With over $750 billion dollars of Australian funds invested in Self Managed Super (SMSF) in Australia, it is by far the biggest superannuation fund segment of choice. It currently makes up 28% of the total superannuation pie and dwarfs its next closest rivals being the Industry and Retail funds, valued at less than $600 billion each.
SMSF are a private super fund option that allows up to 4 members to bring their super together for a common investment purpose. Typically they are used by married couples, but we’ve seen them used between business partners and family units, with kids. The benefit of this pooling effect can be that a more expensive investment is affordable, like a property for example and partly due to the fact that funds can be pooled, the average SMSF in 16/17 FY, was $693,000.
Each year the Australian Tax Office release statistics on the SMSF sector and the most recent, relates to 2016-17. You might be wondering – Why so old? The reason is because SMSF’s have to lodge a tax return like we do as individuals and therefore returns are not typically collated until the following financial year.
One of the things their research showed is that on average SMSF members are very satisfied with their fund once they set them up. In 10 years prior to 30 June 2017, 88% of funds were still in existence, highlighting that there only a small group of people starting an SMSF that later realise it is not appropriate for them.
The median age of trustees in 2016/17 was 48 years and it is interesting to note the trends on the age groups opening SMSF’s in the period. It reflects a typically younger demographic that are setting them up, as is reflected in the following graph.
SMSF’s are a super investment of choice for many Australians, because they give the most control and flexibility; they can be the least expensive fund to run; and with rapidly improving technology, they are getting simpler to manage too.
Coupled with this the investments available on the ASX, that offer simple, diversified and low cost access to investing, are just some of the reasons SMSF’s are becoming more and more popular and worthy of consideration.
To read more about how we can assist with SMSF advice, click here: ‘Our SMSF Advice’.
Written by James McFall