Self-managed superannuation funds (SMSFs) can appeal to people who want hands-on control and flexibility over their retirement savings. Below are the key advantages—along with context to help you assess whether an SMSF could suit your goals.
Investment Control
SMSFs give trustees direct control over how and where money is invested. Unlike traditional super funds with preset options, trustees can build a tailored portfolio spanning shares, property, managed funds, term deposits, ETFs, and other permitted assets. This control allows you to set your own strategy, adjust quickly to market changes, and align investments closely with your objectives and values. For an overview of how SMSFs work, see the Australian Taxation Office (ATO) SMSF guidance and ASIC’s MoneySmart SMSF resource.
Diversification
With broader investment choice, SMSFs can diversify across asset classes, sectors, and geographies, helping to manage risk and smooth returns over time. Trustees can build a portfolio that matches their risk tolerance and time horizon while remaining consistent with the fund’s documented investment strategy and legal obligations.
Cost Efficiency
SMSFs involve setup and ongoing expenses (such as administration, audit, and advice). However, because many costs are fixed rather than charged as a percentage of your balance, an SMSF can become cost-effective as the fund grows or where multiple members (for example, couples or families) pool their super in one fund. The right balance point varies—seek advice to compare total costs against alternatives.
Tax Benefits
Like other complying super funds, SMSFs receive concessional tax treatment. Broadly, investment earnings in accumulation phase are taxed at up to 15%, with capital gains on assets held for more than 12 months generally taxed effectively at 10%. In retirement (pension) phase, earnings may be tax-free up to the transfer balance cap, and eligible withdrawals can be received tax-free. Contribution types (concessional and non‑concessional) have different caps and rules. Ensure you understand the current limits and conditions via the ATO or an adviser.
Estate Planning
SMSFs provide flexibility for managing how benefits are paid on death. Trustees can use binding death benefit nominations or reversionary pensions to direct benefits to specific beneficiaries, and structure payments in a tax-aware way. This control can aid intergenerational planning, especially where the fund holds significant assets like property or a concentrated share portfolio.
Borrowing for Investments
SMSFs may borrow to acquire certain assets—commonly property—using a Limited Recourse Borrowing Arrangement (LRBA). LRBAs can increase purchasing power and magnify returns, but they also add cost, complexity, and risk. Strict rules apply to how loans are structured and maintained. For details, see the ATO’s guidance on LRBAs.
Control Over Costs
As a trustee, you decide which service providers to use and what you’re prepared to pay for administration, audits, investment platforms, brokerage, and insurance. Careful provider selection and fee oversight can help manage costs and potentially improve long-term net returns.
Flexibility in Retirement Planning
SMSFs allow you to tailor retirement income to your needs. You can commence and manage account-based pensions, combine income streams with lump sum withdrawals, and align drawdowns with your cash flow and tax position—while meeting minimum pension standards and other rules.
Ownership of Assets
Assets are owned by the fund (not by individual members), providing transparency over holdings and clear separation from personal assets. This is particularly attractive for direct ownership of property or certain alternative assets, subject to the sole-purpose test and other restrictions. Note that special rules apply to collectables and personal-use assets, including storage and insurance requirements—see the ATO’s guidance on collectables.
Educational Opportunities
Running an SMSF can lift financial literacy. Trustees gain practical experience with investment selection, risk management, tax rules, and retirement income strategies—often with support from professional advisers and reputable resources.
Overall, SMSFs can offer meaningful advantages—greater control, broader choice, potential cost efficiencies, and flexible retirement and estate planning. They also come with significant responsibilities, including ongoing compliance with super and tax laws, maintaining a documented investment strategy, annual independent audits, record-keeping, and timely lodgments. Before establishing an SMSF, consider the time commitment, costs, and your capability to meet trustee obligations, and seek professional advice. Helpful starting points include the ATO’s SMSF guidance and ASIC MoneySmart’s SMSF overview.