A self-managed super fund (SMSF) is a legal tax structure designed to provide you money during your retirement. There are vast advantages in using this system, with the most compelling one being you having full control of your retirement funds. Of course, having full control means you also get to have full responsibility of your finances. Given the potentially grave consequence to your finances, you cant afford to mess up your SMSF.
Here are some things you must know if you are planning to go for an SMSF.
1. Choose your co-trustees wisely – While you can always choose to be a sole trustee, there are a lot of advantages associated with sharing trustee roles with multiple people. As a rule, up to 4 people can be co-trustees in a single SMSF. However, you got to choose trustees who know what they are doing and whom you can trust.
2. Follow a sound investment strategy – Managing retirement funds can be tricky. A proper investment strategy is crucial for making the self-management super fund set-up work. You got to study your investment options before committing to them. Also, you got to learn that you cannot over-invest in one thing, as theres always a risk of a failed investment.
3. Take account of running costs – Maintaining an SMSF means learning how to manage running costs. You have to take into account all of your personal expenses, but it all doesnt end there. Aside from your yearly running costs, you also have to take into account of availing professional services such as auditing, accounting, and taxes, and legal advice.
4. Organize insurance- Insurance is one of the most important things you must have, especially once you have hit retirement age. There are different types of insurance coverage available. The most important ones include life insurance, disability covers, property insurance, and income protection. Of course, maintaining your insurance covers means extra costs.
5. Get mortgaging right – Making investments mean you get to have enough funds at your disposal. More often than not, what is available at your SMSF may not be adequate to complete your investment. This is where loans and mortgages come into the picture. Of course, you have to get this right, as a bad loan deal can end up being brutally costly. Hiring the right mortgage broker can help you make the right decisions for your SMSF Loan needs.