Growth in Self Managed Superannuation Funds (SMSF’S)

 

The growth in self managed super funds over the last 20 years has been significant.

In 1994 there were about 80,000 SMSF’s in Australia. ATO data now shows that this number is approaching 500,000 SMSF’s.

The remarkable growth of SMSF’s shows no sign of slowing. SMSF’s are typically set up by people approaching retirement; Australia’s large baby boomer generation is having an obvious impact.

Whilst the appeal of having their retirement fate in their own hands is undeniable, the following list makes it clear that there is not one simple explanation for the growth of SMSF’s.

 

Consideration to establishing a SMSF may include:

 

1. Control
An SMSF gives investors the ability to apply the same principles to their retirement assets as they apply to their own home.

2. Avoiding Larger Organisation’s Performance Problems
Many people believe they can run their own fund and achieve returns that will either be better than, or just as good, as the professionals.

3. Flexibility
SMSF’s provide more flexibility than the large superannuation funds that must record and reconcile all transactions daily.

4. Speaking Directly to the Administrator
Most SMSF’s are administered by small accounting practices, therefore it is easier to contact the accountant and solve problems almost immediately.

5. Data Security
Some are concerned with the data security of larger organisations.

6. Transactional Tax and Structuring Benefits
Most states offer stamp duty concessions involving SMSF’s, where transferring of assets to SMSF may enjoy concessions.

7. Desire to Find Retirement Using Specific Assets
Some SMSF investors want to fund their retirement using assets that aren’t often available in large funds. These may include specific residential or commercial property, collectables, etc.

8. Property Investment
SMSF’s now have the ability to borrow for property acquisitions, this provides opportunity for income earnings and capital gain to be made in a more favourable tax environment.

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The establishment of a SMSF needs to be carefully considered. We work with appropriate financial advisors to allow recommendations to be made as to adopt and implement these strategies.

It is also important for those already maintaining SMSFs to continually review its purpose, and benefits, associated with the initial goals or objectives.

Steve Roxby.

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