Should I Pool or Segregate the Assets of My SMSF?
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Should I Pool or Segregate the Assets of My SMSF?

With your retirement day nearing, the importance of saving up for your later years has likely become more critical than ever to you.

Financial security is crucial to a happy life after retirement – with sufficient funds, you can look forward to a peaceful time in your golden years.

For many Australians, your best life may well be in retirement where you can relax, sit back, and enjoy the life you deserve.

However, when you fail to prepare for life after retirement, you won’t be able to experience as much fun and relaxation as you’d expect. To enjoy your days in retirement, it’s crucial to invest in retirement financial planning.

Funding Your Retirement With an SMSF

If you’re thinking of saving up for retirement and ensuring that you have enough money to fund your needs when you no longer have a regular source of income, then you may be considering starting a self-managed super fund (SMSF).

In managing your own super, you’ll be able to put the money you’d typically put in a retail or industry super fund into your SMSF. Managing your SMSF allows for more control over how your fund is managed and where your money is invested.

Moreover, with greater visibility over your retirement savings, you could feel more confident making investment and lifestyle decisions while gaining a deeper understanding of your overall wealth.

Besides providing flexible investment options, an SMSF will also allow you to run accumulation and pension accounts. Thanks to the flexibility SMSFs offer, you can react quickly to changes in market conditions, personal circumstances, or superannuation rules.

Choosing Between Pooled and Aggregated Assets

When you manage your own super, you’ll be responsible for all the fund’s decisions even if you get wealth management advice from a financial adviser or if another member made the decision.

Moreover, having an SMSF doesn’t guarantee financial stability, as your investments may not bring the returns you’ve expected.

An important thing to note when considering having an SMSF is that you can also lose money, which is why it’s crucial that you formulate, regularly review, and give effect to an investment strategy.

Pooled and segregated assets are investment strategies of an SMSF that you may run. Here is how they differ:

Pooled Assets

A pooled investment strategy is where the assets of the SMSF are attributed to all members of the fund. When it comes to administrating and accounting pooled funds, you won’t have difficulty, and you also get to have much lower costs.

In addition, you’ll also be able to invest in more significant assets or gain direct access to wholesale investments.

However, unfortunately, since all members of the SMSF must have the same investment strategy, this may not be ideal if your ages, objectives, and risk profiles vary.

Segregated Assets

In a segregated investment strategy, each member or class of members has specific assets related to their accounts. Under a segregated strategy, certain assets can be attributed to a particular member specific to their age, objective, and risk appetite.

Unlike pooled assets that don’t allow specific assets to be held in different tax environments, segregated assets do. Nevertheless, it may be more challenging to manage administration and accounting due to the complexity of segregated funds.

When choosing between pooled and segregated assets, each has its strengths and weaknesses. The best option for you may be different to your neighbour

To gain more insights before selecting an investment strategy, make sure to reach out to a competent wealth advisor experienced in SMSF?

Are you looking for the best wealth adviser in Newcastle to help you make decisions regarding your SMSF?

Our team at Newcastle Financial Planning Group may just be the people for the job! When you work with us, you’ll receive a thoroughly researched and tailored financial advice strategy so that you can live your best life. Book a complimentary meeting with our financial planners today.

 

Disclaimer: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Coastal Advice Port Macquarie and Sydney Wealth Advisers are subsidiaries of Coastal Advice Group which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429. 

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