A DIY Super is also known by the terms ‘self managed super fund’ and ‘SMSF’. The idea behind them is that you and your employer both make contributions which are then invested in shares or government bonds. You are then able to receive the money upon retirement in one of 3 forms – either in one lump sum, by regular payments or a combination of the two.
The advantages of having a DIY Super are:
Control: By having a DIY Super, you have the flexibility to choose how and where your funds are invested and also the ability to adjust your investment strategy based on ever changing economic factors.
Investment Choice: Having choice in where and how much to invest with your DIY Super gives you a huge advantage in customization of your funds investments compared to other similar funds that can not offer this.
Low Taxation: A DIY Super is eligible for tax concessions, which means that you will lose less of your money to the government compared to other fund accounts. This means that at the time of releasing your money, a huge amount of money can be saved in tax payments alone.
Protection: The assets of a DIY super are protected from bankruptcy and other legal claims (up to a certain threshold). It is nice to have this security in place as losing your retirement fund in your later years is a major problem.
So, you are thinking about investing in a DIY Super? Then remember these important points…
- Each member of the fund must be a trustee
- Trustees cannot receive any payment for performing their duties
- Compliance with regulations is your responsibility
- Your assets and the fund must not merge
- All records, statements and paperwork must be held on to for the duration of the fund
Choosing the correct investments for your DIY Super can be a difficult process due to the number of options available to you. A financial advisor is a sensible way of getting help in finding good investments however; remember that the responsibility of the fund lies at the members’ feet, and finding a good financial advisor is sometimes not easy.
When deciding which DIY Super advisor to use, look at whether they are licensed to give you financial advice and whether their advice is appropriate for your specific circumstances. You should be willing to pay extra for someone who is more experienced because you will make more money in the long run.
Research is key in starting a DIY Super. You need to know who you will be opening the fund with, what will you be investing in, what exactly are the rules and regulations and which financial advisor you want to help you. If you remember all these point it will help you in the long run.
Find Out More – DIY Super Sydney
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