The most common reason for choosing to establish a SMSF is investment flexibility. Many people ponder what the point is of having a SMSF if you only want to own cash, shares or managed funds.
I want to highlight a few reasons why a SMSF should be considered in addition to investment flexibility.
A SMSF gives you:
The ability to upgrade the trust deed at your discretion, meaning you can immediately take advantage of strategic opportunities arising from changes in legislation
Reduced costs of managing your superannuation depending on your account balance, as most other superannuation funds charge on a percentage basis, whereby SMSF costs are generally fixed
Provide insurance to members which can result in significant tax benefits for the SMSF
Potential for huge tax deductions available for surviving members of the SMSF upon the death of a member
Make benefit payments to pension members at any time within their limits – not restricted to lengthy delays and static payment dates of other superannuation funds
Much greater control over your estate plan in relation to tax implications upon your death and certainty around beneficiaries receiving what you intended.
More control and tax efficiencies surrounding inter-generational transfer of wealth
Ability to choose the life insurer for policies held within superannuation, rather than being restricted to the life insurer used by a particular fund.
For those of you that like to be intimately involved with your superannuation savings, a SMSF opens up a world of opportunities. It also takes away the frustration of snail’s pace administration, as well as rules and processes put in place (in addition to legislation) by organisations controlling your super.
Peace of mind, control over your savings and management of your tax position should be considered just as attractive as investment flexibility. While it’s true that having more control over investments within super may make your asset rise quicker (or ensure it’s not a flop), the real pleasure comes from the growth and relief you experience when you don’t have to share your cheque with the taxman…well, not as much anyway!