The benefits of SMSF investment

76Investing in your future is important to ensure you can enjoy retirement and there are various ways to go about this.

Throughout your working life, your employer pays super for you. Most people are entitled to guaranteed contributions from their employer, at a rate of 9.25 per cent of their ordinary earnings.

An increasingly popular approach to retirement investment is the concept of a self managed super fund (SMSF).

As the name suggests, you manage the fund, rather than a third party fund provider. The great news is that you can even invest in property as part of your fund, which is great news for those with some knowledge of the commercial or residential property markets.

Arm’s length

The Australian Taxation Office notes the importance of the sole purpose test.

This means your fund must be “maintained for the sole purpose of providing retirement benefits to your members”.

If you purchase an investment property – be it a stand-alone dwelling or apartment – you won’t be able to live in it.

You also can’t rent it out to any relatives or associates. However, if you buy property in the right area, where rental demand is high, you may quite easily find the right tenants.

The rental income you’ll receive from the property will go into your fund. With smart growth strategies, you could earn a tidy nest egg.

More control

A frequently cited benefit of SMSFs is the control that fund owners have.

Unlike a super fund that’s managed by a third party, the investment decisions are entirely in your hands.

If you have the time and expertise to manage the fund, you may be in an ideal position to run a SMSF.

You’ll need to account for the expenses of running the fund, including accounting, auditing and legal obligations, notes the Australian Securities and Investments Commission.

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