Tuesday, July 15, 2008

Learn about Self-Managed Super Fund and see if it is for you

Self managed super funds (SMSF) are one in which up to four people pool their superannuation for investment purposes. This gives them the opportunity to invest in a wider variety or resources than only one. Each person must become a trustee or directors of the fund. SMSFs are strictly regulated by the Superannuation Industry (Supervision) Act and Regulations (SIS) and the Australian Tax Office (ATO).

Some people like to have an SMSF because it gives them the flexibility to choose their own type of investment strategy, because they are in control and they have the flexibility to arrange everything to suit themselves. When properly set up, the fund can invest in a great diversity of products from property to art to online savings accounts.

If your SMSF complies with all the rules and regulations of SIS and ATO, a concessional tax of only 15% applies. The rules? There must be no borrowing to invest, and financial assistance to members or relatives is prohibited. Any assets acquired must not belong to members or relatives. It must meet the sole purpose test and document an investment strategy. The sole purpose test is that the fund exists to provide retirement benefits to its members.

In fact, while there are benefits to owning a SMSF, there are so many rules and regulations to which you must comply that many people use a specialist SMSF administrator - that costs extra, of course if you want to go beyond simple DIY investment such as term deposits and the like.


Jeshermoza said...
This comment has been removed by the author.
Jeshermoza said...

Vanguard Investment is good for superannuation fund trustees who have a self managed super fund because they have index fund products that mean that the investor does not have to worry about buying and selling shares at the right time. Vanguard buy shares in every single company in the ASX200 or the ASX300 so that the investment just goes up and down in line with the whole Australian share market. This is something that would be impossible for most investors to do on their own; and most investors would not have time to manage all the paperwork for 300 single investments! It is very clever and simple.