Is a Self Managed Super Fund right for you?

John Liston
Director | Adviser
August 1, 2018

One of the most common questions we are asked by our clients and friends is ‘Should I set up a SMSF?’

When it comes to super fund options there are 3 paths we can take; Industry super fund, Retail super fund or SMSF.

We are finding that SMSF’s appeal to business owners and ambitious individuals because of the amount of control and flexibility they allow.

Like anything, there are pros and cons to each option and our advice is always centred around your goals and what you’re trying to achieve.

Here are some of the differences at a glance:

differences between smsf and industry and retail super funds

The Benefits of SMSF

The key benefit of a SMSF is that the returns can be better planned to suit your specific situation. For example, if you’re approaching retirement and have a desire for steady income, specific investments can be matched to this goal. Alternatively, you may have good knowledge of your local property market and can choose to purchase investment properties in areas you believe have long-term growth potential. A SMSF gives you full control and visibility of the investments that will determine your quality of life in retirement. When you start to truly consider the future lifestyle you want, having an investment strategy that you’ve matched to your wealth goals becomes paramount.  

Another important benefit of having a SMSF is that it can protect you from a market downturn. During the Global Financial Crisis, many superannuation investors pulled money out of the super system which forced fund managers to sell assets to pay out cash to the investors who wanted their money back. Unfortunately, this was the worst possible time for the fund to sell assets and had a negative impact on the value of the fund. You will never have this problem with a SMSF since you are in control.

Possible downsides of SMSF setup

While the financial returns from a SMSF can be well and truly life-changing, the owner of the fund does have more responsibility which can be a deterrent for some people.  

The responsibilities include:

  • Lodging annual tax returns
  • Being independently audited every three years
  • Having a documented investment strategy

You also need to consider how much money you have for your SMSF setup. In most cases, you will need at least $200,000 in your SMSF for it to be viable.

In saying this, the responsibilities can be delegated to professional Advisors who would help shape your investment strategy and stay compliant with the ATO. You have full discretion over the level of involvement you want in running your SMSF.

Still not sure which is for you?

If you're still unsure whether it’s something you’d benefit from, feel free to contact our team and we can help you find clarity on the below questions:

  • Why do you want to establish a SMSF?
  • What do you want to achieve from your super?
  • How much money do you have to start your SMSF?
  • Do you understand your responsibilities?
  • What help do you need when running the fund and the investment strategy?

Ultimately, a SMSF will give you more choice and control over your investments and wealth. If you want to ensure you’re making the most of your super get in contact with myself or the team at Liston Newton Advisory.