Considering Self-Managed Superannuation?
A Self-Managed Super Fund (SMSF) can be a powerful tool for those who want greater control over their retirement savings. However, it’s not for everyone.
Here’s when it might make sense to consider an SMSF over an industry or retail super fund.
1. A Larger Super Balance
SMSFs come with fixed costs, making them more cost-effective as your balance grows. While ASIC suggests $200,000–$250,000 as a minimum threshold, a balance of $500,000+ is generally recommended for achieving sufficient diversification.
2. Greater Investment Control
Unlike retail and industry super funds, SMSFs provide direct access to a wider range of investments, including:
- Shares, ETFs, managed funds and bonds
- Term deposits and physical gold
- Residential and commercial property, including the option to lease business premises to yourself at market rates.
3. Ability to Borrow for Property Investment
SMSFs are the only type of super fund that can borrow money to purchase property. This is particularly useful for business owners who want to buy commercial property through their SMSF and lease it back to their business.
4. Business or Family Group Structure
With up to six members allowed, SMSFs enable families or business partners to pool superannuation savings for larger investments that may not be feasible individually. This can be an effective way to strategically build wealth while maintaining control over investment decisions.
5. Willingness to Manage Compliance and Admin
Running an SMSF requires active involvement in record-keeping, compliance and annual audits. It suits those who are comfortable with financial oversight or willing to engage an SMSF accountant for administration.
When an SMSF May Not Be the Right Fit
While SMSFs offer flexibility and control, they may not be suitable in the following cases:
- A super balance below $250,000, as the costs may outweigh the benefits
- A lack of time or interest in managing investments and compliance
- Limited financial or investment knowledge, which could lead to underperformance
- A preference for a low-maintenance option, as retail and industry funds handle administration and compliance.
Before deciding on self-managed super, it’s essential to weigh up the responsibilities alongside the potential benefits. For those looking for more control and strategic investment opportunities, an SMSF can be a powerful tool, but it requires commitment to ongoing management.
Intuitive Super works with you from setup to windup, offering a full range of SMSF admin services. For more details, visit the ATO website or consult one of Intuitive Super’s SMSF specialists on 1300 856 064.
