1. What’s an SMSF?
SMSF stands for self-managed superannuation fund. It’s an alternative to an APRA-regulated super fund, where your money is pooled together with other members and managed by professional trustees. It’s also different to a retirement savings account, which some, but not many, people have.
An SMSF can have a maximum of four members. It must be run for the sole purpose of funding the retirement of its members. As the trustee of your own SMSF, you get to make all the decisions about where your money is invested and, ultimately, how to maximise returns. Of course, if you don’t want to be quite so hands-on, you can employ the expertise of a financial adviser such as ourselves to take care of it for you.
2. Why is it better than a standard super fund?
SMSFs are not for everyone, but for some people, they offer more control over their future. For a start, you know exactly where your money is invested. And you will enjoy tax benefits, such as negative gearing (if you invest in a new property through a property trust or share portfolio through an instalment warrant). For some investors, it’s a rewarding way to build your wealth.
3. How much super do I need to set up an SMSF?
There’s no steadfast rule on how much you need but the Australian Taxation Office suggests $200,000 as a good starting point. That said, you can pool your super with your partner and other family members, which may help. Or you can simply choose to start slowly and build your assets over time.
4. How does Money Intelligence Advisory come into it?
Susan Wahhab is an SMSF specialist adviser. Although you are essentially in charge of your SMSF, Money Intelligence Advisory can guide you through the setup process. We can advise you on how to make the most of your money and recommend investments that will help you grow your wealth.
5. What do I need to do to set one up and manage it?
You can have a lot of involvement or a little, depending on your inclination. The setting up of an SMSF can be a little complex and initially, there is quite a bit of paperwork. Rest assured that Money Intelligence Finance can organise everything. We can help you with setup, investment strategy and property investment, share portfolio, business premises, farm, land or car park within an SMSF.
6. What are the benefits of investing in property through my SMSF?
Property is a growth asset in Australia. The reason why we think propertyis a good SMSF investment is that you need a 30% deposit for a residential property and a 30% to 35% deposit for a commercial property. You can borrow the balance from the bank using a property trust structure and a limited recourse borrowing arrangement (LRBA for short!). We will help you with this structure and you can reduce the SMSF tax (normally 15% tax), protect your assets from the creeping inflation and continue to generate an income into retirement.
7. Do I need to invest in property or can I spread my investments?
You can choose to invest in property, shares or cash and term deposits with an SMSF. We believe an SMSF structure is the best investment vehicle to invest in your business premises. We believe it’s a structure that could help you achieve your retirement objectives faster. Of course, we need to look at the numbers before we recommend this strategy.
8. What happens when the property is paid off?
You can either sell it and invest the cash elsewhere, or continue to rent it to your business or other tenants.
9. This all sounds good. How do I move forward?
Great! The next step is to contact us to attend one of our seminars, which will help you get your head around things. Once you attend our seminar, you will be able to decide whether an SMSF is right for you. Click here for more details on our next seminar. We will then organise a two-hour financial strategy meeting to discuss your options.