SMSF vs Traditional Super: What Australians Need to Know in 2025
- My Finance Agent
- May 1
- 3 min read
Updated: May 2
Superannuation is one of the most powerful wealth-building tools for Australians — yet many people don’t understand how their super works, or how much control they really have. If you're comparing SMSF vs traditional super, this blog breaks down the key differences, benefits, and considerations to help you make an informed choice.
How Most Australians Use Superannuation
Most Australians are part of a traditional superannuation fund, usually selected by their employer. But how involved are we in our super?
Over 60% of Australians don’t choose how their super is invested
37% of Australians have little to no understanding of how superannuation works
There are 23.8 million super fund members, with 24% holding multiple accounts
Annual growth across the system has averaged 7.9% over the past 32 years
Where is your super invested?
Most traditional super is invested in Australian and global shares. Shares can offer strong long-term returns — but they’re also known for volatility.
Australian shares fell over 40% during the dot-com crash, Global Financial Crisis, and COVID-19
Market shocks — like tariff announcements — often cause rapid share market drops
In contrast, Australian residential property has never experienced a 20% nationwide decline. See our State of Play report for detailed breakdown of the Australian property market.
For those wanting more control, transparency, or the option to invest in property, a Self-Managed Super Fund (SMSF) may be worth exploring.
What Is a Self-Managed Super Fund (SMSF)?
A Self-Managed Super Fund (SMSF) is a private super fund that you manage yourself. It’s regulated by the ATO and must follow strict rules, but it gives you greater control over how your retirement savings are invested.
Key features of an SMSF:
✔️ You choose where the money goes — from shares to residential or commercial property, gold, or term deposits
✔️ Pool your funds with up to six members (usually family) to increase your buying power
✔️ Set your own investment strategy — you’re not tied to a fund manager
✔️ Can be tax-effective and cost-efficient with the right structure and professional support
An SMSF can be a smart structure for experienced investors — especially those wanting to include property in their super strategy. However, it’s not a set-and-forget solution. Trustees are responsible for the fund's compliance, reporting, and financial performance.
🔗 Learn more about SMSF loan options or speak to a broker if you're considering investing through super.
SMSF vs Traditional Super: A Side-by-Side Comparison
Here’s how the two super structures compare:
Feature | Traditional Super | Self-Managed Super Fund (SMSF) |
Control | Fund manager decides | You make the investment decisions |
Flexibility | Limited to fund offerings | Invest in property, shares, gold, term deposits, and more |
Members | Just you | Up to 6 members (usually family) |
Costs | Percentage-based fees | Fixed costs (can be lower with more funds) |
Transparency | Low visibility | Full visibility over performance and decisions |
Frequently Asked Questions About SMSFs and Superannuation
Q: Can I use my SMSF to buy a residential investment property?
A: Yes — but strict rules apply. The property must be for investment only, pass the sole purpose test, and cannot be lived in or rented by you or your relatives.
Q: How much do I need to start an SMSF?
A: While there's no legal minimum, most experts suggest a starting balance of $200,000 or more to make it cost-effective. Pooling super with family members can help reach this.
Q: Can I manage my SMSF by myself?
A: You can, but most people work with professionals — including SMSF accountants, brokers, and financial advisers — to help manage investment decisions and compliance.
Q: Can I switch from a traditional super to an SMSF?
A: Yes. You can roll over your super into a new SMSF structure. This should be done with expert guidance to make sure it’s compliant and aligns with your long-term goals.
Q: What are the risks of having an SMSF?
A: The main risks are non-compliance, poor investment choices, and time commitment. Trustees are legally responsible for the fund. Getting expert help can reduce these risks.
DISCOVER MORE >
Choosing Between SMSF and Traditional Super
Choosing between a traditional super fund and an SMSF depends on your goals, financial literacy, and how hands-on you want to be. Traditional super is simple and set-and-forget. An SMSF gives you more control, flexibility, and investment choice — but comes with added responsibility.
If you're thinking about using your SMSF to invest in property or want to understand how lending works inside super, we can help.
Call us at (02) 6332-2600 or request a call back
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