Will a SMSF really increase your wealth in retirement?
Many people look to self managed super funds to take a greater control in their investment decisions to meet their retirement objectives. This decision to set up an SMSF is an important one that should be carefully considered to ensure that it is the right option for you and your family.
The most popular reasons for wishing to setup a self-managed super fund are CHOICE and CONTROL:
- CHOICE in investment options within your fund and,
- the ability to be in CONTROL of your retirement decisions.
Self managed super funds also have some unique features that make them more attractive to other superannuation options available within Australia. With an ability to have up to four members within a fund, an SMSF allow for family members or business partners to pool their money together to make investment decisions.
The benefits of an SMSF for your business
The real attraction for small to medium business operators to setup a self managed super fund is the ability to acquire property in which to operate your business from. Subject to the amount of money you have within superannuation, this may be bought outright or using borrowings from a lender.
Self managed super funds can also be a cost-effective option as well, although this is not always the case. There is a lot of discussion and debate around how much you need to start a self-managed super fund, but there is no hard and fast rule with this as SMSFs are not typically setup purely because of costs.
A commonly held view within the industry is fund assets of $200,000 or more would be cost competitive within an alternative super fund. Different sections of the superannuation industry will argue on starting ranges for an SMSF of between $100,000 to half a million dollars. However, cost usually isn’t the driver to establish a self managed super fund, choice and control is. Cost is more likely to be a secondary issue that may justify your decision to setup a self managed super fund.
Some things to consider when setting up a Self Managed Super Fund
There are some important considerations when thinking about, running and setting up a self managed super fund. Not only do you have to think about whether it is right for you, you need to consider and understand the responsibilities that come with being a fund trustee, including having the necessary time and skills to appropriately manage the fund.
You will also need to be confident in your own ability to make the best investment decisions or else engage somebody such as a licensed financial adviser to work with you. It is important that you ask yourself whether an SMSF will do as well – or better than – other super funds after paying all the costs.
Is a Self Managed Super Fund right for you?
Further information on setting up a self managed super fund and other trustee education articles, booklets, webinars and videos are available free for SMSF Academy Members – read more about SMSF Academy Trustee Membership benefits.
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