Key Benefits That Make Self-Managed Super Funds Popular Choices
Life can be very unpredictable in different ways, and at times, things may not go as planned. The times that people are currently living are very uncertain, especially in the financial sense; hence, unless you are extremely financially stable, that’s another critical aspect that most of us need to constantly worry about.
A vast majority of people have retirement as an end goal, which sounds ideal at first glance because you’ll no longer need to work. On the other hand, it also means that you won’t have any other source of income, at least not in a conventional sense.
And that’s exactly why people are being introduced to self-managed super funds (short for SMSF), which enable you to save a certain amount of cash for retirement, and, simultaneously, manage that amount the way you want to.
Even though all of this sounds pretty easy and simple, it would still be wise to get familiar with how it works (if you’re interested in having one), and if that’s what you’d like to do next, then just pay attention to everything that will be written below.
An Excellent Investment Alternative
SMSFs, in general, provide a myriad of different investment alternatives in comparison to other similar funds. Accredited self-managed super fund enthusiasts at smsfaustralia.com.au would like to highlight the fact that those who have an SMSF are allowed to invest in basically anything as long as they do not break any rules during the process. Besides that, it can borrow money to acquire a particular asset, which does sound great, but it’s worth mentioning that there are lots of banks that have completely eliminated the SMSF lending product from the market.
In addition, self-managed super funds are generally very appealing to the smaller entrepreneurs or those who are self-employed, since a commercial property can be bought by the SMSF. Once purchased, their company can rent it, as long as it sticks to the current market rates.
Aside from properties, things like artwork, physical gold, and others are allowed within the self-managed super funds, too! However, bear in mind that there are certain rigorous criteria that must be met if you want to adhere to the law.
You Have Very Good Control
Those who are members of the SMSFs have much better control over how their super is invested while they are still working, and how they are going to be paid once they retire.
So, what does it mean? In other words, they can invest in various products that are available to public super funds, and even in those that aren’t. For instance, SMSFs can invest directly in properties, instead of being restricted to property funds, which is usually the case with a lot of public funds.
You Do Not Need To Be A Sole Investor
Now, here’s another benefit in terms of investing that many people who have self-managed super funds aren’t aware of. Namely, although there’s an option for you to be a sole investor, an SMSF allows you to join forces with other members of this fund. This is an advantage that should surely be taken into consideration, in particular:
- It doesn’t matter whether there’s one member account or more; it’s not going to further complicate the investment management of your fund. For instance, there are lots of people (approaching retirement) who have several super accounts. Some of them have started taking cash out (also known as starting their pension), but they also sometimes make contributions. However, something like this must occur in two different super accounts. When it comes to public funds, each one is invested separately, which doesn’t need to be the case with the self-managed super funds. It doesn’t focus on the number of super accounts, meaning that all of them can be invested together.
- There’s only one group of investments that’s supposed to be managed instead of two or more. This means that a couple’s wealth is combined if they decide to invest in things that require a substantial amount of money, such as real estate.
- Pension payments can be made from all the cash coming into the fund’s bank account, regardless of its origin. This doesn’t refer solely to the contributions but to all the income from every single investment, as well. That’s drastically different from a public fund in which the pension account only gets cash flow from the assets that are supporting the pension.
Even though to some of you managing the self-managed super funds may seem like something that’s overly complicated, as you can see, it comes with numerous benefits, which should stimulate you to consider this option in the future.
