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SMSFs – What Do You Need To Know About This Approach To Super?

The initial set-up of a self-managed super fund is perhaps the simplest step in the process. Establishing a super fund that delivers superior returns from your investments is a far more difficult task to do.

To invest successfully involves determining precise goals and selecting investments that can effectively achieve those goals. One of the key advantages to an SMSF is that a portfolio can be built which reflects your short-term and long-term goals in response to fluctuations and changing market conditions.

When it comes to an SMSF, your investment options can include:

  • Australian and international shares (in both listed and unlisted forms)
  • Residential or commercial property
  • Cash and term deposits
  • Fixed income products
  • Physical commodities
  • Collectibles

Diversification

Before you begin investing, you need to consider what might be the best way to diversify your portfolio. How you portion your investments will depend on your funds, the market, and your goals.

Regardless of what your plan is, diversification should be a priority.  Diversification of the portfolio can result in less risk to the overall investment, as the investment is split across multiple markets and can potentially produce more returns on the investments.

If you choose an SMSF over an industry or retail super fund, you may be provided with more flexibility but also far more responsibility. If you want the best performance from your SMSF, you will need to do your own research prior to investing.

Record Keeping

Record-keeping is one of the most critical aspects of your finances that you want to get right, and never more so than when dealing with your self-managed super fund.

You want to ensure as one of your fund’s trustees that you are meeting all of the reporting obligations for your SMSF.  Good and timely record-keeping can assist you in this process while maintaining your compliance with super laws.

Accurate and well-kept records will also promote good governance for your SMSF. Keeping your records up to date will ensure that you are able to provide any information required to your approved SMSF auditor or to the Australian Tax Office at short notice.

Are you concerned about how well your super is performing or thinking about getting involved in an SMSF? You can speak with us or to your super fund provider for further information and advice.

If you’re someone who often finds it difficult to make large lump sum payments for goods or services, you may want to consider looking into “Buy Now Pay Later” services.

Buy now pay later essentially means that, rather than paying in a full lump sum payment for a product or services rendered, there may be an option to pay through instalments of a certain amount over a set period to make the sum of the full amount in total. This method should allow you to pay in full for the product or service without overly straining your finances – you pay back what you can, as agreed upon when you begin the buy now pay later service.

Some popular buy now pay later services include Afterpay, Zip Pay, Brightepay, and some credit card networks such as  Mastercard and Visa, can offer buy now pay later arrangements.

Though it can be a convenient, immediate solution, it may be challenging to juggle the necessary repayments with other financial commitments. It’s not always the most appropriate method for people, and you should bear in mind your situation and ability in paying back the amounts. 

Before you sign up, keep in mind: 

  • It becomes easier to overspend with buy now pay later services, so know your limits on what you can and can’t afford.
  • You will be charged fees and costs to use the service, which can add up to a princely sum in and of itself.
  • Keeping track of your payments can be tricky if you’ve signed up for multiple services.
  • It could affect your loan applications for a car or mortgage as lenders consider buy now pay later spending just as much as your credit score.
  • Late repayments can appear on your credit report, which affects your ability to borrow money in the future.
  • Layby can be a cheaper alternative to buy now pay later, with no account-keeping or late fees to consider

If you are someone who could make use of BNPL services, you may wish to:

  • Ensure that when using the BNPL service, you stick to a set limit on what you spend so that you can comfortably pay it back later. 
  • Aim only to have one BNPL account at a time to manage payments through, rather than confuse yourself with multiple payments across different providers.
  • Always budget for bills, loan payments and BNPL payments, and 
  • Rather than use your credit card for payments to your BNPL account, consider linking to your debit account instead.

If you would like assistance in planning your financial future, help in managing your budget or some friendly advice, see us for a chat about what we can do for you.

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John Briggs

Jane Noller has been my accountant for the last 15 plus years. I can testify to Jane’s professionalism and expeditious manner in dealing with the day to day issues that surrounds our business accounting.

John Briggs

Registered Building Certifier