How much is needed for an SMSF?

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Keith has always planned to start his own SMSF, but is now starting to question whether he has sufficient funds to make it worthwhile.

Q. Keith

My retirement savings goal has always been to have my own self-managed super fund (SMSF), as I believe this is the best way to have control over whether I have enough money to enjoy the type of retirement I want. In my mind, as I’m sure I was told this some time ago, is a figure of $200,000 to make this possible. Is this still the case, or do I need to have more saved before I can consider my own fund?

A. Costs vary for a SMSF and the Australian Securities and Investment Commission (ASIC) recommends a minimum balance of $200,000 for a fund to be cost effective. However, you can start a SMSF with as little as $100,000, as long as you have access to funds to increase the fund balance within a short period of time.

Managing your own super fund may well give you control and financial freedom to achieve your retirement funding goals, but it is onerous; there are risks involved and you need to be sure to meet and follow strict guidelines. It’s important that you have a good level of financial literacy and it’s definitely worthwhile considering a suitable education program before making any commitment.

For more details, or to work out if an SMSF really is the best for you, visit Moneysmart.gov.au.

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Written by Debbie McTaggart

5 Comments

Total Comments: 5
  1. 0
    0

    Think long and hard before starting a SMSF. You really have to have an accountant, and another cost is getting your fund audited yearly. These are costs nobody ever speak about. I had to start a company, and I am the only director. I am thinking now I may go back to a managed fund..

  2. 0
    0

    I hdustad a SMSF with nearly that amount and I can tell you costs were exhorbitant, accountants robbing each year 1400 to 2000 dollars. Much caused by Government regulations also.
    Transferring to an Industry fund has turned out to be far more profitable for me, with sound returns over a number ofyears. Once over 60 you can access it.

  3. 0
    0

    SMSF’s are a trap for smaller funds. The auditing fees are very high and the legislation offers no protection or exemption when a small fund cannot meet the annual costs. This has been very obvious since the GFC when values of funds have dropped.

    There seems to be no interest from Government at all in protecting people with small retirement funds. Governments should look after people on lower incomes better – especially in the area of providing for their retirement. We need more incentives and protection, otherwise we all end up on the age pension (if we last that long!).

  4. 0
    0

    I started my SMSF in 2010 and read extensively before I did so.

    I ended up going with a company called Esuperfund whose total costs each year are currently $700. That’s tax return and audit.

    It might sound too good to be true…..but, and it is an important but, they don’t give advice beyond answering the odd email about administrative matters.

    You have to make your own decisions and supply the appropriate documentation around tax time and it is most suitable for those who want to keep their investments simple ie cash and shares.

    It’s worked for me but remember who have to take the self-managed part of SMSF seriously.

    • 0
      0

      I am with you Shanners best thing I ever did. I have more control and the option to invest in different investments(no chance in a superfund). I bought a unit when 65 and got the deposit from my SMSF all legal and above board. I will be 67 next month and while I can work I will until they retrench me. I will be working hard to get the mortgage down, then I can retire. With no debts- thats the goal. If I had not been Esuper I would still be living with my father in law with no prospect of getting our own place.


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