by Greg Stevens
… If you are, then a Self Managed Super Fund (SMSF) may be an investment vehicle for you.
A significant number of Australians prefer to make their own decisions on the investment of their superannuation savings.
A Self Managed Super Fund allows them to combine the assets of family members into a single fund and decide where to invest those funds. With control comes responsibility.
As trustees and members of your own Self Managed Super Fund, you control the fund and have a responsibility to ensure that you formulate and give effect to an investment strategy for the fund.
SMSFs provide the following attractive features and benefits for investors:
Tax Concessions: Complying SMSFs in the accumulation stage are normally taxed at a maximum rate of 15 percent, but for many funds the benefits of imputation credits reduces this tax to a single figure. For funds that pay pensions, no tax is payable on the income and capital gains on assets used to fund pension payments.
Investment Control: Unlike retail, industry or employer funds, in a SMSF, members set the investment strategy and manage the investments of the fund. As a result they can create a superannuation investment portfolio that meets their exact needs. Investment decisions can take into account each member’s age, existing assets, likely retirement needs, risk profile and contribution pattern in a way that is often not possible in a larger fund that has to meet the needs of thousands of other investors.
When formulating this investment strategy it is important to take into account a number of key principles being:
• Risk – consider the risks involved in making, holding and realising various investments; • Return – consider the likely return from the investments having regard to the objectives and cash flow requirements of the fund and its members;
• Liquidity – consider the liquidity of the fund’s investments acknowledging the financial obligations of the fund; • Diversify – consider the make up of the investments of the fund as a whole including a review of the level of diversity of investments. Investment Choice: A larger range of investments is
available to members. Their fund can invest in shares, property and cash with many business owners buying their business premises within their fund.
Administrative Cost Savings: SMSFs generally offer one-off fixed establishment costs and lower ongoing fees (particularly where a fund has in excess of $200,000 in assets). A SMSF can give significant cost savings over time when compared to either retail or master trust funds because many of the ongoing costs are fixed, rather than increasing as the fund balance grows.
SMSFs involve many complex rules and regulations. Investors need time and expertise to keep up to date with legislative changes as well as undertaking the day-to-day administration and compliance tasks. A financial planner can assist the active investor in dealing with the responsibilities associated with running their SMSF fund by absorbing the day-to-day burden of compliance and administration.
Remember the consequences of investment decisions you make today will resonate in your retirement years. The Credit Union can introduce people to a financial
planning group that specialises in SMSFs.
For more information contact MCU on 5499 8988, visit our website www.malenycu.com.au or visit our branch today at 28 Maple St Maleny.
Maleny Credit Union (AFSL 246921)
BUNYA HOUSE, 28 Maple St, Maleny
Ph: 07 5499 8988
www.malenycu.com.au
Any advice in this column is of a general nature only and has been prepared without considering your objectives, financial situation or needs. To decide if a product is right for you, please carefully read the Product Disclosure Statement for that product. The Product Disclosure Statement is available from our office at 28 Maple Street, Maleny or on-line at www.malenycu.com.au
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