Super is one of the best tools Aussies have for growing long-term wealth, yet somehow it’s still a bit of a mystery to many. Lately, more people are looking to take the reins when it comes to their retirement savings. Enter self-managed super funds. With over a trillion dollars in assets and more than 40,000 new funds set up just last year, it’s clear that Aussies are keen for an alternative to the big-name super funds.
So, what’s got everyone talking about self-managed super funds? And more importantly, is it the right move for you?
What Exactly Is a Self-Managed Super Fund?
Think of a self-managed super fund, or SMSF, as your own private super fund that you run yourself. Unlike retail or industry funds where someone else makes the investment calls, an SMSF puts you in the driver’s seat.
You get to choose where your money goes – whether that’s shares, property, ETFs or something a bit different. It gives you heaps of flexibility and a clear view of how your money’s tracking.
But here’s the kicker. With that freedom comes responsibility. You’re not just a member of the fund – you’re also a trustee. That means you’re legally responsible for making sure the fund sticks to all the tax rules, does its paperwork, and performs well enough to support your future.
Why More Aussies Are Going Down the Self-Managed Super Fund Path
If there’s one word that sums it up, it’s control. After years of disappointing returns, data breaches and dodgy decisions from some big super players, a lot of Aussies are saying, “Nah, I’ll handle it myself.”
Here’s why people are jumping on the SMSF train:
- Transparency: You know exactly where your money is. No funny business with hidden fees or tricky terms.
- Investment flexibility: Want to mix and match shares, cash, ETFs or property? It’s all up to you.
- Better value as your balance grows: While industry funds charge based on your balance, SMSF costs are more fixed. The more you’ve got, the more cost-effective it can be.
- Tax smarts: You can plan things like contributions and withdrawals in a way that works best for your tax situation.
The big appeal of self-managed super funds is being able to tailor everything to suit your goals. You’re not stuck with whatever the fund manager reckons is best.
How Self-Managed Super Funds Stack Up Against Traditional Super
There’s no denying that retail and industry funds are convenient. But they also tend to box you into set portfolios. You don’t always get much say in where your cash ends up.
For instance, a standard super fund might put your money into Aussie companies with limited growth, while giving you barely any exposure to global tech giants like Apple or Microsoft.
An SMSF lets you choose your own mix, both locally and globally. You can put your money where you believe the growth is. No waiting around for someone else’s strategy to (hopefully) pay off.
Know the Risks and Responsibilities
Now, let’s not sugarcoat it. Running an SMSF isn’t all smooth sailing. It takes time, know-how and a solid understanding of the rules.
Here’s what you’ll be on the hook for:
- Lodging an annual tax return
- Getting an independent audit done each year
- Following ATO rules to the letter
The good news is you don’t have to do it all yourself. There are accountants and financial advisers who know SMSFs like the back of their hand. Get the right team behind you and you can enjoy the benefits without the stress of managing every detail.
How Much Do You Need to Start?
This one comes up all the time – “How much do I need to kick things off?”
There’s no one-size-fits-all answer, but many experts reckon somewhere between $250,000 and $500,000 makes it cost-effective. That’s usually the sweet spot where the fixed costs of running an SMSF start to make more sense compared to standard super fees.
If you’re younger and plan to keep adding to it, you might be able to start smaller. Just make sure you’ve got a clear reason for setting it up. If you’re after more control, flexibility or a long-term plan, you might be on the right track.
Why It Pays to Get Expert Advice
Sure, you can set up an SMSF online for cheap. But plenty of people who go down that route end up making expensive mistakes – missing insurance, messy trustee setups, or not meeting all the legal bits.
Fixing those errors later can be a nightmare. As the old saying goes, do it right the first time.
A good adviser can:
- Help figure out if a self-managed super fund is actually right for you
- Guide you through the compliance maze
- Create a custom investment strategy that fits your goals
- Handle the audits and reporting without fuss
Watch Out for These Common Slip-Ups
- Starting an SMSF just to buy a property – this can lead to poor diversification and higher risk
- Skipping key compliance steps – missing your annual return or audit can land you in hot water
- Forgetting about insurance – a lot of people lose their life or income cover when they switch from a retail fund
- Trying to do everything yourself – unless you’ve got the time and expertise, it can backfire
When a Self-Managed Super Fund Might Be Worth It
You might want to seriously look at an SMSF if you:
- Have a super balance above $250,000
- Want to call the shots on your investments
- Are interested in specific assets like direct shares or property
- Value visibility and flexibility
- Don’t mind working with pros to keep things ticking over
But if you prefer to set and forget, have a smaller balance, or just don’t want to deal with the admin, then a traditional super fund might still be your best bet.
Wrapping It Up
Your super is a big deal. It’s your future, and it deserves a bit of care and planning. Self-managed super funds can be a great way to take control, get more transparency, and build a retirement strategy that actually fits your goals.
But don’t go it alone. A good team of professionals can make the process smoother, keep everything compliant, and help you get the most out of your fund.
If you’ve been wondering whether managing your own super is the next step, now’s a great time to explore your options and have a yarn with someone who knows the ropes.
