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Super Funds: Managed Versus Self Managed
In an economy where many things are uncertain and returns arent as high as they used to be
, many people are looking at their options when it comes to superannuation. But when it comes to managed or self managed super funds, what are the differences?Managed Funds
Corporate (the fund your employer uses to pay your super), industry or retail funds have long been the norm for many people, trusting that when it is time to retire there will be a healthy little nest egg sitting there, just waiting to be enjoyed. But, like anything, there are two sides to every story.
The Pros
It takes little attention from your end to manage the fund (if any at all)
The managed super fund looks after all of the legal requirements
Managed super funds have been around for years
A professional is responsible for a huge chunk of your money
The Cons
A managed fund is based on a bull market if it falls over, your superannuation fund will suffer
You cant manage the performance of your fund, nor can you diversify it
You cant control where your money is invested your super is exposed to the investment strategy of the managed fund
Self Managed Super Funds
When you decide to take on your own super and manage it yourself, its a massive burden, but also a massive release to know that youre in charge of your own retirement. To manage your own super, you will need to educate yourself on all the laws and regulations that come with it, along with the finance and investment market. Although youll be armed with a sense of freedom, this type of fund does have its own set of pros and cons.
The Pros
You have total control of your super fund
You can choose where to invest the money stocks, property, bonds, cash, etc
You can save money on fees
You can maximise your returns
You can salary sacrifice
The Cons
You are responsible for a huge chunk of money which is ultimately your future if you invest poorly and lose all your money, its nobodys fault but your own
You must have the spare time to manage your investment strategy and ensure you are investing wisely
As the trustee of your self managed super fund, you are responsible to carry out all the required duties and adhere to all of the super laws you are bound to.
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