Why you should set up a self-managed super fund

The latest statistics show that over one million Australians have now switched their superannuation to a self-managed superannuation fund (SMSF). One third of the total superannuation fund assets are in SMSFs. Traditionally, most people invested in retail or industry superannuation funds, with the fund managers having the responsibility to make all the investment decisions. Below are five reasons why you should set up a self-managed super fund.

Control & flexibility

You will have total control of your SMSF. You also have the flexibility to choose where you want to invest your funds. If you have the skills and time to manage it totally, you can do both the administration and investment work. You also have the choice to hand the administration side of things over to a professional accounting firm to do the administration and accounting for you. Highly skilled accountants can help you with investment decisions. However, as the trustee of the fund, you will remain in control at all times.

Lower fees

The operation of your SMSF will have associated costs and fees, but it is the most cost-effective type of super fund. The average retail super fund will charge around 2% or more of your balance annually in fees. This adds up to a huge amount of money over your working life. The fees are usually lower than that for a SMSF. It is generally not cost effective to have less than $200,000 in a SMSF, as the fees will still be high in proportion to your balance. If you do happen to have less than that, you can find various online super management funds that charge significantly lower fees. Normally they don’t give any financial advice to help with your investing; they just do the administration and accounting part for you.

Own your own superannuation fund

There are now indications that in the near future, the mainstream super funds might begin to experience difficulties with the liquidity of pay-outs. This is due to the retirement of more and more baby boomers. The reality in the retail and industry superannuation funds, is that you don’t own your money. You just have an entitlement as a fund member. When you are ready to access your superannuation, you might find your fund has a liquidity crisis. By having a SMSF, you will bypass this scenario, as you totally own all your super fund assets. Leaving it to be your decision when you can access the benefits.

Wide investment choice

There is an almost limitless choice of investments for SMSFs. With ordinary super funds the investment choice is mostly limited to capital balanced, stable or growth investments. With a SMSF you have the choice of shares, property, cash, precious metals, direct equities, cryptocurrency (Bitcoin), collectables such as antiques or artwork, wine and vintage cars to name a few.

Combined accumulation & pension fund

If you have a retail or industry superannuation fund, at retirement time you will have to put some of your hard earnt cash into a separate pension account. Then you will have two separate accounts, both charging fees. Having a SMSF will give you a combined accumulation and pension fund. You will be able to continue contributing and drawing a pension from the one fund.

These are some of the main reasons you should set up a self-managed super fund. You will be able to rest easy, knowing your superannuation is in your control. Nevertheless, before beginning a self-managed super fund, it is imperative that you seek advice from a qualified accountant. If you want to deal with the best of the best, IQ Accountants are the ones to call on 5576 0011.