So you’ve probably heard Self-Managed Super Funds are pretty popular in Australia
Running your own Self-Managed Super Fund known as SMSF is an alternative to putting your money in a retail or industry fund. According to the AFR, today’s SMSFs are so popular that they are the fastest growing super segment in Australia, and “there’s no other sub-sector like it in the world.”
The current number of SMSFs is set to reach 600,000 funds controlling $650 Billion in assets, and the average balance is around $1.17 Million Dollars (APRA data, as of February 2017).
The Advantages of Managing Your own Super
There are some key advantages to SMSF’s like having control over your super, more flexibility in investment choice and you decide what you want to manage and what you don’t. You can pool your super with family members of the fund, and you can also borrow from your super to purchase property.
Many people typically include in their reasons for starting an SMSF, to increase their income, minimise tax, take more control of their retirement contributions, or for using a portion of their SMSF to invest in residential property. A lot of younger people want to manage their super contributions because they are less trusting of retail and industry funds and would prefer to take care of and manage their investments themselves, and this may give more peace of mind.
Whatever the reason may be, SMSFs are not just the domain of millionaires anymore as the costs of administering SMSFs have decreased with time and popularity.
Rules, Reporting and Administration
Starting an SMSF can be empowering and exciting, but there are compliance rules and risks with operating which you need to know about, such as you are ultimately responsible for the ATO’s rules and reporting requirements. If you are willing to do this, you can access opportunities and strategies and the good news is you can get other people to setup and take care of the administration and compliance.
Starting Balance for Starting an SMSF
SMSFs are an option whether you’re employed, self-employed, retired or near retirement.
If you are interested in learning more and getting started, you will need a recommended starting super balance of $130,000- $200,000k which can be a combined sum between spouse or partner. Of course, more and more younger people are starting with less and quickly building their super contributions, but the average starting balance is $200,000 because this is roughly the equivalent cost of running an SMSF instead of a retail fund
Financial Advice and Setting up
To enquire about setting up an SMSF you can contact our Financial Planning side Best Wealth Creation at our Townsville office on 07 4779 0555.
Best Wealth Creation Pty Ltd and Jeminna Best are authorised representatives of Synchron, AFS Licence No. 243313