Thinking about self-managed super

There’s been much buzz around self-managed super funds, but what are they all about? Many people are weighing up their options and now more than ever are considering taking control of the biggest asset they have (besides their home).

Here we discover the key factors that are making self-managed super fund so attractive.

Reduce Your Super Fees

When it comes down to it, nobody likes paying for anything when they don’t have to. Many corporate, industry or retail super funds charge their fees based on how much you have in your superannuation fund and are calculated as a percentage, not a flat fee. Therefore, as your super grows, you’ll be charged more!

An SMSF does away with all of the percentage calculations and allows you to pay a flat fee, which doesn’t increase as your fund gets bigger. So when you add it up, think of the money that you could save with a self-managed superannuation fund on fees alone.

Maximise Your Returns

Aside from the money you’ll be saving on fees a SMSF will allow you to maximise your returns by splitting up where you invest your money. You can invest in shares, managed funds, residential properties, cash and fixed interest in whichever proportions you think are appropriate for you. By having this control, when a market dips you can act upon this by shifting your assets elsewhere.

With a company, industry or retail run super fund, you are exposed to their particular strategy which limits your opportunity for returns.

Reducing Your Tax with Salary Sacrifice

Salary sacrifice is simply an agreement you make with your employer to pay part of your pre-tax income into your self-managed superannuation fund.

  • The raw dollar advantage in choosing to salary sacrifice is that the contributions put into your SMSF are not taxed in your name but your SMSF at 15%.
  • So, if your personal tax rate is more than 15%, there is a tax benefit in salary sacrificing. If you sit at the top tax rate of 46.50% you can save up to 31.50% on each dollar you salary sacrifice into your SMSF.

By doing this, you can add thousands of dollars in tax benefits annually. Click here !

Claiming Benefits – Claim Co-Contribution

The Australian government has set up a scheme which matches dollar for dollar the additional contributions one makes to their superannuation. Although the government’s contributions are capped at a certain amount, there is still great opportunity to add to your SMSF balance. Many reputable companies who assist with setting up a self-managed superannuation fund will have all the relevant paper work for you to apply for this scheme.

Finally, be advised that you cannot access SMSF money for purposes other than your retirement needs. SMSF funds are bound by the sole purpose test, which says that superannuation investments are meant only to provide retirement benefits for the trustee(s).

Conclusion

While it is our duty to secure our financial future through prudence and alertness, it pays to remember the other durable values of life. As the great philosopher Bertrand Russell said, “The most valuable things in life are not measured in monetary terms. The really important things are not houses and lands, stocks and bonds, automobiles and real state, but friendships, trust, confidence, empathy, mercy, love and faith.”

This explains why the reason why the government gives a tax break for the income from self-managed super. Visit this site for more information : http://www.smsfselfmanagedsuperfund.com.au

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