A self-managed superannuation fund (SMSF) is definitely quite desirable when you reach it from the perspective of flexibility and control. However, before boarding the SMSF bus, you must figure out whether it is a good deal for you or not. Yes, SMSF gives you full control over the pace at which you want to build your retirement savings but having said this, it also asks you to come out wearing the cloak of “extra responsibility”.
Two ways in which you can set up SMSF
There are two ways to go about your SMSF. Either you manage it yourself or you give the duty of portfolio management to a financial adviser. When you hire a financial adviser, you add to the total cost of maintaining the fund, but at the same time, curb the risk of selecting a bad investment — a case that can certainly come to haunt you when the market is falling. As an aside, financial advisers can also help provide a great deal with planning contributions and payments of pensions.
Is SMSF for you?
So should you set up SMSF for yourself? The first question you should ask yourself is what’s your SMSF kitty going to be like? SMSFs need to maintain annual accounts and also need to undertake annual costs. Including other relevant fees, the total comes to around $2200 a year. This is why it is advisable to begin with something like $200,000.
Should you hire a financial adviser?
If you are looking for the services of a financial adviser, you will need around $400,000 to play with. Of course, there are situations where you will only be served by an SMSF. For instance, if you have bought office premises to rent it out to a related business of yours, any fund barring SMSF will fall short of accommodating the condition. It is also worth pondering that insurance options inside SMSFs are better placed than other arrangements of Super.
So, when is the right time to set up SMSF?
The answer really depends on you — when you’re ready, when you have the funds, and when you’ve realised that SMSF will indeed work for you.