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What Is An SMSF? How Can It Help You?

The abbreviation SMSF stands for self-managed super fund which, like all other funds, is a simple fund that provides financial compensation to its members after they have retired and are no longer working and earning wages in the normal way.

But there the similarities end. In an SMSF the members of the fund are also its trustees. Typical SMSFs can have anywhere from one to four members. The most advantageous aspect of SMSFs over other super funds is the “customization” that the members can achieve to tailor the fund as per their needs. This is vastly different from the retail funds where decisions are made in order to benefit the collective instead of the individual, whereas in an SMSF it is the individual need that is considered during decision making. Typical SMSFs are established with independent TFN’s and ABN’s with a separate bank account so that it is easy to get contributions, make investments and then give out pensions when the time arrives. Like all trusts SMSFs require trustees who can either be an individual trustee or a corporate trustee. Here is how SMSF helps!

Freedom of choice

There are many benefits of an SMSF, one of which is that it gives greater freedom in a person’s finances, and it gives a wide range of choices when it comes to investing the hard earned cash. This allows for better returns if the investment is astute.

Flexibility of choices

SMSFs allow the trustees to change the dimensions of the funding order to mirror any change in the market or the individual lives. This is not given in any other super fund. This flexibility has made them a very popular option with the new generation and those who seek to be self-employed.

Cost effectiveness

The cost of an SMSF usually depends upon the investments that have been made, and the professionals that have been hired for their skills. But when an SMSF is compared to a similar fund with the same professionals engaged and the same investments made, the SMSF will come on the top as the most cost effective one.

Greater transparency

As all SMSFs are created to make sure that all decisions are made according to the personal needs of the trustees and not on the collective benefits required, they allow the investments to be more transparent with the trustees being able to actually have a feel of where their money has been invested and which routes it has taken.

Author:

Entrepreneur, writer, and marketing expert. Would like to share my experience and knowledge with Australian business owners, especially small businesses, and new starters.

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