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  • Writer's pictureShiv Jaidka

Is a Self Managed Superannuation Fund right for you?

If you are thinking about starting a self-managed super fund, this could be an effective way to manage your retirement savings. It has several upsides, but it comes with heavy responsibilities. What is an SMSF? As the name suggests, an SMSF is a private super fund that you manage yourself. It is a form of trust, established for the sole purpose of providing retirement benefits to its members. You need to comply with annual tax return lodgement and auditing requirements.

Benefits of SMSF

  • The most common reason to commence an SMSF is the greater control over investments.

  • SMSFs can invest in shares, direct residential or commercial property.

  • An SMSF can also borrow to buy a property via a Limited Recourse Borrowing Arrangement (LRBA).

  • Tailored Insurances - You can Pick and Choose the features of the policy

Drawbacks of SMSF

  • Members are responsible for the fund investments, and no recourse is available for the loss of investments.

  • It is expensive to run SMSF where member's balance is quite low.

Setup of SMSF

  • You need to discuss the suitability of SMSF with a licensed adviser.

  • You need to have $200,000 to $400,000 (combined for all members) to rollover from existing funds with an expectation that the fund will continue to grow.

Setup Costs You are looking at between $2,000 to $5,000 to set up an SMSF. The more expensive part would include establishing an LRBA. It is cheaper to set up a fund with individual trustees, rather than a corporate trustee. Regular Costs The ongoing costs will depend upon the complexity of the fund investments, but expect between $2,000 and $3,000 a year, including the annual audit for the fund. If you wish investment management or financial advice, that would be an additional cost. If you like me to review your situation, please book a discovery call. (Disclaimer: This advice is general and does not take into account your personal circumstances)

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