Setting up a self managed super fund is not something that needs to be incredibly difficult or complex. However, there are certain steps you want to follow to ensure that the process goes smoothly and that you end up with an arrangement that makes the most sense for you and allows you to take full control of financial future.
If you are interested in setting up a self managed super fund then engaging with talented and reliable accountants to help you establish and manage it is a good idea. Having this expertise in your corner can really help speed up the process and give you peace of mind that all the pieces will fall into place without hassle.
With that said, let’s take at some things you should consider when setting up a self managed super fund.
Will it prove to be cost-effective for you?
Before setting up a self managed super fund, you want to know that it is going to be more financially beneficial for you than your traditional arrangement. While it is most often beneficial to make the switch, there are situations where it will result in less of a return for you and may not be worth it.
If the amount of money you will get is similar to what you already have, then it can be a good idea to switch since you will get greater control and transparency. It is generally not cost-effective to go with a SMSF if your savings are below $200,000 (according to ASIC).
One factor of setting up a self managed super fund that can be more cost-effective in that you will often be charged a flat accounting rate rather than a percentage of your balance. This can prove to be a lot cheaper in the long run, but it will depend on other factors as well.
It’s very important that you undertake a cost comparison with your accountant prior to setting up a self managed super fund so that you can have peace of mind it’s going to be a sensible investment choice.
Can you handle the extra responsibilities?
When you go about setting up a self managed super fund, there will be extra responsibilities that you will need to be prepared to deal with. After all, you are electing to take greater control, so you need to be prepared to have responsibility for your investments.
As opposed to a traditional arrangement, you will be responsible for creating a winning investment strategy and are going to be accountable for their success. It will all depend on you and your instincts as an investor.
If you buy property using your SMSF, then you will need to handle the management of the property, including tenants, rent fees, maintenance etc. If you invest in cryptocurrencies, then you will need to be responsible for storing them, monitoring the investment, so you don’t miss essential trades, and purchasing them from the correct exchange.
Are you aware of the restrictions on assets held in the SMSF?
When you are setting up a self managed super fund, it’s important that you are aware of the restrictions placed around the assets you invest in. The sole purpose test on investments means that the assets cannot be used or influences by anyone involved with the SMSF.
Those are just a few of the important considerations you need to think about when it comes to setting up a self managed super fund. Above all, it’s essential that you engage SMSF experts to help you with this process.