Want to retire comfortably? Consider setting up an SMSF


Whether you are approaching retirement or simply planning for your long-term future, it’s time to start strategising about how you can build your wealth. For many, superannuation is a set-and-forget decision – but by taking the reins yourself, you can customise your investment decisions and potentially grow your nest egg substantially. Here’s what you need to know about self-managed super funds (SMSFs).

What is an SMSF?

Rather than letting an industry or retail superannuation fund manage your retirement money, a self-managed super fund is all about giving you the freedom to choose the investments and insurance that suit your financial goals.

An SMSF is a private fund that you manage yourself. It can include up to six members, which is why it’s a common option for families, and as a member of the fund you typically act as its trustee (or you can get a corporate trustee). No matter what you choose, you are responsible for the fund – which comes with a variety of benefits but also a number of potential drawbacks. That’s why it’s important to consider whether an SMSF will suit your needs at this stage of life.

Top benefits of SMSFs

Thinking about joining the more than 1.1 million Australians with over $822 billion in their SMSFs? Here are some of the biggest benefits of doing it all yourself:

  • Tax breaks: SMSFs allow you to be much more flexible with tax, and you are generally taxed at the concessional rate of 15%. Benefits added after you turn 60 are also tax-free.
  • Total investment control: Rather than relying on a traditional super fund to grow your wealth, you get to choose how your funds are invested. If you want to invest directly in residential real estate, you can do that. If you want to choose only ethical and green investments, you can do that too!
  • Less with more: The fees of running an SMSF are potentially cheaper when you have a greater pool of assets. So it’s actually an incentive to get more members into your SMSF so you can combine your assets and reduce your overall fees.
  • Protection: For business owners and professionals, the attractiveness of SMSFs is in their ability to protect members’ assets against the risk of future bankruptcy, or a claim by other creditors.

Considerations before setting up an SMSF

If you are still unsure whether running an SMSF is right for you, make sure you are aware of some of the potential drawbacks. Some minor cons include:

  • Cost: If your fund only holds minimal assets, then fees related to accounting, auditing, administration, fund management and financial planning may outweigh the benefits.
  • Obligations: As you are responsible for the fund, you are personally liable for any actions the fund makes, including decisions made by other members. Non-compliance can result in severe penalties.

“Because a self-managed super fund is such a unique approach to securing your retirement, it may not suit everyone’s needs,” says Daran Thomson, Managing Director at Hallmark Consulting. “If, however, you want total control over your investment decisions and you have plans in place to manage your fund properly, it can be the perfect way to grow your nest egg. At Hallmark, our SMSF specialists work to understand your needs and will ensure all your compliance obligations are met.”

Ultimately, the decision will come down to your financial strategy, your life stage and your long-term goals for retirement.

Interested in learning more about self-managed super funds, or are you ready to take the plunge and start growing your wealth today? Contact Hallmark Consulting or call 1300 135 295 to get started.