Self-managed superannuation funds (SMSFs) can offer you greater control over your retirement investments.

However, while SMSFs can afford you much greater freedom in how your investments are managed, they can be complex to manage. If you wish to pursue a retirement strategy based on an SMSF, you should get expert advice first.

Let’s review what SMSFs are and how they work.

What Is An SMSF?

SMSFs are super funds that individuals manage themselves instead of relying on traditional retail or industry superannuation fund managers. Although SMSFs are regulated by the Australian Taxation Office (ATO), those who choose them have much greater control over their retirement savings.

SMSFs can have one to four members, all of whom must also be trustees of the fund and are responsible for making investment decisions and ensuring compliance with the Superannuation Industry (Supervision) Act of 1993.

There are two types of trustee structures for SMSFs:

In individual trustees, each individual member is a trustee, and the fund’s assets must be held in the name of all trustees.

In corporate trustees, a company acts as the trustee, and each member is a director of that company.

How Do SMSFs Work?

SMSFs work in much the same way that regular super funds work, except that they are privately managed.

This means that the trustees have significant flexibility in terms of the kinds of investments they want to make, as long as they comply with the sole purpose test, which means they must be made solely to provide retirement benefits.

For example, SMSFs can invest in shares, bonds, managed funds, residential or commercial property, term deposits or collectibles.

SMSF trustees also need to create and follow an investment strategy that aligns with the fund’s goals and risk profile. While SMSFs benefit from the same tax concessions as other super funds, with earnings generally taxed at 15% in the accumulation phase and potentially 0% in retirement, running an SMSF involves a few additional costs.

These additional costs include things like setup and administration fees, accounting and auditing expenses and investment and legal advice fees.

However, you need not spend a fortune on these things if you have Infuse Advisors & Accountants on your side.

If you want professional advice and guidance on how to manage self-managed superannuation funds (SMSFs), then book a free chat with one of our financial experts at Infuse Advisors & Accountants today.