Are you considering setting up a Self-Managed Super Fund (SMSF)? Maybe you’re saving for retirement. Perhaps you want better control over your money and investments. Today, more than 1.1 million Australians manage their own superannuation through SMSFs with nearly 600,000 total funds, and the numbers are steadily rising. But what exactly are Self-Managed Super Funds, and how do they help you achieve your financial goals?

What is a Self-Managed Super Fund?

A Self-Managed Super Fund (SMSF) is a privately run super fund that offers a clever way to save for retirement. According to the ATO, ‘the difference between an SMSF and other types of funds is that the members (up to six people) are usually the trustees.’

Since the trustees run the SMSF for their benefit, they are responsible for complying with all the super fund rules and regulations set by the ATO.

Importantly, if you choose to set up an SMSF, you’re in charge and responsible for complying with super, tax and trust laws. SMSF specialists can help with your SMSF setup, administration, taxation and audit duties to ensure you stay compliant.

Benefits of a Self-Managed Super Fund

The most common benefits of an SMSF are that you have control, flexibility, longevity, variety of investment choices and can borrow to acquire assets, mainly directly held property.

As a member of an SMSF, you have access to various investment choices, including shares, real estate property, managed funds,  fixed-interest investments, initial public offerings (IPOs), collectables such as artwork (has strict rules) and gold and silver bullions.

You also get significant tax benefits. For instance, you can contribute before-tax dollars through salary sacrifice. Also, complying super funds receive the lowest tax rates of any entity structure in Australia on income and capital gains. Additionally, when you receive a pension or lump sum, you’re unlikely to pay tax on them if you’re over 60.  Other benefits include:

Financial flexibility

SMSFs also offer the most flexible option for paying benefits in retirement, whether taken as a pension or lump sum.

Insurance savings

Life and total and permanent disability insurance are also obtainable through your SMSF, thus making the premiums a tax-deductible expense.

Cost savings

An SMSF can be more cost-effective than other superannuation alternatives when set up and managed correctly. In our experience, the reason is twofold.

  • First, SMSF expenses are mostly fixed. By contrast, retail and industry funds charge fees at a percentage of assets under management.
  • Secondly, you can consolidate up to six family members within a single SMSF. This means there’s one collective fee instead of each member paying separate fees.

What can an SMSF invest in?

SMSFs allow you to invest in a broad range of asset classes. For instance:

Residential and commercial property

Unlike traditional super funds, you can invest directly in real estate property using your SMSF, but there are rules and it’s a complex process.

When it comes to residential property, you or anyone related to you can’t live in the property owned by your SMSF and it has to be rented out to a third party at market rent.  However, if your SMSF owns a commercial property, you and/or your relatives can lease it out as long as it’s solely used for producing business-related income. The property must return a market rental income.

While all types of super funds can borrow to make investments, it’s primarily SMSFs that take advantage of this option. Members of an SMSF can often use limited recourse borrowing arrangements to acquire property. However, lenders will sometimes require the SMSF to have a company as a trustee rather than individual trustees.

Australian and international shares

You can buy shares listed on the Australian Stock Exchange and Exchange Traded Funds (ETFs) that track markets like global markets or sectors such as technology and healthcare.

Cash and term deposits

Most banks offer term deposits specifically tailored to SMSFs. While considered a low-risk strategy, term deposits offer higher interest rates than most savings accounts, provided you don’t withdraw the funds before the end of the term.

Fixed income investments

Corporate and government bonds are the most common type of fixed investment products. Historically, they’re popular because they’re less volatile than shares. That being said, they’re not the only fixed-income products available to SMFS. Other products include money market funds, Treasury bills and notes, asset-backed securities and mortgage-backed securities.

Generally, these investments offer a pre-determined rate of return with reliable governments or large corporations backing them. However, they can be less liquid than stocks, making it more challenging to enter and exit the market quickly.

Physical commodities

Commodities are a class of investments that cover basic goods like precious metals. As an asset class, commodities appeal to investors because of their independence from stocks, real estate and bonds. Plus, commodities typically thrive in rising inflation markets, making them a helpful hedging tool against inflation.


Artwork, jewellery, antiques, cars, coins, memorabilia and wine all fall into the collectables category. However, with the introduction of stricter regulations in 2016, fewer SMSFs invest in collectables. So, before adding collectables to your SMSF, ensure you understand the ATO’s collectables rules.

How to develop the investment strategy for your SMSF

When creating an investment strategy, we advise our clients to consider the following factors:

  • Each member’s (trustee’s) individual circumstances
  • Asset liquidity
  • Whether the investment meets the retirement and investment objectives, and
  • Decide on whether or not to hold insurance cover for the SMSF members.

And when deciding which investment strategy is most suitable for you, we suggest our clients aim for three goals:

  1. Capital growth
  2. Income, and
  3. Capital preservation.

Seeking professional superannuation accountants

Establishing an SMSF isn’t a simple set-and-forget process. For this reason, we recommend watching the ATO’s short but engaging SMSF setup video. In less than three minutes you’ll discover why seeking expert advice is the all-important first step.

At Carbon, we’re here to assist you with the journey – from establishing your Self-Managed Super Fund to ensuring legal and tax compliance. We’ll also provide you with tailored advice on how best to structure your SMSF and invest based on factors such as age, risk aversion and desired retirement outcomes.

Expert advice for SMSFs

Are you looking for more control over your retirement savings and the added benefits of tax savings? An SMSF might just be the answer! But here’s the thing, setting up an SMSF can be a bit tricky and that’s why it’s always a good idea to get advice from a pro.

That’s where we come in. Our team of experienced superannuation accountants are experts in SMSFs and know exactly how to make sure your fund complies with all the relevant laws. Plus, we’ll work with you to make sure your investments align with your retirement goals and personal circumstances. With our help, you can feel confident that you’re on the road to a secure financial future. Get in touch with us today.