SMSFs vs Industry/Retail Super

Contemplating retirement is a daunting and intricate subject, primarily because it often appears distant. Nevertheless, echoing Benjamin Franklin's wisdom, "Failing to plan is planning to fail." It's wiser to contemplate retirement now, well in advance.

In Australia, the primary path for retirees is superannuation, and a significant portion of retirees opt to invest their super funds in either an industry or retail super fund.

An increasing number of individuals are opting for an alternative route—Self-Managed Super Funds (SMSFs). So, what sets these three types of superannuation apart?

Delve into each superannuation option and accentuate their key distinctions.

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Industry Super Funds

These funds are open to the general public, and any profits are reinvested to benefit the members, not stakeholders. They operate as not-for-profit organisations.

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Retail Super Funds

In contrast, retail super funds are owned by corporations and banks, hence incentivised to perform well for their shareholders. They offer a slightly broader range of investment options compared to industry super funds but come with higher fees.

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SMSFs

SMSFs are private super funds managed by an individual or a group of individuals known as trustees. They grant investors the flexibility to invest in their preferred ventures without being constrained by specific investment methods. For instance, with our assistance, SMSFs can opt to invest in high-yield properties within their super, such as brand new house and land builds across Australia.

While SMSFs provide this level of freedom, industry and retail super funds adhere to specific investment guidelines. Essentially, they allocate your super funds as follows:

• 85% in shares and property
• 15% in cash and fixed interest

Industry and retail super funds create the illusion of choice by allowing a more conservative investment portfolio, with:

• 30% in shares and property
• 70% in cash and fixed interest

This effectively limits the investment options to primarily stocks and minimal growth properties.

The Choice is Yours with an SMSF

The decision rests with you. Would you prefer to invest your super funds with industry and retail super funds offering modest returns, or embrace the complete autonomy offered by SMSFs to invest in high-yield, brand new house and land builds?

Feel free to reach out to our team today to establish your SMSF or explore your SMSF property investment alternatives.