We all have different dreams for retirement and the cold hard truth of the matter is that those dreams cost money. How much differs for everyone, but one thing we all have in common is that the most tax effective way to save for retirement is through a superannuation fund.
There are several types of super funds:
- Corporate funds
- Public sector funds
- Industry funds, such as Australian Super.
- Retail funds, such as ‘Colonial First State First Choice Super Trust’ or ‘BT Super for Life’.
- Small APRA funds.
- Self-managed superannuation funds (SMSF).
SMSFs, also known as DIY super funds, are the fastest growing segment of Australia’s super industry, so much so that they now hold the largest share of the country’s retirement savings. There were more than 458,500 SMSFs in Australia at the end of 2011 with about $400 billion in combined assets. This represents about 32% of the entire super industry’s assets.
What is a self-managed super fund?
Many people are attracted to SMSFs because they allow you to take control of your retirement investments. You become the fund manager and you have complete control over the types of assets you and any other trustee of the fund, such as your spouse, want to invest in. You also take on the regulatory and legal responsibilities that come with it.
There are three criteria that set SMSFs apart from other super funds:
- An SMSF must have four or less members; and
- Each member of the SMSF must also be a trustee, or if the fund has a corporate trustee, each member must also be a director of the corporate trustee; and
- Simplified reporting and regulatory requirements.
Is an SMSF right for you? Find out more in our Setting up your SMSF section.
The Switzer Super Report is an investment newsletter and website dedicated to helping SMSF trustees grow their retirement savings. If you already have an SMSF or if you’re thinking about starting one, sign-up for a 21-day FREE trial or subscribe now to see how Australia’s leading investment report for SMSF trustees can help you.
Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Anyone should, before acting, consider the appropriateness of the information in regards to their objectives, financial situation and needs and, if necessary, seek professional advice.