A self-managed super fund (SMSF) can form a key part of an Aussie’s retirement plan.
This is particularly the case if you’re a keen-eyed ASX investor looking to beat the market and achieve capital gains.
Very few Australians are well-informed about what a self-managed super fund is and how it could benefit them.
So, let’s take a look at the ins and outs of SMSFs and see how you can achieve your retirement goals.
What is a self-managed super fund?
For most Australians, super is paid into an industry or privately-run super fund.
However, there is an option to have more control over your superannuation, and that is through an SMSF.
An SMSF is a more sophisticated vehicle that allows you near-total control over your investments.
Common uses of a self-managed super fund include holding investment properties, direct share investments or business holdings.
If you’re a strong stock picker with a fair retirement nest-egg, then an SMSF may be for you.
Do I need more control of my super?
The answer to this will vary depending on your own circumstances and comfort level.
The reality is that many of the industry super funds have delivered exceptional returns in the past few decades.
While past performance doesn’t indicate future performance, it does inevitably build confidence in super fund participants.
The big advantage of a self-managed super fund is the flexibility it can provide you in your retirement investing activities.
Are there any downsides to an SMSF?
It might seem good on paper, but the flexibility of an SMSF does come at a cost.
Apart from the potential pitfalls of bad investments wasting away your retirement buffer, there are costs involved.
The added complexity and individuality usually requires lawyers, accountants and/or financial advisors.
The good news is that once you have your SMSF in place, the ongoing management fees really shouldn’t be too high.
As always, it’s best to consider what is right for you before you go diving into those Afterpay Touch Group Ltd (ASX: APT) shares in a shiny new SMSF.
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Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.