When is a self-managed super fund a good idea … and when is it not?

The use of self-managed super funds has grown rapidly in Australia over the past five – seven years. But, is this the most appropriate vehicle for you?

Self-managed super funds are also known as DIY super funds. They can have up to four members and are generally established by an individual, a family or business partners to manage the investment of their own superannuation savings. 

Managing your own super can offer greater control and access to a broader range of investment options such as shares, direct property and alternative asset classes not available to conventional super funds. 

However, SMSFs can be costly to run and all members are held responsible for their decisions, such as where legislative compliance is concerned.

Members of the fund must also be trustees, unless a corporate trustee is appointed, and are responsible for all the investment and compliance decisions of the fund, including administration, trusteeship and taxation. The differences between individual and corporate trustees will be discussed in our next article.

When determining whether a self-managed super fund is right for you there are some simple steps you can follow.

  • Seek professional advice
  • Make sure you have enough assets, time and skills
  • Understand the risks and laws
  • Make sure your trust deed and investment strategy are tailored to suit the member
  • Make sure you can meet your record keeping and reporting obligation
  • Make sure you understand the auditing obligation

While self-managed super funds can be a very good way of looking after your super, it is extremely important that trustees understand what they are doing, and if in doubt, get some advice and/or assistance. The penalties for getting it wrong and becoming a non-complying fund are severe.

Your Adviser is available to provide advice about whether or not a self-managed super fund is right for you. Why not schedule a meeting with your financial adviser now?