It’s never too early to plan for your retirement. And one of the things you should consider is how you’re going to save money. Now, there are many ways to save for retirement. And one of the things you should consider is a self-managed super fund (SMSF).
In general, SMSFs differ from other types of funds by having the SMSF members also being the trustees. This means that SMSF members are responsible for running the fund for their own benefit. They are also responsible for complying with the laws involved.
Using an SMSF can have its advantages. And we’ve listed some of the more significant benefits below.
1. Buying and Selling of Investments
Since you’re basically running your SMSF, you also have control over its investment decisions. So, as a trustee, you’ll have enough flexibility when it comes to the buying and selling of investments.
SMSF trustees can have the unique benefit of taking advantage of their investments’ capital gains and income. And this can be especially helpful when moving into the retirement phase. In particular, the fund can be provided with partially exempt or tax-exempt income.
This is a unique advantage of the SMSF since other funds would not be able to give this power to the trustees. In other funds, trustees would not have the freedom to buy or sell investments when they feel it is the right time.
2. Tax Benefits
One great thing about SMSFs is that members can purchase business properties from other members or related parties. This will come with its own tax benefits as you can lease the property at market rates to the related parties. This, in turn, allows the fund to build wealth from rent and capital gains. Furthermore, if the property is being used for business purposes, the rent paid to the SMSF may be tax-deductible. This is in addition to the tax-deductible contributions being made to the fund.
3. Control Timing of Investments for Tax Advantages
We’ve discussed earlier how SMSFs allow their members to control the buying and selling of investments, which is not possible with other types of funds. But the timing of investments also opens up certain tax advantages.
SMSFs essentially still follow the same tax rules as other funds. However, the difference is that the trustees will have more flexibility. This means they can respond quicker and gain better fund efficiencies.
4. Estate Planning
SMSFs can also be great for estate planning. When a member of the SMSF approaches retirement, they can prioritise estate planning to ensure their beneficiaries are paid the right amount at the right time. This is achieved through a binding death benefit nomination.
Intergenerational transfer of fund assets can also be achieved when other family members also belong to the bond. This will allow the family members to tax effectively and use their business property productively.
Financial planning for retirement is crucial, especially if you want to ensure a comfortable and cosy life in retirement. And one way you can save money for retirement is through self-managed superannuation funds. SMSFs come with many benefits, primarily more control and flexibility for the trustees, which is not possible with other types of funds.
Financially plan for your future now with the help of Sydney Wealth Advisers. We provide services such as financial planning for retirement to help you secure a financially stable future. Our financial advisers will work closely with you, selecting suitable strategies to give you peace of mind that you can have the ability to finance the lifestyle you desire. Book a complimentary meeting now.