In some situations, a self-managed super fund (SMSF) can offer a number of advantages especially in relation to increased flexibility when it comes to investments and a greater degree of control over the way funds are managed.
New research
The University of Adelaide’s study indicates that a SMSF may be a suitable option for those with lower superannuation balances than was thought in the past.
Here are some of the findings of the report:
- the report accessed data from over 318,000 SMSF from July 2017 – June 2019;
- researchers sought to identify the minimum amount of capital required for a SMSF to achieve comparable investment returns with much larger funds;
- the researchers indicated that the performance of a SMSF improved as the fund balance neared $200,000. For funds above $200,000, researchers contended that the investment performance of the fund was comparable with much larger funds; and
- the research suggests that $200,000 would be considered an appropriate threshold amount for those considering establishing a SMSF.
This research offers some interesting statistics and data which suggest SMSFs might be appropriate for a greater number of clients.
Is a SMSF right for everyone?
In short, the answer is no.
While this research is interesting and indicates a lower balance may not be a bar to establishing a SMSF, it is of course, essential that you seek good quality financial advice followed by good quality legal advice tailored to your individual circumstances to determine whether a SMSF is right for you.
Oftentimes, SMSFs are established because of the extra flexibility and control that they can provide when compared to other types of superannuation. However, setting up a SMSF is a major decision which traverses both the legal and financial space. There are a great many factors to consider including whether you have enough superannuation balance to get you started. Setting up and operating a SMSF means ensuring that you meet strict obligations under super and tax laws. Getting the SMSF set up properly and ensuring its ongoing compliance is crucial as there can be significant penalties for failing to do so.
Next steps
If you are considering establishing a SMSF, HopgoodGanim can provide you with a broad range of legal SMSF services. If you would like to discuss your options further, please contact us.