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Time, money and self-managed super funds

I’m toying with the idea of starting my own self-managed super fund – my friends say they’re cheaper than the usual super funds. Also, I don’t mind buying shares and playing the market. What do I need to know?

There are about 320,0000 self-managed super funds out there with over 600,000 Aussies involved. I reckon you need about $300,000 in a fund to make it worthwhile but I know of others who have done it with less and they fared pretty well. The accounting costs are about $2500 but you can do more work yourself and bring the costs down.

In running a SMSF, you are working with the Australian Tax Office and all trustees of a SMSF will have to sign a declaration stating that they understand their obligations. Some people use advisers/accountants in the early days and learn the ropes but then take over the role of running the fund. Others simply pay for help and set the costs against the profits of the fund.

If you’re going to take the plunge, decide to become your own fund manager. Know the rules of the SMSF and establish an investment policy. Also, work out your goals and if you have others in your fund, make sure that the fund’s investments are compatible with the members’ goals.

If you don’t like the idea of investing, you could choose an index fund for your SMSF’s investments. However, if you don’t like paper work it might be easier to forget an SMSF and look at something cheap and successful such as an industry super fund.

One thing to remember – definitely don’t do it simply because your friends say it’s a cheap option!

For advice you can trust 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, September 27, 2010

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