Is it cost-effective to start a self-managed super fund?

For many employees in today's business world, the prospect of setting up a self-managed super fund (SMSF) is an enticing one. After all, the SMSF is different from other forms of retirement saving – it offers people a unique level of autonomy. Because the investors are also the fund's trustees, they get to make critical decisions about how and when their money is invested.

Having said that, getting a fund set up is not always easy – nor is it cheap. Starting an SMSF is not for everyone. It's important to read up on all the challenges involved before getting started. There's a careful cost-benefit analysis required whenever you consider going down the SMSF route.

Is an SMSF cost-effective?

When you start to survey your options where superannuation services are concerned, it's easy to be seduced by the SMSF possibility. Running your own fund always sounds enticing. But according to the Australian Securities and Investments Commission, it's only cost-effective to open one if you have a balance of $200,000 or more to work with. This will ensure that the cost of getting investment advice doesn't outweigh the revenues you'll bring in.

There are exceptions to this, such as if you have a large asset coming in the future, or if you can get a financial advisor for cheap. For the most part, though, you need a big nest egg to consider an SMSF.

Considering the non-monetary benefits too

Of course, the benefits of using an SMSF aren't just monetary – you might have other factors motivating you. SuperGuide notes that it's hard to put a price tag on control of your own wealth management. Having the right to purchase your own property, and under your own time constraints, is a huge plus.

Running an SMSF means being in charge of your own property investment decisions.

Additionally, people like to have flexibility about how specifically to fund their retirement, such as by starting superannuation pensions. If you really value having control of your own money, that might be something worth spending for.

Getting help from the accounting experts

Opening a self-managed super fund is a big decision, and you probably don't want to make it without first considering the insights of chartered accountants who know all the angles. For that, all you need to do is get in touch with Wilson Porter.

The SMSF landscape in Australia is complicated, but we can help simplify it for you. Talk to us, and we'll tell you everything you need to know about establishing an SMSF, running it continually and maintaining compliance all the while. We'll set you off down the path to success.