Should I start an SMSF?

SMSF can be the stand out best solution. It is the fastest growing segment of the superannuation sector and for good reason, but they are not for everyone. Some considerations to weigh up include:

  1. They offer greater investment flexibility than any other superannuation option. New investments are coming out all the time that are making SMSFs more and more attractive, however too much choice and lack of guidance can result in bad decision making and substandard investment outcomes.
  2. Cost benefits – Balances greater than $300,000 can benefit from improved cost outcomes, dependent on the investment strategy, however it is important to weigh up all costs, including how you value your own time, as SMSFs do require more time input. Previously only the domain of Accountants, there has never been a better time to reconsider your options for management of your fund.
  3. Improving technology – managing an SMSF has never been easier, which is also having a positive influence on the cost of running them. Solutions now exist that are both cost effective and offer data feeds and consolidated reporting, that make running an SMSF easier than ever before. Yield Financial Planning offer an end to end service that leverages off some of the best technology available.
  4. You can borrow for property investment – Since 2007, it has been possible to leverage your super money to buy property. This is not always as good as it sounds and it does involve extra cost and compliance to set up, but can be a great option for some investors. It can work for residential investment or commercial and can be a great strategy for business owners to consider. It’s important to always be cautious and get good advice before just jumping into this.
  5. You can pool your investments with family to increase your buying power and in turn investment options. This pooled approach can be great to really align your wealth creation strategy as a family, however it is important to find a balance of risk that meets the needs of all parties involved.
  6. Tax management – there are great tax planning opportunities that come with an SMSF. Franking credits and control around management of capital gains are two examples of how tax can be better controlled. The pooling effect for couples with different tax statuses (e.g. one in retirement and one not) open potential tax efficiencies, due to how tax is calculated proportionally.

If you do decide to set up a SMSF, you should get advice first. Once you set up an SMSF you become a trustee or director of the trustee company and are ultimately responsible. The rules are complicated and the penalties for breaching the rules can be severe.

Speak to one of our degree qualified advisers about how this relates to you.


Related FAQ's

When can I access my Super?   |   Are SMSFs a good idea?


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The content of this presentation is intended to be general information only and has been prepared without taking into account any person’s objectives, financial situation or needs. Each person should consider its appropriateness having regard to these matters or obtain relevant professional financial advice before making any financial decisions.  Examples are illustrative only. Each person should obtain any relevant professional financial, taxation and social security advice before making any financial decisions.