The savings market in the UK has taken a hit in recent times, as disproportionately high rates of inflation and stagnating earnings have combined to impact negatively on the typical households' disposable income levels.

At the same time, a minimal base interest rate has also diminished savings returns over the last decade, making it increasingly important for individuals to seek out more creative and lucrative ways of optimising their capital for the future.

Fortunately, the financial market has evolved to offer numerous options to aspiring savers in the modern age, including self-managed super funds (SMSFs) and tax-free European equivalents. In this post, we'll compare these two options and see which one is best for you.

Self-Managed Super Funds vs. Tax Free European Options – The Key Considerations

SMSFs are synonymous with the Australian financial markets, with more than 460,000 options of this type available in the nation and through forex trading platforms. This represents a staggering 32% of the entire super industry's total assets, and such funds have become the preferred way for Australians to manage and grow their retirement income in the current climate.

With this in mind, it's no surprise that SMSFs also represent the largest and fastest-growing sector within the Australian super industry, and pivotal to the nation's $1.5 trillion retirement pool.

SMSFs are also becoming increasingly popular across the globe, performing well in comparison with tax-free, European equivalents. Essentially a superannuation trust structure that delivers benefits and returns to its members upon retirement, this affords far greater control to investors in terms of how and where they commit their capital.

This arguably represents the biggest difference between SMSFs and tax-free European alternatives, as the members of the former are also the trustees of the fund. This means that the same people who  structure and execute the fund's investments are also the beneficiaries, whereas most alternative options leverage financial expertise on behalf of private clients.

The Last Word – Which Option is Right for you?

While the decision that you take is ultimately a personal one, there is a general rule which suggests that SMSFs are best-suited to seasoned and knowledgable investors who are capable of responding to market trends.

In contrast, alternative funds and tax-free European vehicles are ideal for savers who have minimal experience of the financial marketplace, as they connect individuals with seasoned and objective experts while also offering a number of lucrative tax breaks.

This distinction is important, as attempting to manage your own investment fund without the requisite knowledge is extremely challenging. So, try to focus on your limitations while understanding which account is best-suited to deliver a viable return.