A self-managed super fund or SMSF is a type of superannuation scheme which is meant to provide retirement income to members who are likewise the beneficiaries. With an SMSF, know that you will be in control of your fund’s investments and that you can purchase residential or commercial property; provided though that the only purpose of this investment is to give retirement benefits to your members or to their dependents when a member dies prior to his or her retirement.
Be aware that an
SMSF property investment must be planned meticulously and can just be
undertaken when the SMSF investment strategy allows for it. If you are going to
set up an SMSF, there are certain requirements you must fulfil to allow for
property investment in your superannuation fund to happen. If you are planning of
investing in property in super, it would be a wise idea for you to employ the
services of a company to run your retirement vehicle.
Other Requirements When Setting An SMSF Property Investment
- Tax File Number (TFN)
- An Australian Business Number (ABN)
- Bank account under the fund’s name – the contributions can be made through it and it can actually pay the fund’s expenses
Prior to making investment decisions for
your fund, you must develop as well as implement an investment strategy. Be
aware that an SMSF investment strategy is the trustees’ responsibility. Also,
this must be a written, detailed financial play which outlines the goals and
objectives of your fund along with what investment types your fund can make.
Important Considerations When Developing & Reviewing Your SMSF Investment Strategy
- Extensive knowledge about the personal circumstances of all the members of the fund – As mentioned earlier, providing retirement benefits to your members or to their dependants in case the member dies before his or her retirement is the sole purpose of the fund. Also, your investment decisions must comply and support this. Important variable to account for will include the age of each member, retirement necessities, risk tolerance, and personal circumstances.
- Liquidity of assets
- Diversification of the assets of the fund – A smart way of minimizing investment risk is to have a diversified investment portfolio.
- The ability of the fund to pay benefits along with other costs it will incur must be studied.
- Insurance needs of all the fund members – It is also important for you to figure out if the insurance must be held in the SMSF.
With all of
these important considerations, SMSF property investment must be thoroughly
though out. When this process becomes very overwhelming to manage, get help
from licensed, experienced financial professionals specializing in SMSFs.
Source: otiumgroup.com.au
is among the experts you can trust when it comes to SMSF property investment
matters.
