A self managed super fund (SMSF) may have many benefits, for example, it will give you more control over the fund's investment strategy, there is a lower tax payable and all self managed super funds are protected from bankruptcy and other legal claims, but many Australians don't understand the time, risks and costs involved in operating a SMSF.
A survey conducted by TNS found that more than half of Australians thought you could establish a SMSF with a balance of $50,000 or less. One quarter of respondents thought a balance of $5,000 would be enough to set up their own SMSF.
As a note, if you have less than $200,000 in super, the admin costs would probably make setting up a SMSF uneconomical. You can also expect to pay $1,000 to $1,500 a year on running your own super fund.
There has been an increase in the number of self managed super funds being set up, suggesting that Australian's want to exercise more control over their super. However, research shows that only a third of people consult a professional financial planner to decide whether a SMSF is suitable for their needs.
So if you are thinking of setting up a DIY super fund, please seek advice from a professional financial planner first to ensure that this is the best option for you. Factors such as time, money in administering a SMSF and whether you have the desire and ability to manage the fund for the long term all need to be taken into account. For more information about SMSF's, speak to one of the financial planners at Intellichoice today on 1300 55 10 45.
