Superannuation and SMSFs

Superannuation is one of the well-known ways of saving for retirement. Most salary or wage earners will have some form of superannuation yet many are unfamiliar with how it works or how they can maximise their superannuation savings through various government incentives. By law, Australia has a compulsory system of Superannuation that your employer pays into a choice of super fund. This is also called the Superannuation Guarantee.

Super as it is commonly referred to, is your first step to save for a comfortable retirement. Your super savings are invested by the super fund across various investment options. The return on investment directly impacts the growth of your super, hence it is important to select a fund or investment option most suitable for you and consider any risks associated with such investments.

Upon retirement, your super fund can then be withdrawn as a lump sum amount, regular income or a combination of both. Depending on your financial situations upon retirement, if you choose to use your super as a retirement stream, the money that you do not access continues to grow in your account.

Choosing the right super fund and selecting the right mix of investments for your super savings are the most critical decisions here. It is an important decision with a direct impact on your retirement.

Often people choose to set up their own fund called a “Self-Managed Super Fund” (or SMSF) and direct the money into an investment property. However, there are important regulations you need to know about and identify its implications on how borrowed funds or internal cash can be used to support an SMSF investment property. An SMSF can also be used to invest in shares which has implications from fluctuating market trends and your risk tolerance becomes a significant aspect to consider.

At Kalpa Wealth Management we understand the complexities of superannuation and SMSFs and can help you to aim to assess your options and arrive at a superannuation strategy that’s right for you.

Is an SMSF Right for you? Download our Smart Guide to SMSF

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