Managing my own superfund

first_imgWith stock markets continuing to fall, the receipt of our quarterly superannuation fund statement isn’t exactly a boost of confidence. Total superannuation returns are in negative territory thus far in 2011 and as I’ve said before, the weight towards Australian and International equities in most super funds means that the carnage on world markets has a direct impact on your retirement savings in the short term. That being said, for many people managing your own superannuation through a Self Managed Superannuation Fund (SMSF) may be an option. First and foremost, remember that an SMSF is just that – self managed. You have to commit both the time and the expertise to successfully manage investment activity and believe that you can assess better than the professionals. Secondly, as you will be a trustee of the fund, you take on certain roles and responsibilities in relation to managing the fund and reporting to the Australian Taxation Office. And in the event that you do not manage the fund in accordance with specific ATO guidelines, your fund could be deemed ‘non-complying’ and subject to penalty rates of tax. Finally, there are certain costs that accompany the running of a SMSF. Apart from the establishment costs, which can be of the order of $1,500 – $2,500, there are annual costs associated with administration, preparation of the tax return, audit, a SIS levy and whatever other expenses you incur in researching investments and executing transactions. It is not unreasonable to expect these other fees can amount to in excess of $1,000 per annum. As a guide, it is considered too expensive to open a SMSF unless you have at least $200,000 in your fund. Clearly one of the biggest advantages of running your own SMSF is that you can decide exactly where you want to invest your funds. Whether that’s cash, term deposits, shares, managed funds or property, the decision is yours in whatever combination you see fit. For some it is that flexibility and ability to change asset classes quickly that attracts them to SMSFs. My advice is to think long and hard before deciding upon a SMSF. For many of us without the time or expertise required, the best thing we can do is to take a more active approach to managing our existing super, wherever it is invested. Talk with your super fund, discuss the investment options and make changes if you think you need to. And as always, seek advice from a trusted adviser if you are unsure. * Mark Bouris is the Executive Chairman of Yellow Brick Road, a financial services company offering home loans, financial planning, accounting & tax and insurance. Email Mark on [email protected] with any queries you may have or check for your nearest branch. Facebook Twitter: @NeosKosmos Instagramlast_img

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