Self Managed Superannuation Funds
Are you concerned with the lack of control and freedom that you have over your superannuation?
Borrowing within self managed super funds
Super is one of the biggest assets that we own, and if you are concerned about not being in charge of this important asset then you should explore self managed superannuation funds.
Mentor can assist in -
- discussing whether a smsf is suitable for your circumstances,
- arranging the creation of the smsf,
- inform you of the responsibilities of trustees,
- help arrange the annual audits that are required.
You may choose to invest your funds by yourself or use Mentor's portfolio construction service.
A self managed superannuation fund is a trust where assets are held and managed on behalf the members to provide future retirement benefits. The trustee of your fund decides on your fund's investment strategy and chooses what your fund's assets are invested in. This means your fund's investments can be tailored to suit the specific needs of members before and after retirement. Your funds can also invest in almost anything, including investments typically not available in public superannuation funds, although the investments are subject to certain limitations and legal restrictions.
You need to give consideration to your fund's investment philosophy - investing successfully takes time, effort and discipline. How will you spread your money to manage risk and how long will you give an investment to prove itself? With regard to investment choice, you need to establish what an acceptable return is and how much risk you are willing to take with your retirement savings. Another important consideration is monitoring your own fund's performance - how is it performing relative to other funds after all your costs are factored out? If it's not doing better, or at least as well, perhaps professional management of your superannuation monies may be your better option.
Please note, there are serious ramifications if the trustee of a self managed super fund does not comply with the rules and regulations. SMSF's are complex and there are many things you have to consider including the investment strategy, the administration of your fund and compliance with superannuation and other laws. The ATO has publicly stated that they are targeting self managed super funds and their compliance. Mentor will do its upmost to educate trustees on the rules and regulations but will end our relationship if the trustee exhibits a cavalier approach.
Please contact Mentor and speak with one of our Advisers, so we can provide you with tailored advice which is appropriate for your individual needs.
Back to Self Managed Super Funds
Borrowing within self managed super funds
In September 2007, new laws came into effect that permit a self-managed super fund to invest in an instalment warrant issued over any asset that an SMSF can invest in directly.
Among other things, this has had the effect of allowing an SMSF to borrow and purchase investment property. The fund must enjoy a right (but not an obligation) to acquire the legal ownership of the asset through the payment of instalments.
The trustee of an SMSF needs to understand the risks associated in any form of gearing. In rising markets, you will accumulate wealth at a much faster rate because you have access to the returns on more assets. However, in falling markets your losses will be amplified.
Please speak to one of the team at Mentor before engaging in any borrowing within your self managed superannuation fund