Self-Managed Super Funds for Doctors: What You Need to Know

Self-managed super funds (SMSF) can have loads of benefits for financially savvy doctors who are looking to maximise their super and ensure financial security for their retirement. They are also a fantastic option for people who want to have more control over what they are investing their superannuation in, or who wish to pool their super with a partner, spouse, or other relatives in the one dedicated fund.

As you are probably already aware, superannuation is a percentage of your pay, which your employer sets aside and pays into your super fund each pay period. This money is added to by your employer throughout your entire working life, so that you have enough money to live off of when you retire.

There are two main types of super funds: industry super funds (which invest your money on your behalf to earn a return on your investment) and self-managed super funds (SMSF), which put you in full control of your investments and allow you to manage them yourself.

The biggest advantage to opting for a SMSF is the greater degree of control you have over your investments. This means that you can decide exactly what you invest your money in, and develop an investment strategy that puts your financial interests first (rather than the financial interests of your super fund). This option can be particularly appealing to people with specific interests they want to invest in, or sectors they want to avoid investing their money in for ethical or other reasons.

These super funds can also be useful for private practice doctors who want to purchase their own rooms and rent them out via their SMSF. There can also be benefits when it comes to estate planning, or when you are wanting to manage your super as a couple or family.

Opting for a SMSF can also have potential tax benefits, as they offer more flexibility to minimise your tax bill, maximise your return, and save on your taxes. They also offer more flexibility in estate planning.

Whilst there are a number of benefits to opting for a SMSF, there are also some drawbacks – for example, the obligations that you have legally. With a SMSF, it is up to you to ensure you remain compliant. You could also face significant penalties such as fines or legal action if you do not maintain full compliance.

The main step that you will need to take to ensure your SMSF is compliant is to set up a proper investment strategy. This document will need to be reviewed and updated regularly. You may like to check out our recent blog post here (add link), which talks about this in more detail. This level of accountability can just be a responsibility that some people do not wish to take on.

Another drawback is that running a SMSF can come at a cost, as there will be extra expenses involved in the initial set up, as well in investing, accounting, legal fees, and auditing fees. You will also need to purchase your own insurance, which again will come at a cost.

If you think that a SMSF is the best option for you, your first step should always be to consult with an accountant or financial advisor who has experience in dealing with this type of super fund. They will be able to advise you on whether this type of super fund is appropriate for your current financial situation and future financial goals, and will also be able to guide you in making sure your SMSF is set up correctly and in a legally compliant way.

There is no set hard and fast rule when it comes to who a SMSF is best for or when you should set one up, which is why it’s so important to consult with a professional, as they will be best placed to provide personalised advice about your situation and circumstances. Generally speaking though, the best time to set one up will be when it is appropriate for you, and when it will best serve you and your financial interests.

From there, you will need to work out the specifics. For example, who will be a part of your SMSF? Will it be just you, or will you be including a partner, spouse, or other family members in the fund? Will you be setting the fund up under individual trustees, or will you be structuring it as a company or corporate trustee? Your financial advisor or accountant should be able to advise you on these things.

Once these things have been decided on, you will need to lodge the legal paperwork to set up your trust and SMSF, including your investment strategy. You will then be ready to set up a bank account for your SMSF, and start making contributions into the investments of your choice. If you’re a doctor who is interested in setting up a SMSF route, it is strongly advisable that you consult with our experienced and licensed financial advisor. As a client of Medical Wealth Planning, you can trust our skilled and experienced financial advisors to help you to set up a SMSF that will set you up for financial success, and ensure you a comfortable retirement. Book an appointment with us today to find out more about SMSF and whether one is right for you.