Contrasting Self-Managed Super Funds and Industry/Retail Funds

Superannuation is a mandatory but critical way of helping you save for retirement, but there are different ways to handle these savings. You can either manage them yourself through self-managed super funds (SMSFs), or you can subscribe to professionally managed industry/retail funds.

Let’s take a closer look at the differences.

SMSFs

If you want complete control over your investments and don’t mind managing the administrative duties associated with financial management, then you might be a candidate for an SMSF.

Although the legal and administrative complexities and costs associated with managing your own SMSF are onerous, it can be rewarding to be able to manage the fund according to your personal financial goals.

With SMSFs, you are free to direct your investments to a broader range of assets than what might be offered in industry/retail funds. On the downside, as an SMSF trustee, you are personally legally responsible for complying with superannuation laws, managing tax obligations, preparing financial reports and undergoing annual audits.

Finally, if you have a small super balance, it can be quite a bit more expensive than industry/retail funds because of the fixed costs associated with setting it up. However, if you have a large super balance, this fixed cost can work out to be more cost-effective.

Industry/Retail Funds

The key difference between SMSFs and industry/retail funds is that the latter are managed by professional fund managers. This means that all investment decisions, regulatory compliance and administration matters are handled by them.

This means that you don’t have any direct control over your investments, although you usually are able to choose from a range of investment options.

The major obvious benefit of these types of super funds is that you don’t have to worry about the costs and complexities of managing your investments. This is often preferable if you lack confidence in your financial abilities.

In general, industry/retail superannuation funds are better suited for those with low super balances, as the costs for joining are low.

Self-managed superannuation funds (SMSFs) can give you superior control over your retirement investments. If you need expert financial advice, speak to one of our seasoned experts at Infuse Advisors & Accountants today.