5 Questions to Ask Before You Switch to an SMSF

These days, more and more Australians are making the decision to set up a self-managed super fund (SMSF), making it the fastest growing area of the superannuation industry. 

But is switching to an SMSF the right option for you? 

To find out, you’ll first need to dive deep into your personal circumstances, motivators and long-term investment goals to discover if they align with an SMSF investment strategy. And if they do, the next step is to seek the advice of an expert to find out more about the requirements and how it works to confirm if it’s a good fit. 

So to help you get started, we’ve compiled 5 basic questions to ask yourself if you’re considering switching to an SMSF.

1) Why do you want to switch to an SMSF?

Being clear on your why upfront is a must. For most people, the first thing that comes to mind is to have more control over how your super is invested. For example, some of our clients have family who suffered significant losses to their retail or industry fund super balances in the global financial crisis as a result of the stock market crash, and are looking for an alternative. In this case, an SMSF appeals as it gives you the option to invest your superannuation in property rather than shares, which has traditionally been a more stable investment strategy.

2) What will your starting balance be?

You’ll also need to work out if you have sufficient funds to establish your SMSF. Ideally you would start with a balance of $150,000–$200,000 to make it cost-effective, and for most people the funds will come from rolling over their super from their current retail or industry super fund into their new SMSF. You also have the option to start your SMSF with up to three other people, who could be close friends or family members, and this means you can combine your existing super fund rollovers to boost the starting balance of your SMSF.

3) Who will you partner with?

Due to the complexities and legal requirements of SMSFs, they are by no means a do-it-yourself super solution. To be sure the fund is set up correctly, that you fully comply and that you get the best return, you’ll need the support of a team of experts. While you can search for each member of your team individually, this can be time consuming and difficult to manage. An alternative is to partner with our specialised team and our trusted network which includes experts on financial planning, superannuation, property sales and rentals, new home construction and more. We can help with every aspect of setting up and running your SMSF, from the initial education and advice on whether it’s the right strategy for you, to taking care of the admin and day-to-day compliance, right through to a personalised investment strategy that will set you up for success.

4) Which structure will you use?

When setting up your SMSF, you’ll need to decide on a structure for the trustees, which can either be individual or corporate. Most people opt for individual trustees, as initially this structure is cheaper to set up and run, however, the corporate structure is worth considering too. While it does have a higher initial set up fee, it can be a more efficient way to run your fund in the longer term, so be sure to consider this when making your decision. 


5) What is your long-term goal?

Because you’ll have a team of experts guiding you and handling the day-to-day and strategic side of your SMSF, you don’t need to be an expert in every aspect of the fund. However, it does pay to put some serious thought into where you want this investment strategy to take you. Are you looking to leverage your super to purchase a home? Or are you looking at a longer-term goal of buying investment properties and building a property portfolio that can provide you with a passive income to fund a comfortable retirement? When you have a goal in mind, you can discuss this with your SMSF team and devise a strategy to make it happen.

If an SMSF seems a good fit, find out more today!

There are many benefits to switching to an SMSF, however, like any investment strategy it is not right for everyone. If you’re considering making the move, start by answering these basic questions, and if it seems like a good fit, book a 10-minute discovery call to find out more today!

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