Miranda Maxwell writes a piece for the Business Spectator where she argues over the truth and farce behind calling SMSF pursuit of millionaires. The ATO has released fresh stats talking about the extra costs (apart from the investment) attached to the SMSF game.
Administrative and regulatory costs
The investment costs are well nigh reduced, but it is more than offset by the flurry of administrative and regulatory costs. Given the data, SMSF investors may need something between $1 million and $2 million to outsmart the costs involved.
Is SMSF cost effective?
SMSF is not deemed cost-effective even if you have a fund base of $200,000. While retail Super funds may have you forking out 0.8% of the fund value as fees and costs, SMSF will have you coughing out 2%-3%, says Maxwell.
You can read the original article here.
I think the topic is highly debatable. At the moment, peer pressure and reduced administrative costs are likely to make the par value for SMSF costs a lot lower than what they have been. Something like 0.7% is clearly on the radar and as and when it happens it will be in line to beat the costs associated with retail Super funds.
Investors do not mind the fees
Moreover, investors do not mind outgoings if the rate of returns offset it easily. They know that the kind of control and flexibility SMSF offers cannot come without a fee. There is a pool of investors who feel that even after taking the cost of account preparation, the SMSF costs do not come anywhere close to where they are rumoured to be.
What is your opinion on the SMSF costs and fees?