If you are thinking about saving for retirement, one of your best options is a self-managed super fund. This is a retirement account that you manage on your own, and that is set up to benefit you (or possibly your dependents) in the event of your retirement. Although this is a great way to save for retirement, they aren’t for everyone, and these accounts differ from a traditional trust in many different ways. Here’s what you need to know before setting up your fund.
What is a trust fund?
In a traditional trust, the money is managed by someone other than the trustees. For example, a retirement or superannuation fund that is managed by your employer would fall into this category, because you cannot touch the account at all until you retire. Although these accounts can be very convenient because they are managed for you, they don’t give you the same level of flexibility that you would get with a self-managed super fund.
What’s the difference between a self-managed super fund and
With an SMSF, you are responsible for investing and handling the funds in the account, so if you have a considerable amount of financial knowledge, you may get more out of an SMSF than other types of funds.
However, there are many other factors to consider. For example, with an SMSF, you bear all compliance risk, which means that you need to be aware of all legal regulations that surround your account. You also are not eligible for any dispute assistance or compensation in the event of fraud or theft. You also can only have a total of four trustees on the account, which is something to consider strongly if you have a large family.