Tue 30 Jan, 2018

10 Reasons to Manage Your Own Superfund

No matter how long you’ve been working, you’ve probably put in some long hours staring at your superfund balance and dreaming of the things you could buy if you could just get your hands on it. The good news is, you can get your hands on it. So long as you play by the Government’s rules, you can self-manage your superfund and invest in almost anything you like. Sadly, that doesn’t extend to investing in yourself with lavish holidays and unicorns, but you’re free to invest in assets of your choice that can contribute to your fund’s wealth. That’s where an SMSF comes in – a self-managed superfund. You might associate these with stuffy corporate blokes smoking cigars and zipping around in their ‘weekend cars’, but the days of having to be a high roller to run your own superfund are long gone. Today, Squirrel shares ten reasons why you should manage your own superfund.


1. You can buy investment properties

You’re probably aware of the booming property market in some parts of the country. Properties in eastern capital cities have been offering substantial rental yields and capital growth in recent years, and with an SMSF, you can get in on the action. Forget sacrificing your lifestyle to save up a deposit – jump right in by using your super balance. You don’t need to buy the property outright – you can get a loan on a Limited Recourse Borrowing Arrangement. Essentially, you can put down a deposit with a portion your super balance, and borrow the rest. You can then put the rental income towards the mortgage repayments. Find out more about investing in property with your SMSF.


2. There’s tons of tax benefits

If you’ve spent years resenting those pesky tax payments on your payslip, your SMSF is your chance to enjoy some concessions. Any income earned on the fund from any source is taxed at 15%, which may be substantially less than your regular income tax bracket, and there’s capital gains incentives too. Once you enter the retirement phase, you’ll pay no CGT whatsoever! Nada, niente, nichts.


3. You’re not completely alone

Traditionally, SMSF owners would need to source the appropriate support to help them manage their investments – and pay big bucks for it. In some cases, this means dicey investment decisions and a fund that costs more to run than it’s yielding. With Squirrel Super, you get full support from our investment experts. It’s built into our flat fee.


4. You can have multiple members

An SMSF can have between one and four members, so it’s a great way to consolidate assets between families and/or spouses. By having one fund between all of you, your fund will be larger and therefore capable of potentially more lucrative investments – and you’ll only pay one fee.


5. You can transition into retirement

Superannuation is designed to support you through a long and happy retirement. With your SMSF, you have a range of options to ensure your retirement is enjoyable and free of financial stress. You can commence a pension when you reach what we call the Preservation Age (this varies depending on when you were born), and gradually transition to retirement. You can even keep working and contributing!


6. Tons of younger people doing it

According to the ATO, SMSFs were being established most prevalently in the 35-44 age bracket in a study of the final quarter of 2016. It doesn’t matter how old you are – as long as you’re dedicated and interested in investing, you can grow your own fund with success.


7. It’s cheaper than you think

The main concern people have when commencing an SMSF is whether it’ll be worth it. After all, there’s ads everywhere boasting the returns available from industry superfunds (yep, one of ‘those’). Will your SMSF generate enough income to outweigh the costs? With Squirrel Super, you pay one flat fee. It doesn’t matter whether you’ve got $100k or $100million in your super.


8. You don’t have to be an expert in the share market

…or even be rich. In the same study by the ATO, the second biggest income demographic establishing SMSFs in the final quarter of 2017 was those earning between $40k and $60k per annum. In addition to ongoing support, Squirrel members enjoy exclusive access to learning materials, training modules and tons of resources to help you build a ‘wealth’ of knowledge.


9. You can invest with your heart

The freedom that comes with an SMSF means you can align your investments with your personal goals and values. Whether you’re a real estate junkie or you’re passionate about ethical investing, you’ll have complete control on where to put your cash.


10. Faster response to changes in market conditions

Investing is never a certainty. Values will rise and fall regularly, but being in control of your own superfund gives you the chance to react accordingly. Do you ever check your super balance and notice you’re down on last quarter, even with your employer’s contributions feeding in each month? That’s likely a result of a value drop in one of your investments. You just have to sit tight and wait for your balance to recover. If you self-managed your fund, you’d have greater control on how and when to respond to market fluctuations.


Managing your own superfund can be your ticket to financial freedom and abundant investment potential – but be sure to do your research. The Squirrel team is available to support you if you’re considering establishing an SMSF, so reach out if you have questions and concerns.