Self-managed Super Funds (SMSFs)
Often referred to as "DIY funds", a Self-managed Super Fund (SMSF) is your own private super fund that you manage by yourself, but only under strict guidelines that are enforced by the Australian Tax Office (ATO). The major difference between SMSFs and other super funds is that people have full control of their own SMSF, including the added responsibility and workload of managing it. For example, even if you get help from another professional, you are still personally liable for all the decisions made by the fund, such as investing, accounting and auditing your SMSF.
The major benefit of having a SMSF is that you are taking control of your investments and have the ability to proactively improve your returns, unlike many external funds which are known to deliver average or below average performance at a high cost. It's generally advised that if you currently have a balance of $100,000 or thereabouts, it's possible to run your own super fund for approximately $1,000 a year, if you have the commitment and expertise to do so.
It's widely recommended that SMSFs can be suitable for people who have been in the work force for a considerable amount of time, therefore have built up a lot of super. It's also recommended that people thinking about moving to a SMSF have extensive skills in financial management, such as being on top of the investment market, the ability to manage a portfolio of investments and knowledge of tax implications.
Below is a list of helpful websites which may provide you with more information on SMSFs, help you understand what's involved in running and effectively managing your own super fund, and provide you with the knowledge to determine if it's right for you.
Website on SMSFs:
Money Smart - website managed by ASIC
Super Guru - providing essential SMSF information
ATO - a section of the website that is dedicated to SMSFs
Intellignent Investor Super Advice - an online service providing advice on superannuation and investing
The Sydney Morning Herald - article on whether you should start a self-managed super fund
Disclaimer: Secure Sentinel is not a Self-managed Super Fund advisory service. This article is simply about providing you with already publicly available information to help you understand more about SMSFs. Secure Sentinel holds no liability if you decide to take out a SMSF based on the information supplied in this article.