Self Managed Superannuation Funds (SMSF’s) appear to be the “flavour of the month” of late. Whilst there is little doubt they are appropriate for some, they can also be a bad idea for others.
Here are some indicators that a SMSF may not be worth your while:
- You don’t want to take responsibility for managing your investments – the “Self Managed” part of the name gives a bit away here. With a SMSF you are responsible for selecting and managing the investments of the fund.
- Just because you’ve heard it’s the “thing to do” – a SMSF might tick all the boxes for that friend you know who has recently set one up. But make sure it ticks all the boxes for you before you follow suit.
- You don’t have a large superannuation balance – it’s generally considered that a combined balance of $200,000 is the minimum starting point for a SMSF. The main reason for this is that the accounting, tax and audit costs of a SMSF may outweigh any benefits until that level of investment is reached.
- You don’t know the rules and the obligations of a Trustee – the buck stops with the Trustee(s) of a SMSF when it comes to compliance. The obligations can be quite time consuming and onerous. Sure, you can outsource much of the work (at a cost) but it doesn’t mean the Trustee can avoid liability if the rules are breached.
- You want a simple solution – a SMSF tends to be more complex than a retail or industry superannuation fund. With a retail or industry superannuation fund you are effectively outsourcing the management, compliance and structure of your superannuation to another party and pooling the costs with many other investors. When using a SMSF the fund directly incurs any costs and is responsible for all of the reporting and compliance requirements.
- You don’t have much time – life is busy and if you’re the type that procrastinates about paperwork then a SMSF isn’t going to improve things. Putting time aside for accurate record keeping and investment management is extremely important.
- You don’t wish to invest your superannuation in anything out of the ordinary – if your superannuation investment strategy is pretty much the same as that of an industry or retail superannuation fund, then there may not be much upside to investing that way within a SMSF.
For some helpful information about SMSF’s visit the governments Moneysmart website.
Of course you can also ask any questions of us too by emailing steve@stevemayfs.com.au
You need to consider with your financial planner (or adviser), your objectives, financial situation and your particular needs prior to making an investment decision. Sensibly Pty Ltd and its authorised representatives (or credit representatives) do not accept liability for any errors or omissions of information supplied on this website
Nick Shanley, Steve May, Luke Styles and Shanley Financial Planning T/A Steve May Financial Services are Authorised Representatives / Corporate Authorised Representative of Sensibly Pty Ltd, AFSL 533923. Please refer to our website at www.stevemayfs.com.au to reference our Financial Services Guides.
