What is a Self-Managed Super Fund?

  • Posted 06 Oct

What is a Self-Managed Super Fund?

Having superannuation is a requirement for all working people in Australia. However, just because you have to have a super fund to cover your retirement costs, doesn’t mean you have to have the same kind of super fund as everyone else.

There are a wide variety of retirement options in the market, and you may find a self-managed super fund more to your liking than other options. It will depend on your individual situation and financial goals.

What is a Self-Managed Super Fund?

A traditional super fund is a retirement account that’s managed by an investment professional on behalf of the individual or individuals who will benefit from it. A self-managed super fund is, as the name suggests, a super fund, which is managed by the person who owns it.

While you can still hire a manager or adviser to weigh in on investment decisions, the responsibility for the account will rest solely on your shoulders, if you choose to open a self-managed super fund.

What Are The Benefits of a Self-Managed Super Fund?

One of the main benefits of a SMSF is that it gives you more control over your retirement earnings. You can choose which investments are made, and in what amounts, which can help grow the super fund to larger amounts than it might otherwise reach through other superannuation options. All the decisions will be yours to make.

Is That The Only Benefit?

Yes and no. On the one hand, being able to choose how funds are invested and to grow the super fund according to your own wishes is not a minor benefit. But on the other hand, a SMSF fund will require you to put in a great deal more time, effort, and work than a traditional super fund would.

What does that mean? Well the short version is that because the super fund is self-managed you have to take on all of the responsibility that comes with the position.

All costs that come with investments, paying for advisers or additional managers, upkeep and auditing fees, as well as super and tax considerations, will rest squarely on your shoulders.

If you have a SMSF you’ll also need to get independent health and life insurance, since a self-managed fund doesn’t offer the savings on these insurance policies as opposed to traditional super funds, which do.

Is A Self-Managed Super Fund Right For You?

A SMSF isn’t the right choice for everyone. If you have a lot of investment experience, particularly with super funds, and if you’re familiar with all the laws that govern how these funds can and can’t be used, you shouldn’t have a problem self-managing your super fund.

With that said however, anyone can get one of these funds; just because you’re not an investment wizard today, doesn’t mean you can’t spend time getting educated on the subject.

This isn’t a decision to be made lightly though, and if you aren’t prepared to handle all of the responsibilities that comes with becoming the manager of your own super fund, then it can be a very expensive decision. Make sure you have all the information you need to make an informed decision BEFORE you cancel your existing superannuation fund.

Want to find out if a self-managed super fund is the right choice for you? Talk to our superannuation experts today and learn more.

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