Understanding Self Managed Super Funds

You have probably heard the term Self managed super fund used before but maybe you’re unsure if it is right for you.

Let’s start by explaining what it is

A self-managed super fund (SMSF) is a private super fund that you manage yourself. SMSFs are different to industry and retail super funds. When you manage your own super, you put the money you would normally put in a retail or industry super fund into your own SMSF. You choose the investments and the insurance. While having control over your own super can be appealing, it’s a lot of work and comes with risks.

This is very different to a managed super fund which most Australians are likely most familiar with.

How do you know if an SMSF is right for you?

Setting up a Self-Managed Super Fund (SMSF) can be a complex and time-consuming process, with quite a few regulations and rules to understand. They should not be taken on lightly and require careful consideration before proceeding

If you are deciding whether you should set up your own superfund, consider the following questions:

Do I have a good understanding of investments?
Am I willing to bear the serious responsibility of managing my and my family’s (or other member’s) retirement funds?
Do I understand the role and responsibilities of becoming an SMSF trustee, and am I comfortable with that role?
Do I have enough money in my super (or member’s combined super) to set up an effective SMSF?
Do I have an investment strategy that makes it worthwhile to switch to an SMSF?

Many individuals find themselves contemplating whether to set up SMSF when they have accumulated a large sum in their superannuation accounts and want to do something more with it. But you need to fully understand what is involved before setting up an SMSF.

The advantages of having an SMSF

Control over your investments:
Flexibility to match your circumstances
Scalable expenses with larger balances
You can include family members
Estate planning flexibility.
Some tax advantages

The disadvantages of having an SMSF

Trustee responsibilities and learning
You cannot live overseas
Penalties for mistakes or non-compliance
No fallback on compensation
Investment risks
Time-consuming management.
Additional fees for accounting & advice

If you are unsure if an SMSF is right for you, our principal, Alec Brandon, is recognised by IPA Australia as a specialist in providing advice for effective management and compliance for Self-Managed Super Funds

At Proactive Accounting, we make the time to help you easily understand the complexities of your SMSF investments while you have greater flexibility and control over your investments and your options with asset protection and estate planning.