Superannuation: Time to Start Taking an Interest

By Jason Fittler

Self Managed Super Funds (SMSF) truly is the way of the future. The rules in relation to what you can do in a SMSF are changing. It is estimated that in the next 10 years there will be more people in SMSF than retail funds. So why are people making the change?  Below are a couple of reasons;

1.    Lower Fees
2.    Control – you chose the investments
3.    More flexibility in retirement
4.    You can add Family Members
5.    You can borrow in your SMSF
6.    Wider range of investment choices.
7.    Better service from your adviser.

Let’s take a closer look at these fees…

3-28-08%20Super%20Table.gif 

As you can see from the above chart as your balance grows SMSF becomes cheaper to run plus you get the added advantage of having an adviser to speak to.  When was the last time you contacted your industry fund?  Was it a positive experience?

Control – you choose your investments with the help of an adviser. Choosing your own investments will provide a return more in line with your risk strategy and expectations.

Flexibility in retirement – through a SMSF you have more control over the type of payments you receive in retirement, for example any lump sums you might need. It is as easy as going to the bank and withdrawing the funds. You will also be able to have far greater control over estate planning.

Family Members – once established you can add other family members into the funds. For example as your children grow and get jobs they can pay their super in the fund. This allows them to obtain an education about investing and take more interest in their own super.

Borrowing – new rules allow you to borrow or gear inside a SMSF. Gearing should be part of any long term investment strategy. You borrowed to buy your house why not borrow for investments.

Investment choice – in a SMSF you can investment into almost any type of investment, better choice allows for better long term returns as you can change your investments to suit current market conditions.

Better service from your adviser – in a SMSF you will be an important client of your adviser. Why? Because most of the above fee is going to them, unlike in a Retail Fund where the adviser is paid a mere quarter of the fee charged, and in an industry fund where advisers are not paid at all. Sound material I know let’s switch it around, say you had two jobs, one puts food on the table the other provides for luxuries. Which job would be most important to you?

Above are some of the reasons why SMSF are becoming more popular, they are not for everyone but if they sound like something you would be interested in give us a call on 07 4771 4577, we can take a closer look.