When you have stepped out on your own and decided to manage your own super, there are a few things that can be done to ensure that you are getting the most out of your SMSF. Here are some tips and tricks to help you do this.
1. Know what you’re dealing with – The finance industry is similar to a roller coaster, the more times you’ve been on the ride, the more you’ll know when to expect the next dip. Educating yourself on the market is one of the most powerful tools you can have at your disposal. Not only will it allow you to make better, more informed decisions on where to invest your money, but it will also prepare you for when the market does change direction. There are many resources online and in print that you can use, but it’s also very useful to engage a professional who can demystify any jargon or confusion you may have.
2. Understand the tax breaks you’re entitled to – There are a wide range of tax benefits that SMSF holders are privy to, that managed fund members are not. To completely understand the depth of these tax breaks that could save you thousands of dollars, it’s best to discuss your options with your accountant and double check by researching it online to ensure you full understand.
3. Register for Co-Contribution – The Australian government has realised how important it is for both the Australian public and the government itself to have each retiree hold a healthy nest egg. That’s why the government has implemented a scheme to encourage people with super funds to contribute themselves over and above what their employer is paying. If people decide to do this, the government has agreed to match the contributions dollar for dollar, but it is capped at a certain amount. By registering for this and contributing, you could add thousands of dollars to your self managed super fund.
4. Divide and Conquer – When swapping to a self managed super fund, you’ll be given ultimate control over where your money is invested. Therefore, if you’re new to the finance market and managing your own super, it’s best to diversify your investments to minimise your risk. After you’ve learned more about the finance market and are comfortable taking some calculated risks to maximise your return, it won’t be as important to spread out your investments as you’ll know what works best for you.
When it comes to your superannuation, you need to be very careful with where you choose to invest because it’s your future you are managing. Sure there will be some hits and misses, but ultimately, to get the most out of your SMSF, you need to know the market, seek advice when you need it, and play it safe until you’re confident you know what you are doing.