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Want more control over your future? The lowdown on SMSFs

Self-managed super funds (SMSFs) have become an increasingly popular choice in recent years due to the control and flexibility they can offer. Today we’ll take a look at why that is, as well as some interesting stats the ATO has gathered on them.

While SMSFs are commonly called DIY super funds, that’s, well, a little misleading.

That’s because they can be tricky for people to wrap their head around, let alone stay up-to-date with all the rules and regulations that are attached to them.

Fortunately, that’s where we can help out.

SMSFs in a nutshell

They say that with great power comes great responsibility. And that saying rings true when it comes to SMSFs.

An SMSF is a private superannuation fund, regulated by the Australian Taxation Office (ATO), that you manage yourself (with the assistance of our licensed advice, if you wish).

One of the key differences between an SMSF and other types of super funds is that the fund members (up to four) are also the fund’s trustees, and each trustee is directly responsible for all of the fund’s compliance and investment decisions.

SMSFs are usually best for people who have established super balances who want more control over their investments. They typically have a broad range of investment opportunities that each of the fund’s trustees have responsibility for.

Some of the major benefits of an SMSF include that it can:

– give you more control over how your superannuation funds are invested.

– give you a wider range of investment choices.

– reduce your superannuation annual fees.

– allow you to borrow money to invest in property.

– provide a range of effective tax benefits.

Latest ATO stats on SMSFs

Ok, let’s get to the good bit.

Below we’ve listed some interesting statistics the ATO has recently released on SMSF performance over the last five years:

– SMSFs achieved an average positive return of 7.8% per financial year from 2012 to 2017, with a 10.2% estimated return on assets in 2016/17 You have probably heard this before, “Past performance is not a guarantee for future results.”

– the number of SMSFs grew by 19% and SMSF assets grew by 57% in the five years leading up to June 2018.

– the top four assets held by SMSFs (by value) as of June 2017 include: listed shares 29%, cash and term deposits 24%, unlisted trusts 11%, and non-residential real property 9%.

– there are 596,000 SMSFs holding $750 billion in assets, with more than 1.1 million SMSF members, as of June 2018.

– in 2016–17, the average assets of an SMSF were just over $1.2 million. This is an increase of 10% from 2016, and 27% over the last five years.

– the median age of SMSF members of newly established funds in 2017 was 48, compared with 59 for all SMSF members.

Final word

If you’d like to find out more about SMSFs, then get in touch.

Reading about them online can be a little difficult when it comes to fully understand the risks, obligations and opportunities.

What we can do, however, is help you make a well-educated decision to determine if an SMSF is the best flight path for your financial future.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.