What Is A Self-managed Super Fund?

Having a retirement fund is extremely important because there will be a time that working would be a challenge due to our physical limitations.

In the United States, there is what they call the 401(k) plan, which is essentially a retirement fund offered by employers to their employees.

However, not all of us have the benefit of someone managing our savings for us. And some of us are entrepreneurs, self-employed, or doing freelancing jobs for a living.

Therefore, learning how to create and manage your own funds is essential in order to keep your future financially secured.

With this being said—in today’s topic, I will provide you an answer to what is a self-managed super fund, the cost of funding this investment, and how you can apply it to your own.

So without further delays, let’s get right into it…

So what is a self-managed super fund?

It basically means that you’re going to manage your own retirement funds. You are in complete control of where you’re going to invest your money.

And a benefit in managing your own funds is that you don’t have to worry about fees implemented by an institution.

How is a self-managed super fund supposed to be used?

You have to be clear on how you’re going to manage your funds.

Are you familiar with how time deposits work? It’s an interest-bearing bank account that you can only gain access to upon maturity date.

You may have to do the same level of strictness with your self-managed super fund. It must only be for the sole purpose of retirement benefits.

You have to exercise discipline when setting up your funds and don’t attempt to get early access to afford your holiday trips or decorate your home.

Let’s continue and find out more about what is a self-managed super fund…

What is the cost of setting up your self-managed super fund?

Here are the expenditures you have to have to consider—

  •  Audit

  • Self-Managed Super Fund Levi

  • Administrator

  • Accountant

  • Tax Agent

You need the abovementioned professionals to make sure that you are doing things the right way.

You may also have to consider additional costs like—

  • Brokerage fee if you decide to invest in financial instruments

  • Professional advice fee if you are in need of financial consulting.

Self-managed Super Fund vs. Super Fund

Responsibility

The first difference is the responsibility involved.

In a self-managed super fund, you bore all the risks involved in fund management. You have to make sure that you are in compliance with laws whose jurisdiction you are under with.

It’s a lot different if someone is managing your retirement funds. This is because the risk is borne by the professionals handling the funds.

Investments

Again, you are in complete of the investment you want to pursue.

As for super funds managed by professionals, they will ask your opinion for a specific investment that you may find interesting and would give you some sort of control.

However, you may not be able to manage some assets in general.

Who is needed for SMSF?

So who are the main players needed to create a self-managed super fund—

  • Other members and trustees – you need other members or trustees in an SMSF because it’s still essentially a company.

  • Tax agent - this is pretty much self-explanatory. They handle any tax-related concerns in your SMSF.

  • Accountant – they will handle the bookkeeping, preparing of financial statements, etc.

  • Auditor – they analyze your documents and transactions and make sure that you are in compliance with the law and accounting standards.

Individual Trustee or Corporate Trustee—which one is better?

Individual Trustees

  • Individual trustees require other trustees, but they cannot be employees.

  • When one trustee leaves, you need to amend the ownership, which would cost additional expenses.

  • Pro: Cost is less when setting up. Con: It bears an extra cost when someone leaves.

  • There might be more penalties if you failed in some aspects.

Corporate Trustees

  • On the other hand, you can be both a member and director in the corporate trustee.

  • Since it’s a corporation, you don’t have to change ownership anytime someone leaves.

  • Pro: It doesn’t bear any extra cost when someone leaves. Con: It is expensive, to begin with.

  • There’s less penalty.

Final thoughts

So yes, I believe that’s just about it!

I believe today’s blog has provided you sufficient information in answering the question of what is a self-managed super fund.

Such a fund will really be ideal if you want to have full control over your retirement funds.

But as you may have seen, it’s not going to be easy since you’re pretty much managing it on your own.

But through persistence, you will eventually reach your goal.

Thank you for the time, and I hope to see you on the next topics!

Peace!

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