Nurturing your Nest Egg with a self managed super fund

February 9, 2024 BY

Learn about self managed super funds with help from the team at Coulter Legal. Photo: SUPPLIED

Setting up a self managed super fund (SMSF) can be a great option for people looking to take a more active role in managing their money and growing their retirement nest egg.

What is a self managed super fund?

Where traditional super funds are managed on your behalf, an SMSF is a private super fund that you manage yourself. A SMSF can have a maximum of six members who have superannuation entitlement held within the fund. Each member is also generally a trustee of the fund (unless a corporate trustee is established), whose responsibility it is to manage, invest, and oversee the administration of the fund. Trustees are responsible for the financial, legal and managerial duties of the fund.

The main purpose of an SMSF is to provide a retirement income for each of its members. An SMSF is treated as an independent financial entity with its own Tax File Number (TFN), Australian Business Number (ABN) and bank account.

Once set up, each fund member puts their superannuation contribution into the SMSF bank account in a lump sum which is then invested. The members can also make further regular or lump sum contributions to the fund over time.

Creating an SMSF investment strategy to grow your nest egg

By law, every self managed super fund is required to have a documented investment strategy. An SMSF investment strategy is basically a long-term plan on how you’re going to meet your investment objectives and retirement goals through the fund. This would generally be prepared with the advice and assistance of an accountant and/or financial advisor.

As members of the fund, it is your responsibility as a group to make sure that all investment decisions are made in alignment with your investment strategy. For these kinds of decisions, bringing in a financial advisor is recommended. You’ll be able to talk about the options you have based on the risk profiles and current financial health of each of the fund’s members, and whether you want to approach higher or lower-risk investments to help you achieve the goals outlined in your investment plan.

What are the benefits of a SMSF?

Self Managed Super Funds have many benefits.

Apart from the fact that, as a trustee, you can choose how and where to invest and how to manage your savings, there are many other reasons why SMSFs are a great way to grow your nest egg, such as:

  • Pooling your funds (where the fund has multiple members) means more investment options
  • The option of more flexibility as to changing and managing the fund’s investments
  • Potentially have more control over tax
  • Potential to invest in assets which may also benefit you during your lifetime, such as property, and
  • Better options for passing fund assets to the next generation.

Do I need professional help to set up and operate my SMSF?

It’s recommended that the members of every self managed super fund get advice from a financial advisor and a lawyer. They will guide you through the set-up phase and whether an SMSF is appropriate for you, and will also help you navigate bigger decisions such as new investment opportunities.

A lawyer can assist with the acquisition of assets by the fund (eg. Property) and will assist with ongoing compliance and the complexities of SMSF borrowing, changing of trustees and death or disability of members. A lawyer will also ensure that your SMSF Trust Deed is appropriate and can assist with ongoing compliance especially with regards to the constantly changing environment of superannuation laws.

Contact the Coulter Legal wills and estate planning experts today by phoning 5273 5273 or head to their website at coulterlegal.com.au

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