Think you’re too young for self-managed super? Maybe not
Ever felt like personal finance is an endless pool of acronyms? Trust me, you’re not alone.
One that often piques curiosity is SMSFs – self-managed super funds. Many think it’s only for seasoned investors, but age might just be a number when it comes to SMSFs.
One of the perks of SMSFs is the ability to put residential property inside your super fund.Credit: Karl Hilzinger
Picture this: a super fund with the ability to pool up to six members’ balances, giving you more opportunity, control and flexibility over your approach to investing for retirement. Sounds like an interesting prospect for young accumulators working together to change the path of their retirement savings, right?
Unlike industry and retail funds, an SMSF can invest directly into property, both residential and commercial, in Australia and overseas. But before you get too excited about that idea, strict restrictions around personal use of super assets apply.
Another trend we’re seeing in SMSF is increasing investment in cryptocurrencies. This currently sits at over $1.6 billion, representing a 576 per cent increase since March 2021. An SMSF can also invest in private equity opportunities, unlisted and listed shares, and you get your franking credits too.
You might also be surprised to learn about some of the borderline ridiculous things Australians own in super funds. Think collectibles such as signed cricket bats and antique cars, fine wine, paintings and even racehorses (just to be clear, I am stating what you can do, not necessarily what you should do).
The earlier you start, the more you can potentially benefit from this dynamic financial tool.
So, when is the best time to start one? As a financial adviser, I get asked this a lot, and while tax office data reveals that 75 per cent of Australia’s 1.1 million SMSF members are over 50, the truth is age has nothing to do with it. It’s more about the right opportunities presenting themselves.
The specific scenarios and use cases where an SMSF can work best for younger wealth accumulators typically involves business owners, high-income earners, or those with large existing super balances.
