If you decided to take better care of your finances and started doing research on how to do so, chances are you stumbled upon the term “self-managed super fund” here and there. It’s not a coincidence this happened because a self-managed super fund can indeed play a huge role in how well you’re managing your money. But what exactly is a self-managed fund and what benefits does it come with? Read on to find out.
What’s a self-managed super fund?
What makes this type of a super fund different from any other types is the fact that you and other members of your fund are also trustees. This means that you and other members have way more control of the fund and can tailor it according to your needs. A self-managed super fund can have up to four members and it has for a goal to provide you with financial benefits once you retire. Alternatively, its purpose is to provide beneficiaries on death.
As mentioned above, one of the best things about self-managed super funds is the control you have over your investments. Traditional super funds usually allow members of the fund to invest their money into shares and property with a number of restrictions. With self-managed funds, not only that there are fewer restrictions but there are more investment options for you and other members of the fund to consider. For example, you can consider putting your money into stuff such as precious metals. On top of this, there’s also more flexibility when it comes to borrowing money within the fund.
Ability to borrow for the fund
Another great thing about self-managed funds is that you can actually borrow money to increase your fund. Let’s say you’re $100,000 short of buying a property your self managed super fund wants to invest in. You can borrow that amount and make your investment earlier than you’d otherwise be able to. Just bear in mind that there are restrictions when it comes to borrowing money for your fund. For example, the resource loan you’re able can get cannot exceed about 65 percent of the purchase price of the property. Also, the money can be used for buying it but not for remodeling.
When you’re a member of the self-managed fund, you also have more flexibility regarding your contributions to the fund. The best part of it is that you can use it to minimize the amount of money you and other members of the fund have to pay through taxes. The way it works is that you have to time your pensions and target franking credits. Another important thing to mention is that there’s only a single tax return even though your fund can have four members.
Helping protect assets
This is often a deal-breaker for people looking to invest in a self-managed super fund. Let’s say you’re running a business and you want to protect some of your assets in case your company fails. Even though the assets you invested in the fund are yours, they are protected from creditors in case something happens to your business. In fact, your super fund might become the only asset you’re left with in case your business shuts down. Just have in mind that you also can’t withdraw your money and use it to help your business overcome the problems it’s facing.
For anyone looking to gain better control of their finances and ensure they have enough money once they retire, investing in a self-managed super fund can turn out to be an amazing idea. Just make sure you do your research before you put your money into it and you’ll have absolutely nothing to worry about.