"I am in my mid 40's and I'm thinking of starting a Self-managed super fund. How much do I need in my Super to start this process? Is there lots of upfront costs?"
-From Danny in Perth.
Top answer provided by:
Great question – self-managed super funds (SMSF’s) are an area of much conjecture.
Firstly, I am going to add that I am not a self-managed super fund expert; if you end up deciding that is the right way to go make sure someone with the correct qualifications is guiding you.
My initial thought is to ask, why is an SMSF on your radar?
For me, you are focusing too quickly on the strategy to achieve your goals, rather than the goals themselves.
Much like any investment decision, if you can’t tell me how exactly the strategy of starting an SMSF will help you achieve your goals quicker than the alternatives (like an industry or retail super fund), it’s too early in the process for you to be deciding.
According to the MoneySmart website, “Historically SMSFs have not performed as well as retail or industry super funds, also known as 'APRA-regulated funds' (APRA is the Australian Prudential Regulation Authority). Money Smart also discusses the average cost of running – in 2019 it was $6,450. Depending on your circumstances, that could be a high price to pay for having an SMSF.
When doing some research, I also found on the ASIC website that “SMSFs with balances below $500,000 have lower returns after expenses and tax than funds regulated by Australian Prudential Regulation Authority (APRA)”
The other factors to take into consideration when it comes to an SMSF are your risk tolerance, diversification & also who will be the members of your fund.
My advice? Plot your retirement goals, get extremely clear on them.
Once they are crystal clear, then start thinking about strategies.
Feel free to drop me a line (email@example.com) if you would like to discuss further.
Cheers - MH
Matt Hale - Director @ Rising Tide
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