The number of new SMSFs established each year has consistently reduced over the last decade. The reason for this is that many people believe SMSF setup is too complicated and time-consuming to operate. Furthermore, they are unable to think of a compelling reason to go through the hassle of establishing an SMSF.
There Are Several Compelling Reasons to Do So:
- Control Over Your Investments
One of the primary advantages of an SMSF is the ability to access a wide range of investment assets while maintaining a high level of control. You can invest in commercial and residential property, collectibles, term deposits, and direct shares through an SMSF.
- Invest in Real Estate with an SMSF
With an SMSF, you can invest in pricey assets that you might not be able to afford otherwise. Of course, commercial and residential properties are included. You can also borrow money through your SMSF by applying for a limited recourse loan.
- Control and Reduce Your Taxes
SMSFs allow you to better manage your taxes. The current tax rate on SMSF earnings is 15 per cent. However, if you are retired and use the assets in your SMSF to produce your pension, you do not have to pay any tax on the income.
- SMSFs Provide Asset Protection
Asset protection is essential for investors and company owners, and an SMSF is excellent at protecting all of its members in the case of bankruptcy or lawsuit. This is because your SMSF's advantages are likely to be protected by creditors. If your business fails, you will be left with your SMSF balance because it is your only asset.
In Summary:
As you can see, there are numerous compelling reasons to establish an SMSF. It can assist you in gaining control of your investment assets and providing for a comfortable retirement. You'll also be able to save money on multiple occasions.
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