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Q&A - DIY super

I have heard a lot about self managed super funds and would like to know the things I should consider before I attempt to start my own super fund.

The first thing you should be aware of is that running your own fund is actually a very serious proposition. I think that many people do not give this enough thought. If you chose to run your own fund, you become the trustee and as a result, there are a number of bits of legislation and rules you must be aware of and comply with. In fact, running your own fund is like doing your own tax return so if you feel you can cope doing your own tax returns then you may also be the right sort of person to run your own super fund. Another reason why I say people should carefully consider this is that they are playing with their retirement, I will say that again, you are taking 100 per cent responsibility for whether you will be putting your feet up at retirement or continuing to work when you should be retired. If you stuff it up, there is no one else to blame.

Now there are a lot of different options and ways to run your own super and, in my opinion, everything comes down to cost. What you want to do is find a compromise (and everyone’s position on how much they want to pay is different) between having someone do the administration work for you and having control over the investments. The more work you do yourself, the more costs you save but I would ask you to think carefully how much your time is worth to you. I like to compare this trade off to the time I built a fence. When you have a tradesperson build you a fence, they do this every day and they have the right tools and have allocated the right amount of time to build the fence. If you build the fence yourself, you have to learn as you go and you may have to buy new tools and if you make a mistake it can be very costly. There is a reason why it only takes a tradesperson a day to build a fence that may take someone like me six months of weekend work – that is the skills, tools and experience the tradesperson brings to the job. So if your family and your leisure time is important to you, then work out how much your super fund is really costing. If you choose to do this yourself, know that the administration will take you away from the things you love to do (I learnt that I will never build a fence again).

So if I were you, I would research the cost of running your current fund and research the investment options. Don’t forget you need to consider any personal risk insurance you already have in place, any change will mean you have to go through the process of applying for new insurance. Then I would compare other options such as an industry fund, verses the costs of setting up your own fund. I would suggest you also compare the cost of using your accountant against using an online administration service to do the tax return and audit for you. Once you have compared the costs, the time involved, the returns and the insurance, you will be able to make a final decision. Of course, if this is all too much you could approach a good financial adviser not aligned with a financial institution so that they can do this for you and help you find the solution tailored to you.

Don’t forget that my company Switzer Financial Services can help you with this decision.

Need help with your super? Book a complimentary first appointment with Switzer Financial Services today.  

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.


Published on: Monday, October 12, 2009

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