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Top Considerations in Doing a Self-Managed Super

Some people defer from industry or retail superannuation because of the admin fees. However, if you want to exercise more control over your investment, a Self-Managed Super Fund (SMSF) is the way to go. It will allow you to choose where you can allocate assets, and doing this can help mitigate costs. Here’s a mini-guide on doing an SMSF:

The Basics of SMSF

An SMSF can only have a maximum of 4 individual trustees. You will have a Trust Deed, which is a legal document that establishes the rules on how the fund is operated. You cannot have a member that is also an employee of another member unless they are family members.

For your peace of mind, the Self-Managed Super Fund is registered to the Australian Tax Office, and they are also in charge of regulating the funds. The key to success is developing a clear-cut investment strategy. If you do not have financial expertise, you can seek guidance from an investment advisor to set up the funds. Once it has been set up, you can then take charge and keep the funds moving in the right direction.

Make Sure The Total Cost is Indeed Lower

This fund can end up costing you more than a retail or industry superannuation fund if you do not know what you are doing. Most people opt for an SMSF in the hopes of cutting down costs.

But, unbeknownst to most, self-managing your superannuation can cost more in the long run, especially if you do not know how to allocate the funds correctly. Apart from making erroneous investment decisions, you can be charged with heavy fines, too, if you fail to follow regulations.

Assess Your Superannuation Knowledge

To succeed in this endeavour, you must have a good knowledge of the whole superannuation system. In addition, you have to stay meticulous and meet the compliance regulations that ATO imposes on all their trustees.

If you are not compliant, you can be end up losing a lot of money on expensive penalties. Thus, it is vital to weigh your options before choosing to do things on your own. Assess if you can truly save money on an SMSF versus a retail or industry superannuation.

Evaluate Competence in Making Investment Decisions

Most importantly, you must be well-versed in fiscal health and making investment decisions. After all, you want to ensure you get the best return on your investment, especially for the other members in your SMSF. It can be quite taxing and time-consuming to do investment research.

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Assess if you have the time to learn fundamental and technical analysis for all your choices. Are you well-versed in figuring out statistical graphs, making projections, understanding ratios, and evaluation key performance indicators? Remember, you must base all your decisions on data, or you can end up regretting things.

Stay Well-Versed With Superannuation Rules

Most people erroneously believe that SMSF automatically gives them access to any super funds they want and do whatever they wish with it. Some go as far as buying luxury items or going on holidays. However, this is not the case. Superannuation investing rules still bind your money in SMSF. It is held in trust on behalf of the members. The sole purpose of these funds is for the retirement purposes of the members and their dependents. Thus, you must use the SMSF accordingly.

The law requires the super fund trustee to be responsible for managing the funds for the members’ benefits. This will infringe on your time and can come at a cost. If you have not done something like this before, prepare yourself for a lot of paperwork that lies ahead. You will be dealing with many forms and regulations, so if this is not your area of expertise, you must re-think this option. Working with an investment professional may be the best choice for you because it is a hassle-free option that accords peace of mind and the best investment choices.

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