SMSF Basics: Is Self-Managed Super Right for You?
A self-managed super fund puts you in control of your retirement savings. But with control comes responsibility—and cost. Here's what you need to know before making the switch.
What is an SMSF?
An SMSF is a superannuation fund with up to 6 members (usually family members) where the members are also the trustees. This means you control the investment decisions and management of the fund.
Unlike industry or retail funds:
- You choose all investments (shares, property, cash, collectibles)
- You're responsible for compliance with super laws
- You handle (or outsource) administration, tax, and audit
- You wear the consequences of good and bad decisions
Potential Benefits
Investment Flexibility
SMSFs can invest in direct property, individual shares, unlisted investments, collectibles (with conditions), and assets not available through most super funds.
Cost Efficiency at Scale
SMSF costs are largely fixed. With a large balance (typically $500,000+), the percentage cost can be lower than retail funds charging percentage-based fees.
Control and Transparency
You see exactly what you own, make all decisions, and can implement strategies immediately without waiting for a fund administrator.
Estate Planning Flexibility
Greater control over death benefit nominations and the ability to structure pensions more precisely for estate planning.
Common reason: Many people start SMSFs to buy property. But remember, the property must meet the "sole purpose" test (purely for retirement) and comes with borrowing restrictions.
The Costs
Running an SMSF isn't cheap:
- Setup costs: $1,000-$2,500 for trust deed, corporate trustee
- Annual accounting: $1,500-$4,000 depending on complexity
- Annual audit: $500-$1,500 (required by law)
- ASIC fees: ~$60 per year for corporate trustee
- ATO supervisory levy: ~$260 per year
Total ongoing costs: typically $3,000-$6,000+ per year, regardless of balance size.
Cost warning: On a $200,000 balance, $4,000 in annual costs equals 2% per year—eating into returns before you even consider investment performance.
The Responsibilities
SMSF trustees must:
- Maintain an investment strategy and review it regularly
- Keep the fund's money separate from personal money
- Ensure investments comply with super laws
- Lodge annual returns with the ATO
- Have the fund audited annually
- Keep records for at least 10 years
Breaching the rules can result in significant penalties, including loss of the fund's tax concessions.
When an SMSF Makes Sense
- Balance of $500,000+ (ideally $700,000+)
- You want investment options not available elsewhere
- You have time and interest to manage the fund
- You're willing to pay for professional advice
- You have a specific strategy that requires SMSF structure
When It Doesn't Make Sense
- Low balance (under $300,000)
- You'd just invest in index funds anyway
- You don't have time or interest in administration
- You're doing it just to buy your business premises (consider alternatives)
- You want someone else to handle everything
How Talk Through Wealth Helps
Evaluate whether an SMSF makes sense for your situation:
- Compare SMSF costs vs. industry/retail fund costs at your balance
- Model investment strategies available only through SMSF
- Project long-term impact of fee differences
- Factor SMSF into your overall retirement planning
- Understand the impact of property or borrowing strategies
Evaluate Your Super Options
Join the waitlist to model SMSF vs. other fund options.
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