Self Managed Super Funds (SMSF) are a growing sector within superannuation, accounting for nearly one third of Australian Super. There’s lots of information out there about getting a SMSF, how much (or how little) you can get started with and how you can use superannuation to borrow and invest in property. So is it a good idea?
Do you know what you’re managing?
A lot of people I talk to about SMSFs think they are mostly taking on the management of their investments. This is true, but when you self-manage you must take on the full responsibilities of the trustee, imposing legal responsibility for the fund on your shoulders to make sure it complies with all relevant legislation. Further, you must have an investment strategy that is ensuring you have enough money in retirement. You must also consider appropriate insurance (Life, TPD and IP) needs for the members of the fund, keep comprehensive records and undertake yearly reporting.
Can your accountant do it for you?
Nope. You can’t pass the trustee responsibilities on to anyone else.
Do you have enough money?
Different people give you different answers, but you should have $200,000+ before you seriously consider an SMSF.
Do you have the expertise?
Investing for the long term is complicated business and requires constant monitoring, clear strategy and defined goals. Are you convinced that you can outperform investment professionals over the long term?
Do you know about the alternatives?
If you just want to take greater control over your investments, this can be done through a host of direct investment option offered by retail superannuation funds. This allows you to invest what you want, how you want (within reason) and you leave the administration and trustee responsibilities with the fund trustee.
So should you do it or not?
Only you can decide if you want to undertake the roles and responsibilities of a Self Managed Super Fund, but make sure you know what you’re getting yourself into.