Learn why more than 5,000 Australians are turning to SMSF each month

Australia’s superannuation savings have swelled post the GFC to $1.8 trillion with one third of these assets now held in Self-Managed Superannuation Funds (SMSF) – making it the largest and fastest growing segment of the super industry.

So,why are more than 5,000 Australians turning to SMSF each month as their preferred choice to house their super nest-egg savings?

The simple answer is control. A SMSF is not a one-size-fits-all approach which allows investors and Financial Planners to tailor strategies for investment management, risk management, retirement planning and estate planning that may potentially best meet their individual and family’s needs.

Investment choice

A SMSF enables one to invest in a wider range of asset classes rather than possibly just owning a managed fund type of investment.  For example, SMSFs have the flexibility to invest in cash in major Australian & overseas institutions to source the most competitive & safest interest rates available. Other examples of direct investments include shares, both listed & unlisted, bonds, residential property, collectibles and business real property.

Investors and Financial Planners can directly target pockets of growth in the market & reduce or avoid exposure to investments with weaker fundamentals – a strategy that can be difficult to achieve with an ‘own everything’ approach of some very large pooled investment funds.

Fee structure

Unlike a regular retail superannuation fee, a SMSF can adopt a fee structure that suits the individual. SMSFs will often have a relatively flat fee structure which means costs are not increasing as a percentage of their assets. This creates significant economies of scale as we project the future growth of superannuation balances as a whole into the future.

Insurance

When it comes to insurance in a retail super fund, sometimes investors take only the default level of cover based on a member’s age. The issue with managing risk this way, is that it doesn’t take into account a member’s individual circumstances which can be quite different depending on life stage, number of dependents, debt position and investments outside of super. SMSF members have the ability to compare all of the major insurers on the retail market and select a risk management strategy that is competitive based on age, gender & occupation, flexible enough to enable member’s to split the ownership inside & outside super, as well as access to multi-policy & multi-life discounts where applicable.

There is no question that this is an exciting area.  If it has been a while since you have looked at your superannuation fund it might be worth speaking with AJ Financial Planning to see if it still is the best one for you.