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Investor Education > Self Managed Super Funds > SMSF Considerations


Setting up and operating an SMSF is a major financial decision. After all, the responsibility for running the fund and complying with the law rests solely with you as the trustee of your SMSF. While SMSFs are great for some people, they do not suit everyone. Managing your own super takes time, knowledge, skill and money, ASIC's Money Smart website suggests you ask yourself these questions when considering whether or not to set up your own SMSF:

Have you considered other do it yourself super options?

There are alternatives to DIY super which let you invest in assets such as shares, exchange traded funds and term deposits that give you the control you desire over specific investments without having to deal with the legal and administrative responsibilities of running your own super fund.

Have you considered other super funds or investment options?

If the reason why you're considering an SMSF is because you are unhappy with your current fund, you may wish to consider another fund or another investment option first.

Will your self managed super fund outperform your current fund?

Super funds use professional managers to invest your money. Can you do better than the professionals? Make sure you have adequate financial experience and literacy to enable you to make sound investment decisions.

Have you considered the costs?

Running your own super fund incur costs of investing, accounting, administration and auditing, which depending on the size of your fund and the complexity of your investments can be much higher than your current super arrangements.

Will you lose benefits?

Super funds usually offer discounted life and disability insurance. SMSF members will have to make separate insurance arrangements and moving from your current fund may terminate existing arrangements. Factors such as age and health issues can limit your ability to buy a new policy and increase your premiums.

Do you know enough?

Managing your own super fund is an important responsibility. Do you know all your legal responsibilities? Are you on top of the investment market? Can you manage a diversified portfolio of investments? Do you know the tax implications?

What if your relationship with others in the fund changes?

You can have up to four members in an SMSF. What would happen in the event of ill health, death, relationship breakdown or waning interest?



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