The Ten things you should consider when establishing a self managed super fund

Self-managed super funds (SMSFs) are a popular way for individuals to take control of their retirement savings. They provide members with greater control over their investments and can offer significant tax benefits. However, setting up an SMSF is not something that should be taken lightly.

There are several things to consider before establishing an SMSF. In this article, we will discuss the top ten things you should consider when establishing an SMSF.

  1. Determine if an SMSF is right for you.
    Before establishing an SMSF, it is essential to determine if it is the right choice for you. SMSFs are generally best suited to individuals with a large amount of superannuation savings, as they can be costly to establish and maintain. Additionally, SMSFs require a significant amount of time and effort to manage, so you should be prepared to take an active role in managing your investments.

  2. Understand the costs involved.
    Establishing and maintaining an SMSF can be costly. There are various fees and charges involved, including establishment fees, ongoing administration fees, investment fees, and auditing fees. You should consider these costs and ensure that you have enough funds to cover them.

  3. Choose a reputable SMSF provider.
    When establishing an SMSF, you will need to choose an SMSF provider to act as the trustee of the fund. It is essential to choose a reputable provider that has experience in managing SMSFs.

  4. Develop an investment strategy.
    As an SMSF trustee, you will be responsible for developing an investment strategy that meets the fund's objectives and complies with superannuation laws. Your investment strategy should be tailored to your risk profile and take into account factors such as age, income, and retirement goals.

  5. Consider diversification.
    Diversification is key to managing risk in your SMSF. It is essential to spread your investments across different asset classes, such as cash, shares, and property, to reduce the impact of market fluctuations on your portfolio.

  6. Understand the rules and regulations.
    SMSFs are regulated by the Australian Taxation Office (ATO), and there are strict rules and regulations that must be followed. It is essential to understand these rules and regulations and ensure that your SMSF complies with them.

  7. Ensure adequate insurance coverage.
    As an SMSF trustee, you are responsible for ensuring that the fund has adequate insurance coverage. This includes insurance for members, such as life and disability insurance, as well as insurance for assets held by the fund.

  8. Keep accurate records.
    SMSF trustees are required to keep accurate records of all transactions and activities related to the fund. This includes financial statements, investment records, and tax returns. It is essential to keep these records up to date and to ensure that they are easily accessible.

  9. Seek professional advice.
    Establishing and managing an SMSF can be complex, and it is essential to seek professional advice from experts, such as financial advisers, accountants, and lawyers. These professionals can provide valuable guidance and help ensure that your SMSF is set up and managed correctly.

  10. Monitor and review regularly.
    Finally, it is essential to monitor and review your SMSF regularly. This includes regularly reviewing your investment strategy, assessing the performance of your investments, and ensuring that your SMSF continues to comply with superannuation laws and regulations.

In conclusion, establishing an SMSF can provide significant benefits, but it is essential to consider these ten factors before making the decision to do so. By taking the time to carefully consider these factors, you can ensure that your SMSF is set up correctly and managed effectively to achieve your retirement goals.

Why not take the next step and talk to a qualified SMSF financial planner? 

LifeTime Financial Group are specialist (holding appropriate accreditations) advisors who are ideally positioned to assist those considering self-managed super. There are a range of cost effective solutions available in the market place that significantly reduce the costs of compliance.

If you would like to discuss your current Superannuation position or wider financial planning needs, why not call us today on 03 9596-7733? There is no cost or obligation for our initial conversation/meeting.

Alternatively, please make an appointment using our online Book an appointment (Blue button above)

LifeTime Financial Group. A leading privately-owned Melbourne-based Financial Planning practice with no ties to any financial institution.

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