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Is a Self-Managed Superannuation Fund (SMSF) Good For You?

Is a Self-Managed Superannuation Fund (SMSF) Good For You?

Running your own super fund is a challenge. The funds are also known as DIY super fund because they are Self-managed superannuation funds (SMSF). An SMSF can have a maximum of four members and the trustees are usually the members of the fund.  Trustees and members of the fund are required to keep financial records, be compliant with the super laws and report annually to the Australian Taxation Office or ATO. ATO is a governing body for self-managed superannuation fund to stay on the right side of superfund laws.

Another fund choice that you could make is the small APRA fund. Professional trustees run small APRA funds and the Australian Prudential Regulation Authority is in charge of regulating the funds and the professional trustee. They cost more than a super fund because trustee fees have to be paid but the fee includes administration and compliance costs.

SMSF gives trustees control on where to invest their money. There are greater choices of direct investments. Trustees can invest in properties, artwork and any valuable asset. They can even purchase business properties like offices and use the property in a business.

To know if an SMSF is good for you or not, you should answer three questions.

  • Are you ready to commit to the responsibilities of an SMSF member or trustee?
  • Are you familiar with investing, investments and investment strategies?
  • Do you have a lot of superannuation money?

Running a fund may take longer than most marriages and if you intend to pay yourself super pensions from the self-managed super fund when you retire, you should be ready for the commitment. If you are confident that you can have better returns with your self-managed superannuation fund than those run by professionals, then a superfund might be best for you. If you can run a more cost-effective superfund than a larger fund could, then the self-managed superfund option might be good for you. Be warned though that as a trustee, you must write down an investment strategy, follow investment rules and choose the best investments to get the best retirement benefits once it is time for you to receive your retirement. However, if you have no knowledge about investing, a superfund is not a good place to start learning about it.

For an SMSF to be cost-effective, you need at least a superannuation balance of around $200,000 but other self-managed superannuation fund providers believe that the cost-effective balance should be above $250,000. If you do not have $200,000 in super balance, cost-effectiveness can still be achieved if you make large contributions in the first year.

Usually, annual costs can be between $1,500 and $5,000. The costs of running the fund may be higher depending on the complications of the fund’s investments and if you hire a company to professionally administer the operations of the fund. Or, rely on an accountant or adviser to administer the fund.

Setting up and self-managed superannuation fund can cost between $660 to $3,300. The cost also depends on the advice you need and get from self-managed super fund professionals. It also depends on whether you intend to have individual or corporate trustees.

If you want to run a self-managed super fund you must be willing to get on top of superannuation laws, the tax rules and reporting requirements. These are usual responsibilities of the trustees and members that you have to adhere to in case you set up and self-managed superannuation fund. Some trustees and members choose to appoint super fund service providers like an SMSF auditor to help them run their funds.

Self-Managed Superannuation Fund is a feasible retirement fund option if you:

  • Have more than $200,000 to $250,000 super savings or plan to accumulate the same amounts quickly after setting up the SMSF on your own or with other members. If you start the self-managed superannuation fund with a low balance, expect a high percentage of the super saving to go to or be eaten by the costs of running the fund.
  • Know an expert adviser who knows a lot about SMSFs
  • Agree and comfortable with the costs of setting up a super fund and running the fund
  • Experienced in investing, and always updated with markets and investment trends
  • Willing to learn, if not familiar with the superannuation rules.
  • Understand and aware of the compliance requirements and administrative work involved in running a self-managed superannuation fund.

If you still need more information about SMSF, talk to us and we will help you.

Kingston Knight Audit are the Auditor Melbourne experts to contact when dealing with your trust account audit, SMSF Audit, financial statement audit,  and internal audit requirements. Contact us today, Kingston & Knight Audit offers a free telephone consultation to establish how we can best help you achieve the assurance and compliance you require.

Call our Melbourne team today on 03 9088 2242, or email us via