Self-managed super funds are becoming increasingly more common due to the fact that they are a very attractive choice for many retired workers in Australia. As with all things, there are several pros and cons of opting to go for one of these fund structures.
A self-managed super fund structure is a superannuation scheme that provides a remuneration structure for its members, who are retired workers. Up to four members can be involved in one self-managed super fund, although most of them are actually set up by couples. What makes them so popular though?
The below facts will easily be able to provide you with some answers:
• Control Over Resources – The main advantage of going for a self-managed super fund (or SMSF in short) is that you have quite a great deal of control over what your fund is going to look like. You can easily ascertain whether the trust deed will provide enough remuneration for both you and your fellow trustee members to be able to lead their lives with relative ease, with enough to pay for expenses such as rent through your pensions, etc.
• Investments Possibilities – Another very good reason to opt for SMSFs is that you can a very high amount of flexibility in regards to what type of investments you can do. It is very convenient, especially if you want to switch to a different type of investment later on after your retirement. A proper investment strategy can go a long way in providing you with an effective path to benefit from various incentives and some tax advantages with the help of a tax accountant.
• Ability to sell or Purchase Assets – Unlike other super fund schemes out there, SMSFs allow the trust members to easily purchase or sell assets. This is not only limited to the cheapest lands available, as members can easily pool up larger sums of money to purchase even the more expensive properties out there.
As you can, SMSFs have quite some distinct advantages that should be attractive to many different people out looking for super funding schemes. Nevertheless, you should also know that there are a few inherent disadvantages as well:
• Time-Consuming – Although most SMSFs do get the help of external firms and SMSF accountants Alexandria, you should always keep in mind that the very operation of such a fund is going to take a lot of your valuable time, since you will be in charge of a lot of different tasks at the same time, including ensuring that you meet the administration standards, research of potential investment plans and their management.
• Costs – Starting up an SMSF is not always an easy task, especially for those who are low on funds and assets. Operating the fund is also going to be a tad on the expensive side, even though these schemes have recently been getting cheaper.
• High Risk – Remember that not all investments are guaranteed to be successful ventures. You will inherently have to bear some risks when you commit to any future investment plan.