SMSFs account for more than a third of Australia’s invested super funds* but your decision making should be based on more than popularity. Taking on an SMSF means taking on the dual roles of fund member and Trustee. There are many more considerations you’ll need to be aware of BEFORE making the switch.

In the past decade, the take up rate by individuals for Self-Managed Superannuation Funds (SMSF) has grown exponentially. Today almost 33% of the $1.7 trillion in superannuation is invested in Australian self-managed superannuation funds.*

SMSFs put you in the driver’s seat and offer a high degree of self-determination, including:

Control – providing the opportunity to create your own investment portfolio that may include shares, residential and commercial property, farms, ethical investments and so on.
Comfort – as a true intergenerational wealth accumulation and wealth transfer vehicle, SMSFs can become a lasting legacy for the generations who come after you.
Choice – offering you greater flexibility over your investment choices as you track and manage your own portfolio. SMSFs have one of the lowest tax rates of any entity in Australia, which can prove beneficial when investing over the long term.

On the flipside, whilst an SMSF increases your investment flexibility, it is also likely to increase your responsibility, your time commitment and your dollar investment.

Responsibility - Members of a SMSF are also the Trustees. This dual responsibility is worthy of serious thought. You should also remember that if there are additional trustees in your SMSF, you are all equally liable for the decisions made and their outcomes. Consequently, you may wish to consider separate life insurance policies including income protection and total and permanent disability cover.
Affordability – until recently it was assumed a SMSF demanded a substantial balance, usually exceeding $300,000 - to make the costs of setting up and administering a SMSF worthwhile. However today, largely due to developments in technology, SMSFs have become more accessible to 30-40 year olds who have approximately $200,000 to invest.
Time - you’ll need to allocate considerable time to manage your SMSF. If this is not available to you, collaborate with professionals who can offer legal and taxation insights. However, remember that the overall responsibility remains directly with you.
Experience – without prior investment experience, you may require additional assistance from a team of advisers equipped to offer guidance around evolving legal and taxation parameters in which your SMSF is authorised to operate.
Insurances - If you are considering making the switch from a public offer fund to a SMSF, you should first review your existing fund’s insurance package and other embedded extras. In some instances, relinquishing your existing fund may see you forego the insurances that formed part of that arrangement.

For more information to assist you in determining whether or not a SMSF may be a suitable strategy for you, call us on (07) 3720 1299.

- By Matthew Lane

*http://www.superguide.com.au/comparing-super-funds/smsfs-lead-the-super-pack-again