SMSF may suit Gen X

Posted 15 Mar '19

SMSF may suit Gen X

By Vicky Richards

The benefits of having a Self Managed Super Fund. Is it right for you?

Traditionally Self Managed Superannuation Funds (SMSF’s) were seen as the retirement vehicle for Baby Boomers (born between 1946 – 1964). However, recent ATO statistics on SMSFs indicate that Gen X (born between 1965 – 1980) see real opportunities to take control of their retirement savings by establishing and running their own SMSF.

So why do people choose an SMSF rather than an industry or retail super fund?

* Greater control over retirement savings - with the ability to develop their own investment strategy and make decisions on when to buy and sell individual investments.

* Some are disappointed with their Superfund's performance and believe that they can do a better job investing their super.

* In some cases, an SMSF can be a more cost-effective option.

* A wider choice of investment options including listed shares, residential and commercial property, corporate bonds, managed investments.

* For business owners, purchasing commercial premises through a SMSF can be a very attractive option.

* It is a tax preferred Investment vehicle – the tax concessions available make superannuation the most tax effective vehicle to hold investments and receive investment income.

* Borrowing opportunities – advances in this area over the last few years allow SMSFs to borrow to fund an investment purchase under strict circumstances and this has attracted some interest.

It is important to note that an SMSF may not be right for everyone. The decision to take control of your superannuation is not a simple one, with many factors to consider. There are establishment costs, running costs and investment returns to consider together with the level of responsibility, time and effort involved in the running of a SMSF. Also, it is generally accepted that a SMSF may not be the best option if the starting balance is $200,000 or less.

Remember that superannuation is your money and it should be invested wisely. The earlier you begin this process the more reward you will receive come retirement age.