If you’re thinking about switching a Self Managed Super Fund we have developed a basic guide to get you thinking about whether it’s worth considering. If, after reading this guide, you think a SMSF is right for you we recommend you talk to a financial adviser.A financial adviser can assess your situation and help you make an informed decision.
Ask yourselves these questions:
Am I a confident and knowledgable investor? If you are, then score yourself a pass and move onto the next question. If you’re not, then you should look to increase your knowledge before even considering a SMSF
Do you have the time to manage the investments, compliance and strategy of an SMSF? It takes time and effort to manage the affairs of an SMSF. Sure, you can outsource some of this to your financial planner and accountant, but there is still plenty you will have to do. If you’re short of time, then a SMSF may not be right for you
How much money do I have in superannuation at the moment? There seems to be a rule of thumb that around $200,000 is the ideal entry point into SMSF. This is based on the fact that the professional fees to run a SMSF compare favourably with managed super funds at around that point. There are exceptions though, like when the fund borrows money to invest in property, so engage some help to do the numbers.
Do I understand what investments a SMSF can make? There are restrictions on how a SMSF can invest and what it can invest in. Penalties are severe if the rules are breached, so make sure you seek advice before going ahead and establishing a self managed super fund.
Do I understand that superannuation is to be used solely for the purpose of providing retirement benefits to members? There can’t be any pre-retirement benefits to members or related parties (such as letting members use an investment asset)
It’s very important to seek advice about SMSF’s before setting one up. The rules are complex and the cost of mistakes is high. Paying for professional advice will give you security and the peace of mind that you’re doing things properly. Contact us for help.
The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information.