What is a Self Managed Superannuation Fund (SMSF)?

A self-managed superannuation fund (SMSF) is a private super fund that you manage yourself. This means that you are responsible for making all the investment decisions for the fund, as well as complying with all the super and tax laws.

SMSFs are different to industry and retail super funds, which are managed by professional fund managers. With an SMSF, you have more control over your super savings and can invest in a wider range of assets, such as property, direct shares and unlisted investments.

However, it is important to note that running an SMSF is a lot of work and comes with a number of risks. You need to have the time and skills to manage the fund effectively, and you are personally responsible for any losses that the fund incurs.

Who should consider an SMSF?

SMSFs are not suitable for everyone. They are best suited for people who:

Have a good understanding of superannuation and taxation
Have the time and skills to manage the fund effectively
Have a high net worth and want more control over their super investments
Want to invest in a wider range of assets, such as property, direct shares and unlisted investments

Benefits of an SMSF

There are a number of benefits to having an SMSF, including:

More control over your investments: With an SMSF, you can choose your own investments and investment strategy. This gives you more control over your super savings and the potential to achieve higher returns.
Access to a wider range of assets: SMSFs are allowed to invest in a wider range of assets than industry and retail super funds, such as property, direct shares and unlisted investments. This can give you more opportunities to grow your super savings.
Tax benefits: SMSFs can offer a number of tax benefits, such as the ability to defer tax on investment earnings and capital gains.

Risks of an SMSF

There are also a number of risks to consider before setting up an SMSF, including:

Complexity: SMSFs are complex and require a good understanding of superannuation and taxation law. If you make a mistake, you could be personally liable for any losses that the fund incurs.
Time commitment: Running an SMSF takes time and effort. You will need to spend time researching investments, making investment decisions and managing the fund's administration.
Costs: There are a number of costs associated with setting up and running an SMSF, such as establishment fees, accounting fees and auditing fees.
Investment risk: As with any investment, there is the risk of losing money on your investments. This risk is amplified by the fact that you have more control over your investments in an SMSF.

Is an SMSF right for you?

Whether or not an SMSF is right for you depends on your individual circumstances. If you are considering setting up an SMSF, it is important to weigh up the pros and cons carefully and seek professional advice.

Here are some additional things to keep in mind when deciding whether or not an SMSF is right for you:

Your financial situation: SMSFs are best suited for people who have a high net worth and want more control over their super investments. If you have a low net worth or limited financial resources, you may be better off with an industry or retail super fund.
Your investment goals: If you have specific investment goals, such as investing in property or direct shares, an SMSF may be a good option for you. However, if you are happy to leave the investment decisions to a professional fund manager, you may be better off with an industry or retail super fund.
Your time and skills: Running an SMSF takes time and effort. If you don't have the time or skills to manage the fund effectively, you may be better off with an industry or retail super fund.

Useful Resources

This is general information only and is subject to change at any time. Your complete financial situation will need to be assessed before acceptance of any proposal or product.

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