Self-managed super funds are a popular choice when it comes to saving for the future. But, as with any other financial instrument, there are both pros and cons to an SMSF.

In today’s blog, we want to talk a bit more about the SMSF advantages and disadvantages. Remember, these are general points – the idea is to give you something to bear in mind as you make your choice. For more specialised information relating to your own situation, reach out to our team today and let’s discuss your specific case.

SMSF Advantages

Let’s start by looking at some of the key SMSF advantages you can expect from your self-managed super fund.

You’re in Charge

One of the most important advantages is the control aspect. You will remain in control of how you invest the money in your fund so that you stay in charge of the investment and growth pathways you choose.

With this in mind, you may be able to take advantage of new opportunities as and when they arise. This investment flexibility may not be available with other forms of retirement instruments.

You Can Make Changes Without Delay

You can only take full advantage of investment flexibility if you can act quickly and decisively. This is an important SMSF advantage, and something that makes this type of fund very attractive to investors.

If one particular investment pathway is not working out, you can change your strategy to take advantage of current trends. If you recognise a new opportunity, you can quickly get on board with this opportunity. This fluidity and ease of action are important parts of an SMSF.

You Have a Wide Range of Different Options

Another key advantage is the diversity of options available to investors. An SMSF can encompass a variety of assets – from property purchases through to securities and managed funds.

This means you have the power to decide on the direction of your SMSF. You also have the opportunity to protect your investments by spreading them out across a diverse range of asset classes.

You’ll Enjoy Reduced Costs

SMSFs are among the most cost-effective forms of investment. Ongoing operating costs are usually more manageable than other forms of retirement planning.

This may be especially true for larger funds. You may be able to reduce the operating cost further as the fund grows in value.

SMSF Disadvantages

There are both pros and cons to SMSFs, so let’s take a look at some of the most important SMSF disadvantages to help you make your decision.

You’ll Take Responsibility for the Fund

The flip side of remaining in control of your fund is exactly that… you are in control of your fund. This means you will need to take on a lot of responsibility and be confident when it comes to making investment decisions.

There will also be other technical aspects to consider, such as the taxation elements, the setup, and the ongoing management. You may need external assistance to help you run your fund in the right way.

The Fund May Take Up a Lot of Your Time

This is really a continuation of the point above, but it’s still worth mentioning. Managing the fund and steering it in the right direction is a time-consuming process.

Again, it may be worth seeking professional assistance to help you manage the fund on an ongoing basis. However, this will come at an extra cost.

Your Funds May Not Be Protected

It may be difficult to protect your funds in the event of losses. Government compensation schemes don’t tend to cover SMSFs, and dispute resolution bodies may also be off-limits.

This puts the assets within the SMSF fund at risk if something were to go wrong with the fund or its management. You may be able to settle disputes in court, but this can come at a high cost.

Speak to the Sydney Brokers Team Today

Our post is simply designed to give you something to consider while you weigh up your options – it’s not intended to provide definitive advice on which path is best for you. To discover more about your own situation, and to make a decision on the best investment pathway for your future, reach out to our team today. Let’s talk about what we can do for you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or 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.