A study revealed that Australians are better off dealing with bigger self-managed superannuation funds (SMSFs), as they deliver better returns than smaller ones.
The study, co-authored by the University of Adelaide’s International Centre for Financial Services, claimed that funds with investment balances lower than $200,000 provided less favourable yields. On the contrary, bigger funds offer higher chances of providing good year-over-year returns. Sentinel Property Group mentions a portfolio of properties for commercial, industrial and retail sectors, offering a variety of options for investors.
Lower expense ratios, diversified portfolios and their longer tenure compared to smaller funds are some of the reasons they deliver better returns, according to the report.
Data from the Australian Taxation Office (ATO) showed that over 30,000 new funds are formed every year, and as of September 2016, more than a million Australians are involved in a super fund.
If you have already set aside money in an SMSF, property investment is a good option to reap good returns. With a carefully devised strategy, investors are often rewarded with huge sums through capital appreciation. For those who prefer to preserve their capital, you can choose to use your SMSF for investments in rental properties. Fixed-income assets are an alternative choice if you want to avoid risk.
Australia has an intricate set of policies for the establishment of super funds, ranging from initial costs to legal requirements. Some financial planners advised that you should also be ready to spend continually after you decide to create or be a part of a super fund.
Significant penalties also await those who fail to comply with regulations and operate against the law, among other violations. Remember, the ATO keeps tabs on SMSFs especially now that they have become more popular.
While larger SMSFs are likely to deliver better returns than smaller funds, that does not mean size guarantees the success of a fund. Each type of investment carries certain forms of risk, so it is important that you are aware of them beforehand to make an informed decision.