Self-Managed Super Funds

What is a Self-managed Super Fund?

A self-managed super fund (SMSF) is a private super fund, that can have up to six members who are responsible for managing the super fund. This means you get to choose the insurance, and investments you put your money into. The money that would normally go in another super such as a retail or industry super fund, instead goes into your SMSF.

 

The responsibilities and risks of an SMSF

Managing an SMSF involves ongoing activities such as:

• • Gaining knowledge on investments, and doing your research
  • Record keeping, accounting, and getting audits done every year
  • Staying informed on laws and regulations
  • developing an investment strategy

In addition to these responsibilities, the setting-up of your SMSF can be a lot of work!

Although it takes a lot of time and effort, you might also spend your money on the getting range of advice required, auditing, insurance premiums, etc. This extra expense is important to consider.

Along with these responsibilities and costs, SMSFs come with risks:

• • Loss of money via scams or theft won’t be compensated
  • Your investments may not turn out well
  • your responsiblity for the fund doesn’t change, and you are liable for any decisions made
  • if relationships between members of your fund change, or there is a dispute, it may affect the SMSF

 

Is an SMSF right for you?

There are several things to consider, when thinking of switching to an SMSF. Are you willing to put in the time and effort to manage it? Do you have an understanding of your responsibilities as a trustee of the SMSF? Will you actually benefit from it, and does it help you achieve your goals?

If you answer yes to these questions, then you might want to go on to do further research and get advice from a licensed financial advisor.

 

The above information was sourced from moneysmart.gov.au