SMSF is a long-term saving arrangement. This is one way for you to save for your retirement. As beneficiary (member) of the SMSF you are also the trustee usually through a company that acts as trustee to the SMSF. An SMSF is allowed only 4 beneficiaries. You must run this trust for your own future retirement benefit.
Key Tip:A great way to take control over your own financial affairs. You should have a minimum of $250-$400k before you start a SMSF.
If you have a SMSF, you can use it to buy an investment property. Borrowing within a SMSF is complex as it involves a trust arrangement within the SMSF trust structure. Check our SMSF page for more information or contact us.
Key Tip: A great product for buying your business premises. It means that the business pays the rent to the SMSF which means that business gets a full tax deduction while the income for the SMSF is taxed at the current tax rate, e.g. 15%. For more details see our SMSF loans page.
In this case, your superannuation is managed by a third party, most likely a bank or a financial institution. You can choose between an industry superannuation fund or a retail super fund, managed by a financial institution. Historically industry funds have had lower fees than retail funds because the fund is run for the benefit of the members, whereas retail funds are run for the benefit of the shareholders. Check our SMSF page for more information or contact us.
Key Tip: Check the cost and fees. The Product Disclosure statement has the details. In particular look at the Management Expense Rates (MER). This is a percentage fee charged on the value of the Funds under Management (FuM).
Life insurance protects your family (or named beneficiary) against the loss of revenue resulting from your death or terminal/critical illness. Funeral expenses are also generally included. This insurance prevents monetary troubles that may result from an untimely accident or death.
There are only two certainties in life, “death and taxes”. You should plan for them both. All superannuation funds are meant to provide Life insurance. However, it is important to examine the benefit and whether it meets your financial needs in looking after your family’s future.
TPD insurance protects you against the loss of revenue, medical expenses and any life modifications resulting from a total and permanent disability.
Most of us hate the idea of being permanently disabled through an accident or health event. Being unable to do our favourite things, e.g. play sport and work. Therefore, ensuring you have sufficient insurance to cover this eventuality is important, as to be disable is one thing, but then to have the double hit in terms of having to sell assets to pay for ongoing medical and living expenses increases the impact.
Trauma insurance protects you against negative outcomes that may occur after a traumatic event. As we are all living longer there is the risk that we will suffer some major trauma event in our lives. According to newspaper reports someone in Australia has a heart attack every 24 minutes. If you smoke and drink and are overweight, then statistically you are a high risk category. Therefore, trauma insurance is a good option, as you are paid a lump sum benefit immediately which means you can wipe out all your debts, e.g. car and home loan in a single payment.
Key Tip: Trauma insurance is limited to the types of events that occur. So read carefully the policy to consider whether there are any exclusions that mean you are not covered. See our Trauma Insurance page.
Income protection insurance protects you from unexpected unemployment.
It is important to understand the difference between Income Protection insurance and Workers' Compensation insurance. Employers are required by law to have Workers' Compensation insurance and it insurers the employer against work place events so if you are injured at work you will continue to be paid. Whereas, Income Protection insurance is taken out by you to protect your income because you are out of work for a long period as a result of a health matter or an accident. The benefit is normally around 70-85% of your salary and it is paid regularly, e.g. fortnightly.
A transition to retirement pension is a strategy designed to help you access your superannuation, i.e. start a pension while continuing to work and contributing to your superannuation.
Key tip: This is a great strategy as you are in both accumulation and pension phase simultaneously.
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