At CommonCents Financial Planning, we believe your money should fuel your dreams—especially when it comes to building a secure retirement through super.
Self-managed super funds (SMSFs) currently manage around $1 trillion across Australia, but they’re not right option for everyone. We help you decide if an SMSF truly fits your goals by focusing on specific and practical use cases.
SMSF’s are used too often and in situations where it’s inappropriate but to show where they can add value, here are three scenarios where an SMSF might make sense.
1. Investing in Direct Property
If you’re a business owner leasing a warehouse or office, using an SMSF to purchase the property directly can make a lot of sense.
Let’s say your business buys a $1 million commercial space — your business pays rent to your super instead of to a third party thereby gaining you the control and all the potential growth.
We assess your balance (e.g., $500,000 in super), guide you on borrowing rules and help to ensure compliance.
2. Pooling Balances for Bigger Opportunities
You may have found an opportunity to invest in a private scheme that is developing a specific block of land but the pricing is beyond the scope of your superannuation resources.
In this case you and a group of others could each invest into a trust vehicle where the development would take place. The only way for you to invest your share using your superannuation savings would be via a SMSF.
Some families also do similar large scale investments by combining up to six related super balances into one SMSF.
There are specific rules to what a SMSF can invest in so there are some protections but this does not eliminate the extremely high risk of failure that a lack of diversification would bring to this option.
3. Borrowing or Speculative Strategies
Though we rarely recommend borrowing inside super, an SMSF allows it under strict rules—ideal if you’re set on leverage.
For speculative moves like Bitcoin (often capped at 5% of your fund), SMSFs offer flexibility unavailable in public options like a retail or industry super fund.
Borrowing and speculative strategies increase your risk greatly, especially when you use your retirement strategies to do it. When you take a high risk there is the expectation of a high reward but the risk of failure with borrowing and speculative strategies in super can mean that you’re left with nothing.
An SMSF can empower your super strategy, but only when it solves a specific need.
Start by reviewing your overall goals and then truly try to justify why you can’t or wouldn’t pursue just a standard retail or industry super fund.
At CommonCents Financial Planning, we’re here to help you live your richest life.
