What Is SMSF?
Planning for the future has never been so important, and everyone knows the benefit of insuring your livelihood into old age. Once you’ve hit retirement age you need to live on what you’ve accrued through your working career, which is why the Australian government has been implementing legislation that will eventually see every worker contributing part of their wages to a superannuation fund. This relieves the burden on the government of having to fund pensions for our aging populations and grants more autonomy to our senior citizens in terms of financial independence.
Your super fund will be your main source of income after retirement, which is why it is important that you are fully aware of the options available to you. Self managed super funds are a different kind of superannuation option, where instead of being managed by a third party, you are able to manage it yourself. This means the ability to take advantage of tax incentives, play the market, and ensure that they get the optimum value and return from their fund. It also requires more effort on your part, so if you are unsure as to which option is better for you, this outline will prove helpful in making a decision.
As an investment, self managed super funds provide several opportunities that others do not. They allow for complete autonomy in decision about where your retirement fund is being invested, and offer more opportunitiesI10-003 for estate planning. In addition to this, they allow for pension planning and lump sums into retirement.
In terms of the responsibilities that come with managing your own super fund, it is important to note that money that is held within this type of fund must be used only for retirement purposes, and there are restrictions in place to ensure this is the case, namely the Sole Purpose Test.
Another part of having a self managed super fund is a requirement that you have a clearly documented investment strategy, and while investments can cover a whole range of things including property, stocks, bonds, joint ventures and others, they all must conform to your stated investment plan.
Self managed super funds can be paid out in the event of death, disablement or retirement, and they do not necessarily need to be wound up in retirement. There are several options that you can take, one of which is to keep withdrawing and contributing.
With the current economic climate, more and more people are deciding to take control of their financial futures,200-500 instead of waiting for someone else to do it for them. While an SMSF can require more work on the party of the individual, it also has the capacity to be much more beneficial to the savvy investor.
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