WEALTH HUB JOURNAL

Is Now the Right Time for a Self-Managed Super Fund?

Now is the perfect time to set up a self-managed super fund (SMSF), because while interest rates in Australia are at an all-time low, they won’t be for long.

Higher petrol prices are driving up expectations for inflation, with the RBA predicting inflation won’t drop back down from its current 3.5 per cent until mid-2023.

The futures market forecast for interest rates presents challenges for home buyers as well. If you’re one of the many Australians who took advantage of low-interest rates during COVID and bought a home or plan to purchase property, prepare for rates to go up.

In April, the market forecast projected the RBA to raise the official cash rate (OCR) from its current record low of 0.1 percent to 1.75 percent by the end of the year and 3 percent by August of next year.

The freedom of an SMSF can help you secure your financial future, and now is the time to set one up before property prices worsen.
Let’s look at the advantages and disadvantages of an SMSF so you can decide if it’s the right strategy for your investment.

What Is an SMSF?

An SMSF is a trust structure that allows you to use your retirement pension benefit funds, or superannuation, for property investment. While you and your employer contribute to your super, you’re building a valuable tool that will help you purchase investment properties and achieve financial independence.

However, like many things in the world of investments, self-managing your super involves risks.

Always seek the counsel of financial experts when making investment decisions, especially when setting up an SMSF.

Most areas will offer holiday activities like Christmas markets and photo opportunities with Santa, so check your city’s website and local blogs and magazines for lists of Christmas events. If you live close to a beach, you don’t need Bali. And if you’re more active, a bushwalk or adventure sport can be something you’ll remember for the rest of your life.

The important thing is to deviate from your normal lifestyle. Focus less on housework and more on fun activities and leisure so you make good memories and are satisfied with your “staycation.”

Advantages of Setting Up an SMSF

While there is some risk, there is also a reward in setting up a self-managed super fund. Here are some of the top advantages:

1. Take control of your money
   With an SMSF, the trustees will craft an investment plan tailored to your specific needs, but you retain the decision-making power. This is not the case with industry or retail super funds, where you will have limited control over your investments due to the numerous parties wanting to benefit.Wealth Hub Australia has a network of specialists ready to advocate for you with the trustees to make sure the strategies for your SMSF prioritize your success.
2. Enjoy greater freedom
   Here are some of the things that self-managing your superannuation will allow you to do that other super funds won’t:
   • Invest in shares
   • Add money into a term deposit
   • Invest in commercial or residential property — if you don’t live in it.

   You can also keep up with the changing economic landscape and alter your strategy based on rising interest, changing laws regarding superannuation, or events happening in your life.

3. Lower payments
   In most cases, it will be more cost-effective to manage your SMSF as it grows. However, this depends on how much assistance you need from your professional team. If you have a large balance in your super, independent advisors can help you keep taxes as low as possible.

Disadvantages of Running an SMSF

While there are numerous advantages to self-managing your funds, there are also downsides. Here are some of the disadvantages you may face with your SMSF.

1. It requires time and experience
   Self-managing your super requires financial literacy and knowledge of Australia’s complex tax and superannuation laws. Not everyone has the time or desire to research how to optimise their SMSF and navigate the constantly changing legal landscape.Wealth Hub Australia can save you time and stress by putting you in contact with our network of experts. They have the education and years of experience required to take the anxiety and confusion out of effectively running your SMSF.
2. Scams are hard to spot
   Phishing scams and identity theft abound among people offering to “help” you with your SMSF, and they’ve reached a level of sophistication that makes it difficult to know who to trust. Australians lost $177 billion to investment scams in 2021, with nearly 3,000 reported scams in NSW alone.People who try to self-manage their super are more vulnerable to scams if they don’t have a financial advisory professional in their corner. At Wealth Hub Australia, we connect you to our referral network of professionals who can guide you every step of the way.

Let’s Set Up a Call

Self-managing your super fund can give you more control over your money, offer you more options, and lower your payments. However, the experience and education required to manage your SMSF effectively, and the challenge of avoiding fraud and theft, make it important to have a financial advisory expert on your side.

If you want to protect your investments from rising inflation and interest rates, set up a call with Wealth Hub Australia today and we will discuss your options. If you qualify, our network of experts will help you navigate purchasing property with your super so you can achieve your goals and reach financial independence.

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