Types of SuperFunds
Selecting a suitable superannuation account for your needs is essential to gain the most out of your funds. Most superfunds fall under the four categories of:
• Industry funds
• Retail funds
• Wrap accounts
• Self-managed super funds (SMSF)
Industry super funds can range from large to small and are usually not high in costs. Larger industry super funds can be accessed by anyone employed, while the smaller industry super funds can only be accessed by an individual working in that particular industry.
Industry super funds are usually accumulation funds. Accumulation funds are depended on the amount which is placed into the account by yourself and your employers. The investment rate can then be determined by the fund and the funds are mainly passively managed.
Industry super funds are beneficial to many as most offer MySuper accounts. A MySuper account is the default account an employer provides you with at the beginning of your employment if you do not supply your own.
Retail super funds are available to everyone and are ran by banks and investment companies.
These accounts are beneficial to the majority because they offer a wide range of investment options in passive and active fund management.
The accounts are medium in cost, although some retail super funds do offer a low-cost option or MySuper accounts.
Wrap accounts are also available to everyone and are ran by banks and investment companies. These accounts will allow you to have multiple fund managed handling different assets classes of your superfund for example, one for Australian Shares, International Shares, Property and Cash/Fixed interest managers. The fund management can be passive and actively managed which is determine on the investment choices that have been made. Most Wrap accounts also allow direct shares and managed funds to be held all in the one wrap account, this allows for all investments to be seen in the one spot and makes them easier to access.
The accounts are medium to high in cost, due to more administration and direct investment
Self-Managed Super Funds (SMSF)
A self-managed super fund is a private fund where you choose the investments and insurance cover.
Setting up a self-managed super fund and the ongoing costs involved with running the fund can be expensive. Running a SMSF comes with many risks and should only be done once you have developed a clear understanding of what needs to be done to make this fund operate successfully. There are strict laws and regulations that govern SMSFs. As a trustee of your own superannuation fund you’re held responsible for your investments and complying with super and tax laws. So it’s important to understand the risks before you get started.
Anyone considering setting up a SMSF should seek professional advice with an accountant and a Financial Planner.
Tyron says “People who are more engaged with their super may want to use superfunds
that have a very broad range of investment options run by specialist managers, and review
and adjust them periodically, aiming to achieve better returns and greater diversification.”
Mitchell Advice Pty Ltd ABN 44 625 356 872 t/as Orange Financial Planning is a Corporate Authorised Representative of Synchron AFS License No 243313.
Unless specifically indicated, the information contained in this email is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek personal advice from a financial adviser
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