The Advantages and Disadvantages of SMSF

23 Aug, 2023 By: Lotus Smart

Having a self-managed superannuation fund (SMSF) is a common method of saving for retirement that people can use to have complete control over how their savings will be invested. However, there are many rules and regulations that have to be followed when managing an SMSF. This means that anyone wishing to manage their own superannuation fund will face a huge amount of responsibility. There are various advantages and disadvantages to running an SMSF that can help to determine if an SMSF is right for you. Read on to learn more.

Advantages

High Level of Flexibility and Control

As members of a superannuation fund are also its trustees, they have the flexibility to modify the conditions of their SMSF to suit their particular financial needs and circumstances. This cannot be done with other types of superannuation funds. Managing your own super investments allows you to quickly make adjustments to your portfolio due to market changes or get involved with new investment opportunities.

Optimal Tax Management

Although an SMSF has the same tax rates as retail and industry superannuation funds, an SMSF allows you to put tax strategies in place that will ultimately benefit you in regard to how much tax you pay. Self-managed super fund accountants can help trustees handle their taxation requirements, saving them the stress and hassle of doing it themselves.

Investment Options

SMSFs offer trustees a much bigger range of investment options compared to retail and industry superannuation funds. It is very common for self-employed individuals and small business owners to get an SMSF that they can then use to purchase or sell commercial property and other assets.

Disadvantages

Time-Consuming

Managing your own SMSF can be a very time-consuming endeavour, even if you have hired a professional that provides self-managed super funds accounting services to help you. With a retail or industry super fund, someone else takes care of all of the required administration work and the day-to-day investment decisions.

Investment Knowledge is Required

SMSF members need to have a comprehensive understanding of the fundamentals of sound investment practices, as they will be directly accountable for what happens with their savings. They also need to stay up to date with all SMSF regulations and requirements. Learning and understanding these requirements can be very difficult.

Contact Lotus Smart Today

If you’ve thought about using an SMSF to manage your finances yourself, schedule an appointment with Lotus Smart today. Our self-managed super fund accountants can provide trusted advice and assistance to help you determine if an SMSF is right for you. Feel free to call us at (03) 9561 9922 or submit an online inquiry for more information on our self-managed super fund’s accounting services.