SMSF is known as Self Managed Super Fund. What does that exactly mean? It is an annuity trust or a structure that provides its members with remuneration at their retirement. What is the difference between SMSF and other super funds? The members of SMSF are also the trustees of the funds.Involvement of money even here might require us to take automated investment advice which is a new buzz today. There are even options of traditional financial advisors to manage it.Automated advice, which is known as robo advisors, works with xplan configuration software, which is effective in giving accurate results. People can go with either of the advisors, but automated advisors are nailing their roots these days.
Working of SMSFSMSF has been established to provide financial benefits for its member and their beneficiary after their retirement. Members of this trust have their own Tax File Number, Australian Business Number and transactional bank account which allow them to make investments and pay out pensions and obtain contributions. There are two types of trustee:
- Individual trustee- each member is a director where in company acts as a trustee.
- Corporate trustee- with a minimum of two trusties, each member is made a trustee.
Points to note down before setting up SMSF
- Reason behind popularity of SMSF.
- Work load involved to setup and manage an SMSF.
- Know your responsibilities as a trustee to avoid any intrusion with ATO.
- Involvement of risks with SMSF.
- Who could setup SMSF?
- Glimpse about the future scope of SMSF in Australia.
Setting up an SMSF account online
- Initially take an expert advice to setup an account.
- Creating trust deeds.
- Start appointing trustees.
- Register with the Australian Taxation Office (ATO).
- Bank account for your fund is required to be setup.
- Control over your superannuation.
- Setting up investment strategies.
Advantages of SMSF
- Room for wider investments.
- Can invest into direct properties.
- Money can be borrowed to invest with rules.
- Self and great amount of control.
- Flexibility in pension.
- Less cost with greater balance.
Disadvantages of SMSF
- No compensation is provided in case of theft or fraud.
- Comes with greater responsibility with rules and regulations.
- Time consuming.
- Cost effective.
- Should keep yourself updated regarding legislation laws.
No proper and automatic insurance is provided.We should also be aware of the disadvantages involved with SFSM. SFSM can be opted depending on a person’s choice; meanwhile he must be ready to bear some risks also. If you are looking for more flexibility and good control over your savings in the future then, SMSF is a right platform, but you should also be aware of heavy work load involved with it.