this has a big impact on your welfare as a retiree.

Exploring your options as early as you can will mean that you have plenty of time to ensure the best outcome. The choices you make will depend on the level of responsibility you’re willing to take on, but one thing is for sure - if you want more control over your retirement investments, you should set up a self-managed superannuation fund (SMSF).

What is a self-manages super fund?

A SMSF is an investment portfolio or superannuation trust structure that allows you to take the DIY approach to saving for your retirement. The main difference between a SMSF and other super funds is that SMSF members are also the trustees of the fund; they have the freedom to run it in the manner they deem to be most beneficial to them.

If a SMSF appeals to you, you can set one up for yourself, making sure you adhere to the strict regulations of the Australian Taxation Office. You may do it on your own or with one to three other members.

What benefits do you gain from a SMSF?

A SMSF gives you greater control and better flexibility over your investments. You and your fellow trustees get to decide what to invest in and how to operate the fund.

The cost to operate the fund can be another benefit, depending on the size of the fund. Account-keeping fees are fixed for a SMSP instead of being percentage-based. A SMSF also has the advantage of being tax efficient with the option of making longer-term investments that allow you to negotiate lower rates.

You also have the option to leverage your SMSF to invest in property, which offers an easy way to diversify your investments. You can also employ strategies that allow you to hold commercial premises in super if you own a business.

The SMSF is effectively a trust that can serve as a family wealth mechanism, which you can pass on to succeeding generations in your family.

How do you get a SMSF set up properly?

Running your own fund can be a complex process. The best way to ensure that you’re doing it correctly is to engage the services of a super fund accountant. Assistance from such a specialist ensures you meet all pertinent legal obligations and that your fund keeps within its purpose of providing you with financial security when you retire. You get guidance and analysis without ever relinquishing control.

How do you manage your SMSF on an ongoing basis?

To make sure that your SMSF is consistently managed and that your fund is essentially doing what it is supposed to do, use the services of a super fund accountant. A super fund accountant will regularly monitor the fund and ensure you’re keeping up with costs and fees and that you are not breaking any rules.

Is an SMSF right for me?

An SMSF isn’t necessarily the best option for everybody. It’s best to consult an expert before deciding to set one up. You should consider whether you have the time and skills necessary to make it work for you and whether it’s the most cost-effective option.

What are the costs of a SMSF?

For individual trustees, the upfront cost should be around $800 to $1,000. For corporate trustees, it’s no more than $2,000. Ongoing fees include account keeping fees, audit fees, and an ASIC fee (if you’re a corporate trustee). Simple funds shouldn’t incur costs of more than $2,000 per year. More complex funds cost around $2,500 to $3,000 a year.

How do you build wealth with a SMSF?

A SMSF can be an integral part of your overall wealth-building strategy as it can be used for estate planning, for making additional investments, and for ASIC protection, etc.

A self-managed super fund is an effective financial vehicle to fund your retirement. If you would like to set up your own SMSF, contact our super fund accountant at (03) 9587 9747 to find out more.

If you need a trusted advisor, who not only has the expertise but also the heart, curiosity and tenacity to help you succeed, then talk with us.