Super Selection: 6 Pros and Cons of Self-Managed Super Funds

Switching to a Self-Managed Super Fund (SMSF) is about more than just choosing an SMSF accountant and letting them take care of everything. They aren’t kidding when they call it self-managed, so it’s crucial to understand all the challenges and benefits before you take the plunge. 


With this in mind, let’s take a look at six pros and cons of self-managed super funds. 

Benefit: Investment Freedom

While you can make some choices about your investment portfolio with other super funds, you’re generally stuck with a tiered menu that centres around your risk tolerance. With an SMSF, by contrast, you have the freedom to invest in anything from property to artwork and collectibles. There are some criteria to be met, but the options are virtually limitless, and you may even be able to borrow to purchase a desired asset. 

Challenge: A significant increase in responsibilities 

The aforementioned freedom does, of course, come at a cost. In the case of Self-Managed Super Funds, that cost comes in the form of extra responsibilities. From understanding your investment portfolio to making new investment decisions and ensuring everything is compliant with the relevant legislation, you’ll have a lot on your plate as a trustee of an SMSF. 

Benefit: Tax works in your favour

When you set up an SMSF, you become a trustee of that fund, and this entitles you to reduced tax rates on your investment returns. At the time of writing, the maximum tax rate for SMSF returns was sitting at 15% – well below the marginal tax rate, which can be up to 45%. On assets held for longer than 12 months, capital gains tax is just 10%. To gain a clearer picture of the tax benefits you may be able to enjoy with an SMSF, it’s essential to talk to a tax agent who specialises in self-managed supers. 

Challenge: Location restrictions

At this stage, there’s no flexibility in where you can live in the world if you have an SMSF. So, if you’re not 100% sure that you want to live permanently in Australia, you may want to hold off on making the switch. Moving overseas permanently or even making contributions while temporarily overseas could affect your fund’s standing with the law, so be very careful in this regard. 

Benefit: Pool your funds

You can include more than one member in an SMSF, and by pooling your funds, you may be able to access investment options you otherwise couldn’t afford. For example, you might be able to snap up lucrative commercial real estate opportunities or simply gain greater diversity in your portfolio by spreading into multiple asset classes. 


The total number of allowable members in an SMSF was recently increased to six, which is great news for families and other close contacts who wish to invest together. 

Challenge: Time-intensive

While other retirement funds are set-and-forget investments, your SMSF will demand time and attention to manage. For this reason, such funds are better suited to those who are keen to dive into the details, learn more about investing, and be directly involved in the management of their retirement account. More to the point, you need to have not just the inclination but the time to do this. If you’re already feeling time-poor, think carefully before adding this time-intensive investment option to your schedule. 


If the benefits have you excited and the challenges seem surmountable, a Self-Managed Super Fund may be the ideal investment option for you. Whatever you decide, don’t be shy about seeking professional advice to ensure you’re making the best moves for your financial future. 

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