Is an SMSF right for you?

A growing number of Australians are looking to manage their own superannuation through a self-managed superannuation fund (SMSF). However, there are many elements to consider before starting an SMSF. We take you through the common questions that can help determine if an SMSF is right for you.

Do you have sufficient funds?

The costs of establishing and running a fund can vary significantly depending on the assets you hold and the activity you undertake. Although there are no specific rules about a minumum fund balance, according to ASIC, SMSFs with less than $500,000 tend to have lower returns after costs. Every situation is unique so it’s important to ensure the costs of administering the fund don’t outweigh the benefits and eat into your retirement benefits.

You should ensure you compare the costs and benefits of running your SMSF with other options such as a public super fund.

Do you have sufficient time and skills?

As a trustee, your primary responsibility is to invest your fund’s money appropriately to increase the benefits available to members upon retirement.

This requires you to understand how your SMSF operates and the regulations imposed on it by the legislation.  It also requires you to have the time to manage the investments and ensure your fund is complying with its obligations.

You will be legally responsible for all decisions made, even if you have sought professional advice, so it is important to ensure you are aware of your responsibilities and obligations.

Can you meet your record keeping and reporting obligations?

As a trustee you are required to keep proper and accurate tax and super records. This includes maintaining records of your funds investment strategy.

You are also required to provide your fund’s auditor with your original records each year, and have these available for the ATO should they be requested.

What can you invest in?

While your SMSF is able to invest in most common investments such as commercial property, residential property, shares, bonds, cash and managed funds you are also able to invest in assets such as collectables and options. However, there are many strict rules regarding SMSF investments such as not being able to use residential properties for personal purposes by the trustee’s or their associates, regardless of whether rent is paid.

You also need to ensure your investments are in accordance with your investment strategy, and are made with the sole purpose of increasing member’s benefits for their retirement.

Considering starting an SMSF?

View our SMSF services and fees (Queensland). Alternatively, contact us today to discuss your SMSF needs.

Disclaimer: This information is general in nature and should not be relied on as advice. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs and seek professional advice before making any decisions based on this information.