How To Make A Self-Managed Super Fund (SMSF) Work For You

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By admin

Your big decision when planning for your future will be to choose between standard retirement funds or a self managed super fund. Superannuation accountants are around to help you figure this out. If you feel you don’t have enough knowledge to decide on your own, speak to an expert.

The great appeal of the self managed super fund is the broad investment options it gives you. This appeal is attractive enough that people continue to set up SMSF accounts that usually don’t perform as well as APRA-regulated industry or retail superfunds. That is, unless your fund has a balance over $500,000, in which case you can get quite competitive returns. But there are plenty of good reasons to manage your own super fund. You can make it work for your future needs with a little knowledge and commitment.

Self Managed Super Funds In A Nutshell

A little refresher on super fund basics is a place to start:

  • The choice is all yours, but so is responsibility.
  • You manage your own super and choose your investments and insurance.
  • The fund can have upto six members
  • You can choose between individual and corporate trustees
  • Trustees aren’t paid for their roles
  • There will also be ongoing expenses for accounting, auditing, investing, legal, tax and financial advice.

Benefits Of A SMSF

Besides autonomy and investment flexibility, SMSF offers several other benefits including:

  • Flexibility in pension planning
  • Benefits to strategies of tax effectiveness
  • Flexible and autonomous estate planning
  • Easy borrowing for investment in real estate
  • SMB owners may lease business property through their super for cash flow.
  • You can include insurance to protect the members assets and income, such as life insurance or TPD.

You have to decide whether a SMSF is right for you. Self managed super fund advisors are there to help you make this decision. But once you’ve made up your mind to set up an account, let’s see how you can make it work for you.

SMSF Tips For Success

●   Beating APRA Funds

Most regular retirement savings accounts or superannuation funds are industry or retail funds regulated by the Australian Prudential Regulation Authority (APRA). On the other hand SMSF accounts are regulated by the Australian Tax Office (ATO).

APRA funds typically have highly skilled fund managers with knowledge of investment markets and legal knowledge. That’s where you want to start: with a clear idea of what investment options are available to you. The ATO is very clear about restrictions on how you can invest, so be clear about these regulations.

You can invest in a variety of assets. As long as trustees follow regulations and take into account returns, risks, cashflow, liquidity and diversification, they can invest in:

  • Shares and ETFs
  • Separately managed accounts
  • Term deposits
  • Managed funds
  • Direct property
  • Other funds like artwork, unlisted shares and derivatives

If you want greater control over your retirement investments, but would like to rely on experience, separately managed accounts or fund managers can help out.

●   Put In The Hours

Managing your own super needs time investment. You’ll need to spend time on:

  • Researching your investment options and managing a diverse portfolio
  • Creating an investment strategy factoring in your risk tolerance and retirement needs, and following it
  • Accounting, record-keeping, arranging yearly external audits.
  • Complying with super, tax and investing laws and regulations
  • Organising insurance for members

When you’re in charge, you’re also responsible for all the decisions of the group of trustees. Most people with successful superfunds spend an average of around 8 hours a month on it. This is true even if they’re assisted by qualified fund managers.

●   Seek Help

There are professionals who can help you along the way: SMSF accountants, legal advisor, financial advisor, fund administrator, tax agent, approved SMSF auditor.

Hiring legal advice can be invaluable in the long run. You can do so right at the outset, so you’re not doing anything to risk losing trustee status, attract bad tax consequences or worse, prosecution.

For instance, did you know that it’s illegal to set up an SMSF to be able to draw from it early?

Self managed super fund accountants can help you set up your financial systems, prepare accounts as it operates and prepare operating statements.

Hiring them from the start is better than hiring them later, when their ability to help you will be limited.

Knowing that you can’t really do it all yourself is a start to managing your SMSF.

●   Setup Your Fund With Eyes Wide Open

When setting up your superfund, make sure you’re going in with a clear idea of what to do.

Choosing a trustee is an important step that’s hard to undo later on. Compare the different requirements for individual trustees and corporate trustees. If yours is a single-member fund, separate rules apply.

The costs of association are different for corporate trustees – an ASIC fee (Australian Securities and Investment Commission) and annual review fees apply. There are different rules of ownership, separation of assets, penalties and succession rules. When appointing a trustee, you’ll also have to be careful about following regulations and due diligence.

●   Work On Your Investment Strategy

Your fund’s investment strategy should make it clear how you plan to take care of each member’s retirement objectives. The regulations are the only constraints, and under their umbrella you can invest in a wide variety of assets with your investing acumen. The higher your balance, the more competitive your returns are likely to be, with investing skill.

●   Prepare An Exit Strategy

You must be prepared for the possibility of your fund ‘ending’ due to unforeseen circumstances:

  • The death of a trustee
  • Relationships breaking down between trustees
  • An accident or illness that prevents a trustee from fulfilling their roles as a trustee.

An exit strategy will reduce the impact of such events. Precautions you take can include:

  • Ensuring all trustees have access to records and electronic transaction accounts
  • Include rules in the fund trust deed for situations where the fund cannot be managed
  • Ensure members make death benefit nominations, which they renew
  • Encourage them to appoint powers of attorney
  • Be prepared for costs of wrapping up your superfund


There are a lot of factors that go into managing a self managed super fund. It’s not for everyone. But if you can take proper control of your fund and have a group of legal advisors, qualified accountants, financial advisors and others to help you get started, you can enjoy great returns.

You can also hire KPartners that offers a package of all these services in one place.