What is an SMSF?
Managing your own super comes with a lot of responsibility and involves significant time and effort. A self-managed super fund (SMSF) is a private superannuation fund, regulated by the Australian Taxation Office (ATO) that is managed by you and your family in order to control how your retirement savings are invested.
SMSF’s have been available and active in Australia for more than 30 years, and it is the largest Superannuation sector by the number of funds and asset size.
What are the benefits of an SMSF?
Having an SMSF ultimately gives you greater control of your investments and is extremely cost-effective. It also provides both you and the adviser control of your super by allowing choice in where your retirement funds are invested. Other benefits include:
- An SMSF can borrow to purchase a property and can invest in direct shares, terms deposits, and even artworks and collectibles.
- In times of volatility or great opportunity, you and your adviser may wish to alter the investment mix in order to protect your investments to take advantage of new opportunities.
- Annual fees can be fixed, so your superannuation balance grows the lower percentage cost of running the fund. This is unique compared to other funds as they typically apply a percentage based fee which ensures that as your balance increases, so does the cost.
- Consolidate your accounts and Invest with your family
- An SMSF can have up to four members, so you can combine your superannuation with family members or friends. This means that members do not have to pay separate fees. More importantly, there is a much larger pool of assets, giving you access to a wider range of assets.
How much do you need to setup and SMSF?
In the past, a common rule of thumb in the SMSF industry was that you should have at least $200,000 in superannuation benefits to justify setting up an SMSF because of the fixed fees involved.
The reality is that you no longer have to pay high administration fees to run your own fund. Thanks to automation and the internet, services are now being provided more efficiently and at a lower cost.
Ultimately the amount you need as a starting balance is a personal decision. BHPW offers a complementary consultation to discuss your personal circumstances and whether an SMSF is right for you.
Are advice costs covered by my super fund?
The cost of advice is covered by your super fund. Costs also cover:
- Administration fees (cost of operating the fund and keeping your super account).
- Insurance premiums (cost of insurance provided through your super fund).
Your advisor will run through the above and any other costs that are also covered by your super fund.
Are you looking for a genuine partner to help you drive the next stage on your financial success journey?
We would be delighted to discuss your requirements and objectives in person or over the phone to get to know your goals better. Please feel free to contact us or book an appointment to set up a no-obligation meeting with one of our financial advisors.