More often than not, people are considering a self managed super fund (SMSF) set up but are uncertain how to go about it. An accountant can provide the necessary information and expertise to help with an SMSF set up. Knowing how much to invest, what to invest in, and what rules and regulations govern the establishment and ongoing investment of SMSFs is advice only an expert can provide.
Most accounts will recommend, the minimum amount required to start up an SMSF is around $200,000. This figure is based on the operating and set-up cost of your SMSF in comparison to those costs charged by the management and administration for retail and industry superannuation funds.
Although setting up an SMSF typically needs a large up-front investment, it has some unique advantages as well. SMSFs allow you and your accountant to be in full control to choose the investments that suit your contribution level, lifestyle and desired outcomes. The flexibility of SMSFs enables you to use investment strategies that are not practiced by the industry or retail fund members.
For example, you can invest in anything from cash, Australian and international shares, residential and commercial property, art and many other things.
It is generally accepted, that the more funds you invest, the easier it is to spread your investments over the different asset classes. Therefore you will have a more stable and consistent portfolio and will be less susceptible to market changes. However if you have a smaller amount of funds when you first set up your SMSF, you may be able to diversify your investments by means of investing in a managed fund. Although in reality, this would be much the same as leaving your superannuation with an industry fund.
The quality of your investments is the answer. Anyone who will invest in good quality investments with a well thought-out and consistent investment strategy will definitely be better off than those who choose their investments without a proper strategy or consideration.
Whichever SMSF investment strategy you choose, your investments always need to be in compliance with the rules set out by the Australian Taxation Office (ATO) and other laws and regulations affecting SMSFs. That’s why each self managed super fund needs to be audited by an independent SMSF auditor.
When choosing an SMSF auditor that can perform audits at arm’s length, as set out by the ATO, individuals and accountants want to consider organisations that deliver the best expertise in combination with great customer service.