There are many ways to invest for the future. The future is not just about to have a nice house, bring kids to college and the like. The future means saving some funds for retirement purposes. Among the many ways that exist is the superannuation. This is a good method of investing for the retirement years as it enables the person to gradually build the money right until the period of retirement. All the employed individuals can join such fund. However, even those people who are not are also free to make contributions when they join. This type is known as the self managed superannuation funds or the DIY super funds.
Nature of Self Managed Superannuation Funds
The SMSF are the funds that are established for small group of individuals. The usual group consists of less than 5 members. It is regulated by the Australian Tax Office. It is a trust fund. Hence the contributors or the fund members are also the trustees. They have the responsibility to perform prudential operations for the funds as well as the creation and implementation of the investment strategy. The assets and the funds can only be used to provide benefits of the members’ retirement. The funds cannot be used for any sort of personal use by the trustees or other third parties. Other facts can be found here http://ezinearticles.com/?SMSF,-How-to-Establish-a-Self-Managed-Super-Fund-in-Sydney,-Australia&id=7537852
Super Funds Advantages
The super funds and the SMSF are entitled to concessions of taxes. It is the allowable deductions and lower income tax rates for the contributions paid. The said funds likewise have the government benefits. There are even cases when it provides insurance coverage and total/permanent member disability insurance.
Who are able to join such investment?
Like what was mentioned above, anyone(managers, accountants, bookkeepers, nurses, medical assistant, etc) is free to join the super funds regardless if they are employed or not. So, when you are not an employee or you are yet with low income, your spouse in your behalf can make contributions for you. The contributions can be made until you reach the age of 65. For the self employed individuals, deciding to join and make contributions is also possible. You can also claim an entire tax deductions for all the contributions made.
Limitations of SMSF
This is a super fund type that is managed by the trust deeds and super laws. This implies that it is a legal document that specifies the rules for the operation and establishment of the funds. Particularly, the trust deed determines the following:
- The duties, responsibilities and power of the trustees
- The member’s rights
- Objectives of the funds
- The trustees of the fund
- Trustee’s qualifications
- The appointment and the removal of a trustee
- Changes of the process
- The date when the contributions can be made
- The manner how to take advantage of the benefits
- The appointment of the professional advisers such as the auditor
Although the SMSF is do-it-yourself agreement, it will still need skills in investing, considerable time and profit ability to work. For anyone interested to set up one should be informed or aware of the strict requirements of the investment and should be able to follow it.