With an SMSF, you have full control over how your superannuation funds are invested. This level of control allows you to tailor your investments to suit your risk tolerance, financial goals, and preferences.

Unlike traditional superannuation funds, which typically offer a limited range of investment options, an SMSF allows you to invest in a wide variety of assets, including direct shares, property, managed funds, and even collectibles like art or wine.

Cost Savings: While there are costs associated with setting up and running an SMSF, these can be lower than the fees charged by retail or industry super funds, particularly for those with larger balances. By managing their own fund, members can potentially save on administration, investment management, and other fees.

SMSFs offer a wide range of investment options, including shares, property, cash, and alternative assets such as art or collectibles. This flexibility allows members to diversify their investment portfolio and take advantage of opportunities in different asset classes.

SMSFs can be tax-effective, particularly for those in retirement. Income earned within the fund is generally taxed at a concessional rate of 15%, and capital gains on investments held for more than 12 months are taxed at a maximum of 10%. Additionally, members aged 60 and over can access their super benefits tax-free.

While there are costs associated with running an SMSF, they can be more cost-effective for individuals with larger superannuation balances. This is because the fees are typically fixed, regardless of the size of the balance, making them relatively more affordable as the balance grows.

As the balance of the SMSF grows, there can be economies of scale, meaning that the costs per member can decrease over time, making it more cost-effective compared to traditional superannuation funds.

SMSFs offer greater flexibility in estate planning compared to retail or industry super funds. Members can control how their super benefits are distributed upon their death, ensuring their wishes are carried out and minimizing potential disputes among beneficiaries.

Control Over Distribution:  An SMSF allows you to have more control over how your superannuation benefits are distributed upon your death. You can specify in your SMSF trust deed how you want your benefits to be distributed, ensuring that they are distributed according to your wishes.

Assets held within an SMSF may be better protected from creditors in certain circumstances compared to assets held personally. This can be beneficial for estate planning purposes, especially if you are concerned about potential creditors in the future.

Spread of Risk: Diversification is key to managing investment risk. With an SMSF, you have the flexibility to diversify your investments across different asset classes, industries, and geographic regions, reducing the impact of a single investment underperforming.

Access to Different Asset Classes: SMSFs offer access to a wider range of asset classes than traditional superannuation funds, including direct property, which can further enhance diversification and potentially improve long-term returns.

Increased Investment Opportunities: SMSFs can borrow to invest in certain assets, such as property, through limited recourse borrowing arrangements (LRBAs). This can allow you to access investments that may otherwise be out of reach, potentially enhancing your investment returns.

Risk Management: LRBAs can be a useful tool for managing risk, as the lender's recourse is limited to the asset being purchased. This means that if the investment goes sour and the SMSF defaults on the loan, the lender can only take possession of the asset and cannot go after other assets in the SMSF.

Managing an SMSF requires time, effort, and financial expertise. Trustees need to stay informed about investment markets, compliance regulations, and tax laws to ensure the fund remains compliant and meets its investment objectives.

Administrative Responsibilities: Running an SMSF involves significant administrative responsibilities, such as record-keeping, reporting to the ATO, managing investments, and ensuring compliance with superannuation laws. This can be time-consuming and may require a good understanding of financial and legal matters.

Ongoing Management: As a trustee of an SMSF, you are responsible for making investment decisions, reviewing the fund's performance, and ensuring compliance with superannuation laws. This ongoing management requires a commitment of time and effort.

While SMSFs can be cost-effective for those with larger balances, they may not be cost-effective for smaller balances. Members need to consider the costs of setting up and running the fund, including accounting, audit, legal, and investment costs.

Initial Setup Costs: Establishing an SMSF can involve significant upfront costs, including legal fees, accounting fees, and the cost of setting up a corporate trustee (if applicable).

Ongoing Costs: There are ongoing costs associated with running an SMSF, such as accounting fees, audit fees, ATO supervisory levy, and investment costs. These costs can vary depending on the size and complexity of the SMSF.

Cost-Effectiveness: SMSFs may not be cost-effective for individuals with smaller superannuation balances, as the fixed costs associated with running an SMSF can be relatively higher for smaller balances.

Economies of Scale: As the size of the SMSF grows, there can be economies of scale, leading to lower costs per member. However, it is important to consider whether the potential cost savings outweigh the administrative burden and risks associated with running an SMSF.

With greater control comes greater responsibility. Trustees need to carefully consider their investment decisions and the associated risks, particularly if they're investing in high-risk assets such as property or shares. Diversification is key to managing investment risk and protecting the fund's assets.

Investment Decision-Making: As a trustee of an SMSF, you are responsible for making investment decisions on behalf of the fund. This requires a good understanding of investment principles, asset classes, and risk management.

Seeking Professional Advice: It may be necessary to seek professional advice from financial advisors, accountants, or lawyers to ensure that your SMSF is structured correctly and that your investment decisions are sound.

SMSFs are subject to strict regulatory requirements set by the Australian Taxation Office (ATO). Trustees need to ensure the fund complies with superannuation laws, reporting requirements, and annual audit obligations. Failure to comply with these obligations can result in penalties or loss of tax concessions.

Compliance Requirements: SMSFs are subject to strict compliance requirements set out by the ATO. Failure to comply with these requirements can result in penalties, loss of tax concessions, or even the disqualification of the SMSF.

Investment Risk: With greater control over investments comes greater responsibility for managing investment risk. Trustees need to ensure that investments are diversified and suitable for the fund's members.

Unlike retail or industry super funds, SMSFs do not automatically provide insurance cover for members. Trustees need to consider their insurance needs, including life insurance, total and permanent disability (TPD) insurance, and income protection insurance, and arrange cover separately if required.