A Deep Insight of SMSF Super Fund and Its Exclusive Perks!

by Vicky Mamoria Website Promoter

Self-managed super funds prove to be a stupefying retirement saving scheme. This article offers you a peep into SMSF and its crucial aspects.

Super funds nowadays are gaining a huge popularity, and it is not without a reason. These are among the most tax-effective ways of saving for your retirement. Besides, your superannuation saving is likely to be your biggest asset post-retirement and pretty much decides your retirement lifestyle.

Needless to say, you need to be very smart and deliberate while taking decisions on the super fund and associated aspects. Today, we have various types of super funds to invest in. While all act on nearly same financial regulations, there returns and benefits differ a lot, which make it tricky to decide which one is perfect for you. Generally, in Australia, we enjoy this right to decide where our current employer’s compulsory superannuation guarantee (SG) contribution should be invested. But this task is not as easy as it sounds. Various types of complex accounting, auditing and investment might leave you frustrated So a much-recommended step is to contact a super fund service provider, who can help you achieve your retirement goals.

First, let’s understand some popular types of super funds.

Accumulation funds – Benefits under this fund largely depends upon the money put in by you and your employers. It also includes the benefits you reap from your investments’ performances. You have all the rights to take the risks to maximize your returns on the investments.

Self-managed super funds (SMSFs) – As you can comprehend by the name itself, SMSF is set up to manage your fund yourself. You become the trustee of the fund, which allows you to have control over your investments and returns. But it is important to note that your fund must abide by all superannuation laws and will be regulated by Australian Tax Office. Superannuation fund SMSF is considered among the best ways of investment savings, especially when you opt it under the supervision of a professional SMSF Advisor.

Defined benefit funds- Under this type of fun, your superannuation benefits are decided by fund's regulations, your earnings at the time of your retirement, and your length of service.

Why SMSFs are such a big hit as a retirement saving scheme with Australian investors. Key reasons are –

· It offers an array of investment options, so you can make great returns by the time you retire.

· You as a trustee have a good level of control over your wealth. You’re entitled to make active decisions on your investments and can build strategies regarding the beneficiaries.

· Another great thing about setting up a self managed super fund structure is, it has a great transparency over the funds in your account, investments you make and the returns you gain.

But remember, managing an SMSF trust is not as easy as it may sound. It takes a lot of time, commitment and expertise to manage it successfully. It involves many tricky decisions regarding establishing and managing an SMSF. Other things you must know before opting for SMSF are-

· There are legal and administrative responsibilities you as a trustee need to abide by.

· For a cost-effective plan, you generally require a starting balance of at least $300,000. Other than that, there are establishment cost, and annual tax return and audit, ATO fees, and investment fees.

· Only an Australian resident can establish and manage an SMSF. If you’re likely to live overseas in coming years (one to two years or more), you better seek professional advice.

· Along with benefits and perks, the super fund might yield some complaints and disputes. You are expected to be aware of dispute resolution mechanisms.