Have you been looking for a different way of approaching retirement savings? A self managed super fund (SMSF) may be something you should consider.
For those who are not aware, a self managed super fund is a private super fund that is managed by you rather than by an industry fund or a retail fund. The thought of managing your own super probably sounds exciting as it gives you more control over what assets you invest it, but is an SMSF really a good idea? Let’s take a look.
First, you have to look at whether or not the cost of managing your own fund would be worth it. Super funds are expensive to setup and manage regardless if you’re the one who’s managing it or not. With a SMSF however, a percentage of your balance goes towards running your super . If you are aren’t adding additional money to cover fees, this could be costing you more in the long run. For example, if you have less than $200,000 in super, an SMSF doesn’t make a lot of sense due to expense of running it.
One of the main reasons why people consider an SMSF is due to the ability to use the funds towards an asset such as home. However, keep in mind that there can be up to four people in the SMSF. If any of the members of the super becomes deceased, falls ill or becomes disabled, you might need to free up cash. In this case, the property may need to be sold. Not only that, but with the home idea, it ties up a good portion of your super fund and it doesn’t allow you to invest in other assets or investment opportunities.
A self managed super fund requires management either by you or another member of the super fun. Regardless all of the laws, regulations and restrictions still apply. It’s your responsibility to ensure they are fully adhered to. The penalties for breaking super fund regulations can be steep and not worth it in the long run.
If it’s the control that you’re looking for, some funds do give people the choice of a direct investment option. This means that you can select specific investments for your contributions.
Is having a self managed super fund a bad idea then? Not necessarily.
Before making a decision, make sure you have all the information. Speak to the team at Camori Investments who can look at your individual situation and help you make the choice that fits your needs.