Setting up SMSF fund was proven to be a smart investment choice for many Australians, who want to invest in a fund that will ensure them a fruitful retirement. There are many reasons due to which more than half million people from all around the country have chosen the self managed superannuation fund as main or additional assets investing method.
In brief, the main advantages due to which the number of SMSF users increases continuously are: increased investment control; more investing possibilities; tax savings; possibility to pool assets with a family member; opportunity to make large investments and more.
However, setting up SMSF requires time and dedication to fulfill the requirements. More specifically, there are certain requirements that you ought to meet before you set the fund. This said, before you set the self managed superannuation fund you should:
- Develop an investment strategy for your SMSF;
- Implement and review your plan for investing in the fund (if necessary look for a professional advice);
- Make sure your personal assets are separated from the assets of your business, and the assets of the other members who contributes to the fund;
- Keep track of the changes in the fund. Prepare and keep all kinds of financial statements;
Aside from the requirements you must need, there are certain limitations you need to be familiarized with before setting up SMSF fund. Or in other words, there are some thing your are not recommended or allowed to do. More specifically, you are not allowed to:
- lend financial assets to another member contributing to your fund;
- borrow money from your saved assets, except under regulated circumstances such as for investing in property;
- use the property you’ve invested in using the assets from the fund; you are only allowed to lease it and use the income to grow the assets in the fund not to use it for other purpose;
- release money to another member you’ve pooled your assets with, out of the concrete conditions of release.
In the end, before setting up SMSF, to decide finally whether this way of saving for retirement is a good choice for you, ask yourself the three following questions:
- Do I have enough time to dedicate on running an SMSF?
- Are the advantages of setting up SMSF, really that beneficial for my financial stability during the retirement days?
- Do I have enough financial assets to take advantage of this fund?