Building and managing your wealth is definitely not an easy task, but it’s something you need to invest time and effort into in order to achieve financial independence and affluence down the road. A traditional way to do this would be to give your money to a fund management corporation, which would take control of those assets and make investments that will, hopefully, generate considerable returns over the following years and decades. Nowadays, things are changing drastically and financial advisors are increasingly steering business owners towards building a self-managed super fund.
So, what is an SMSF? A self-managed super fund is a fund you set up yourself, for yourself, either alone or with a group of trusted investors like you. Working closely with your accountants and legal team, you can set up an SMSF with your other investors to control your combined wealth and make investment decisions for the betterment of your financial future.
Let’s put this into perspective and take a look at the key benefits of a self-managed super fund and how you can set it up.
Control how your assets are used
One of the main reasons why self-managed super funds are becoming so popular among small business owners these days is because it allows a much higher degree of asset control and management. If you were to give your assets to a fund management corporation, you would have little to no say in how that money is managed, where it goes, what projects it is funding (some of which might go against your values and beliefs), and whether or not the corporation itself will survive in the long run.
If something were to happen to that fund management cooperation, you could stand to lose all your money for good, or at the very least you would be tied up in lengthy legal proceedings. A far better option would be to establish an SMSF that you and your partner investors can control and oversee by yourself. This way, you will retain complete control over your assets and invest in the right opportunities.
Maximize the value of your business in the long run
The obvious benefit of controlling your finances through this fund is that you can collectively allocate resources towards asset procurement. In other words, you can use your self-managed super fund to obtain physical assets, or properties, that will further accrue wealth and value for your businesses or help you achieve your personal goals. For the most part, these investments need to work for all members of the fund, but you can also make investments into individual business growth.
For example, a self-managed super fund would allow you to buy the building where your business is located, after which you can lease the rest of the space to other businesses and tenants in general. You can, therefore, grow your income streams by procuring other properties and thus diversify and strengthen your portfolio.
Work with legal professionals for tax purposes
When you’re considering setting up your self-managed super fund, it’s important to work with professional accountants and legal experts in order to ensure legal compliance, and for various tax purposes. Keep in mind that proper SMSF setup and administration will depend on the country you’re operating in and its laws and regulations, which can also lend itself to tax benefits and incentives.
Some of the benefits may include a reduced capital gains tax by transferring the commercial property to the fund, tax deductions for business expenses, deductions for money earned by the fund, and more. Your accountants and legal experts will make sure to explore all the opportunities and tax breaks you can capitalize on, which will help you grow your wealth further and take your business forward.
Finance your life insurance and other policies
You might not have known this, but you may be able to pay for your life insurance policy, your total and permanent disability insurance, and an income protection insurance policy through your self-managed super fund. You can work with other investors in your fund to finance your group life insurance policies, for example, but keep in mind that this coverage can be cancelled by other party members at any time. It’s important to work as a team to make the best insurance decisions and thus safeguard your personal and professional assets over the long term.
Build your wealth to secure your family’s fortune
Last but not least, keep in mind that your self-managed super fund is a gateway for a financially stable future for you and your family, and that you can one day use it to transfer your wealth to the next generations or your beneficiaries.
The fund is a way to manage and grow your wealth sustainably over the long term by making smart investments with your team, and you can one day transfer that wealth and your assets to your next of kin, meaning that the fund lives on after you’ve passed away. This is one of the best ways to secure your wealth and its future to take care of your loved ones.
Over to you
There are many other benefits to building an SMSF as a small business owner, and the right accounting and legal team will help you uncover the SMSF’s true potential. Be sure to work closely with these experts and find other investors you can trust to launch your own fund and secure your financial future.
Guest Author, Raul Harman, s a B.Sc. in Innovative entrepreneurship and has a lot to say about innovations in all aspects of digital technology and online marketing. While he’s not enjoying travel, football and great food, you can find him on Technivorz.com.