Myths need to be debunked, whether they are about an urban legend or the self-managed super fund. There is a lot of noise around how SMSF is only good if you have about $200,000 in your kitty. Let us find out if there is truth to this claim.
You can actually maintain your SMSF for far less than $200,000
I know how it goes. Investors have to put in nearly $2,000 per year as running costs of their SMSF account. Now, if you further presume that these costs, as part of the accepted rule, are close to 1% of your total kitty, it is easy to calculate that you need something like $200,000 in the SMSF bag.
This notion needs to be challenged. In present times, it is quite possible to start a Self-managed Super at the running cost of $700 per year. Applying the same 1% rule, it is easy to infer that you can start your SMSF for as less as $70,000.
Providers are ready to bring down fee considerably
It is not difficult to understand that while we keep talking about the average fee, what we fork out is the actual fee and this ‘actual fee’ is considerably reduced in times of the internet. Nowadays, providers compete against each other to offer least set up fee and yearly costs.
While it is true that your SMSF investment is determined by the level of control you want to have your investments, it is clearly a myth that you cannot get started if you are keeping short of $200,000.
What kind of running costs do you pay?