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SMSFs give you more power over your retirement.
June 7, 2021

Industry funds don’t want you to know these facts about SMSFs

Money ManagementSMSF Advice

Retirement sneaks up on you fast and it's important to have a steady stream of funding in place to ensure you can retire happily and peacefully. Superannuation funds are the standard retirement fund in Australia and many people simply join an industry super fund run by an external organisation and leave it at that.

Industry funds are the tried-and-true type of super fund but they may not be the best option for you. Once reserved for the rich, self-managed super funds (SMSF) offer many benefits for you and other members. This includes the power to invest and set strategy, greater accountability and even affordability.

What is an SMSF?

An SMSF is exactly what it sounds like: A super fund that you get to manage yourself, as opposed to other types of superannuation funds that are managed by someone else. What makes SMSFs different from other super funds is that members are also trustees, which means you're responsible for devising a strategy and investing money allocated to the fund.

SMSFs can be a lot of work, but they also provide a number of advantages that industry funds would rather you not know about. These include:

  • Freedom to invest: With SMSFs, you get to decide where and how you invest your funds. That means you can choose both the types of investments and the level of risk you take on. With the right strategy, you could make a lot of money making investments with high returns. Of course, it also means there's a higher chance of a bad investment, so caution is advised.
  • Buy property: SMSFs give you the power to make investments you might otherwise not have the funds for, like property. While important restrictions do apply, SMSFs basically allow you and other trustees to pool your funds and invest in residential or commercial property.
  • Greater control: SMSFs give you and other members greater control over the terms of the fund. As you manage your SMSF, you can make adjustments as market conditions change to reflect your needs at any given time.
  • Cost-effective: For a long time, SMSFs were too expensive for the ordinary person and they were mostly just used by the wealthy. But costs have dropped over the years as technology has made it easier to manage an SMSF. SMSFs are now an affordable way for people to manage their own super fund.
  • Ability to leverage: You can borrow money from a lender and invest these funds in addition to your existing funds within your SMSF to effectively give you a larger asset base sooner than you would otherwise, giving it more time to grow so you can eventually take advantage of the compound interest.
  • Tax-effective: Depending on how you choose to invest the funds in your SMSF you may be able to use franking credits, depreciation and interest to reduce the amount of tax paid within your SMSF.

To make sure an SMSF is the right move for you, it's important to talk to a qualified financial advisor. At Smart Money Wealth Management, we're committed to providing affordable financial advice and wealth management services to all Australians. Contact us today to get started with a free consultation.

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