The best uses
of a self managed
super fund (SMSF)

In the pursuit of a financially secure future, many individuals turn to self SMSFs as a powerful tool to take charge of their retirement savings.

Unlike traditional superannuation funds, SMSFs offer greater control and flexibility over investments by providing an array of possibilities for achieving long term financial goals.

As the popularity of SMSFs continues to soar, let’s explore some of the best and most popular uses of these funds that can pave the way to financial freedom.

1. Diversified investment portfolio

One of the most attractive features of an SMSF is the ability to tailor an investment portfolio to suit individual preferences and risk appetites.

SMSF trustees have the flexibility to invest in a wide range of assets including stocks, bonds, property, cash and even direct ownership of businesses. By diversifying their investments, trustees can spread risk and potentially achieve higher returns over the long term.

2. Real estate investment

Investing in property is a highly favoured use of SMSFs providing a tangible and potentially lucrative asset. Trustees can invest in residential or commercial properties and can even pool their funds with other SMSFs to invest in larger real estate ventures.

Utilising an SMSF for property investment can offer tax advantages such as reduced capital gains tax and the potential to claim deductions on expenses related to the property.

3. Business ownership

For those with an entrepreneurial spirit, an SMSF can facilitate the dream of business ownership.

SMSFs are not prohibited from carrying on a business, but the business must be:

  • allowed under the trust deed, and
  • operated for the sole purpose of providing retirement benefits for fund members.

The rules governing SMSFs prohibit or limit some activities available to other businesses such as entering credit arrangements or having overdrafts. You should get professional advice before carrying on a business through your SMSF. For more information click here to go to the ATO website.

4. Tax planning strategies

SMSFs offer excellent tax planning opportunities, especially for those nearing retirement age. Trustees can strategise their contributions and pensions to minimise tax liabilities and maximise the funds available for retirement.

Additionally, SMSFs can implement tax effective pension strategies to optimise income during retirement.

5. Estate planning and wealth transfer

SMSFs provide a valuable tool for estate planning and wealth transfer. Trustees can structure their SMSFs to create binding death benefit nominations, ensuring that their superannuation benefits are distributed according to their wishes.

This allows for the smooth transfer of wealth to beneficiaries while minimising potential disputes and taxation.

6. Art and collectible investments

Art and collectibles can serve as alternative investments within an SMSF. Trustees with a passion for art, antiques or other collectibles can use their superannuation funds to acquire such assets.

However, it is essential to comply with strict regulations to ensure that these investments align with the sole purpose of providing retirement benefits.

7. Growing retirement savings

By actively managing their investments, SMSF trustees have the potential to grow their retirement savings at a faster rate compared to traditional superannuation funds.

This growth is driven by the ability to capitalise on market opportunities, make timely adjustments to the portfolio and optimise the fund’s performance.

8. Borrowing to invest (Limited Recourse Borrowing Arrangements)

SMSFs can borrow funds to purchase assets through a Limited Recourse Borrowing Arrangement (LRBA). This feature allows trustees to acquire assets, such as property or shares, without using the entire superannuation balance.

While an LRBA can amplify returns, it’s crucial to assess the associated risks and adhere to strict borrowing rules.

9. Family investment strategy

SMSFs can be strategically used to benefit the entire family. For example, SMSF trustees can create a family investment strategy that includes family members as members of the fund. This enables the pooling of resources, potentially leading to more substantial investments and cost savings.

10. Control and flexibility

Finally, the overarching benefit of an SMSF is the level of control and flexibility it affords. Trustees can respond to changing market conditions, adjust investment strategies to suit individual circumstances and make informed decisions that align with their long term financial goals.

A word of caution

Seek professional advice

While SMSFs offer numerous opportunities for financial growth and security, it is essential to approach their management with prudence.

Managing an SMSF involves significant responsibilities, compliance requirements and potential risks. Trustees are urged to seek professional financial advice before establishing or making any investment decisions within the fund.

Empowering your financial future with SMSFs

An SMSF is a powerful vehicle that empowers individuals to take control of their retirement savings and pursue their financial aspirations.

With diversified investment options, real estate opportunities, tax planning strategies and the ability to invest in businesses and collectibles, SMSFs offer unparalleled flexibility and potential for growth.

With power comes great responsibility

SMSF trustees must navigate complex regulations, adhere to compliance requirements and make informed decisions that align with their long term financial goals.

Seeking professional advice is crucial to ensure that SMSFs are used effectively and securely to unlock the full potential of these funds and pave the way for financial freedom and a prosperous retirement.


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Disclaimer: This article provides general information only and has been prepared without taking into account your objectives, financial situation or needs. We recommend that you consider whether it is appropriate for your circumstances. Your full financial situation will need to be reviewed prior to acceptance of any offer or product. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances. © 2023