Self-managed superannuation is the fastest growing type of fund in Australia and it is little wonder why their popularity is increasing. The number one thing people look for is more control of their retirement funds, and self-managed superannuation certainly allows you to do this.
Why SMSF?
The main attraction is “control” – being able to choose the assets, decide on the fees and keep a tight ship when it comes to investment performance.
The ability to borrow through a self-managed fund is also a big draw-card, especially to purchase real estate. However, it is important to remember the purpose of superannuation, and not become distracted in leveraging residential investments, as your super is meant to replace your pay cheque when you’re in retirement.
Is it right for you?
Self-managed super can be a lot of work, so before you undertake one it is important to do your research and talk to a professional. The paperwork, reporting, investing and managing of a super fund can take a lot of time and knowledge if you do everything yourself.
Your best option would be to outsource to accountants, stock brokers and financial advisers, albeit at a cost.
What are the ongoing costs?
According to superannuation specialist lawyer Bryce Figot from DBA Lawyers, the cost each year starts at about $2000. This covers the minimum accounting and audit requirements, but doesn’t include advice or the cost of buying or selling investments. The total cost will be dependent on the amount of professional help you receive and the investments you make.
What are the set up issues?
You need to ensure that the legal documents are made clear about what the fund can and can’t do. You need to include issues such as what happens when someone dies, when and how to start paying a pension to a member, what investments can be made and how decisions are made.
How many people can belong?
A self-managed fund can have up to four members. Every member must also be a trustee of the fund or a director of the trustee company. Figot recommends that a company be used as the trustee and investments, assets and bank accounts are purchased and held in the name of the company, with each member being a director of the company.
What can you invest in?
You can invest in anything from Australian and international shares, property, fixed interest, to buying gold, other metals and gems, even artwork and collectables.
For more information on how to start a self-managed super fund and to speak with a knowledgeable and experienced Financial Planner – please don’t hesitate to give the team at Fortis Financial Planning a call on 02 9267 0108. Alternatively, you can reach us via info@exemplary-financial.flywheelsites.com.
