SMSF finance is a way to fund your real estate investment besides a home loan. SMFS (Self Managed Super Funds) are directed at people who like to get hands on with managing their finances and those who like complete control over their funds. SMSF finance gives people added responsibilities as well as a good amount of paper work, which can prove to be burdensome. SMSF finance will work best for people with extensive financial as well as legal skills and knowledge. If you are prepared to spend a good amount of time researching and tracking your money, then opting for SMSF finance can be very rewarding.
How does a SMSF finance work?
The first step to an SMSF finance is that you will have to setup a private super fund. There can be more than one member (up to four members) in an SMSF finance and all are equally responsible; each member will be called a trustee or a director.
You will have these roles and duties when you manage your own SMSF finance
- As the director, there will be certain legal responsibilities on you.
- The money should be used only to give you retirement benefits.
- You should set up a strategy that will ensure you have made and taken all the steps that will keep your retirement as financially stable as possible.
- Keep, update and maintain all the paperwork which will also have to be audited regularly as per regulation.
- You can hire a person to do the paperwork and make decisions for you, but they will be acting on your behalf and your responsibilities cannot be transferred.
The main investment that is normally done in an SMSF finance is real estate. You can purchase any kind of rental or commercial property, as long as your post retirement years will be kept well funded and you are able to keep the SMSF finance alive.