It is becoming more popular to have a SMSF (Self Managed Super Fund), with over eight hundred thousand Australians believing that controlling their own super funds is better for their financial security. While many start funds to be more in control, others will start a self managed fund as it is the only way they can gain certain assets, like property, and others also find they cost less than industry super funds. When running your own super fund there are certain keys things you should keep in mind.
There are many advantages to running a SMSF. As well as having control of your fund you can invest the money where you want to. You will also have a lot more investment options, including a choice of shares, managed funds, fixed interest and property trusts. You will need to understand the ins and outs of investments to fully benefit, otherwise you can hire the services of a broker or adviser. Keep in mind that despite being charge of your own fund you can delegate any administration to a specialist who deals with SMSFs. Running your own fund allows you to save on fees, but keep on eye on industry super funds and their costs because if your total superannuation is less than about $300,000 the industry super may cost you less.
It is important to make sure that your SMSF is going to give you the best return, so ensure that you have the best interest rate possible. You also need to watch the balance of your funds in this account. You will need to watch what other institutions are offering in terms of interest rates and keep a good eye on it. You may find that banks are offering a better interest rate at any given time and you could be better off moving your funds. Also be careful when investing large amounts at once. Watch the market as timing is vital to getting this right. Make sure you understand what the risks are and that you invest accordingly.
Don’t just start your SMSF and then forget about it. You need to run it professionally just as an industry super fund would be. Read all your emails and correspondence, go to meetings and participate in share purchase plans. You need to look at yourself as your own funds manager and treat it like a job. Check your fund and investments at least once a week and review your strategy. At some point you may want to rebalance your portfolio. Remember that you have a SMSF so that you can maximise your investments and have more superannuation to retire with than you would if you went with an industry super fund.
Is a SMSF right for you?
If you feel that your current super fund is not meeting your needs then you should look at starting your own SMSF. You need to have the time to manage it properly and have some understanding of investments and financial matters. You also need to understand that you must keep up to date with the financial climate and invest your money wisely because your lifestyle after you retire depends on the right decisions being made.