Self-managed super funds (SMSF) are a way to save for retirement. They are usually established by an individual or family as a means of looking after their own super savings. The operative word (or words) is self-managed. An SMSF needs to be managed in order for it to be successful. It shouldn’t just be left – that is not really different to putting money into an interest-bearing savings account. Here are some expert tips from Charter Partners for a successful self-managed super fund.
- Write down your investment strategy and make it specific. It should include what percentage of the fund is invested in each sector and should suit the general ambition of all members of the fund. Investment strategy should be reviewed annually.
- Keep personal assets separate to SMSF assets. This will avoid future complications if it is a shared fund and also avoids potential compliance breeches with Australian taxation laws (for example – early release schemes).
- Keep everything orderly and up to date. This means
- Ensure your SMSF is compliant
- Submit tax returns on time
- Have an independent annual audit
- Keep binding death nominations up to date
- Keep contribution caps in line with legislation
- If in pension mode, ensure minimum pensions are drawn
- Don’t make rash decisions in a panic. In other words, don’t react impetuously to severe market changes as this can reduce income and crystallise losses. When such events occur, assess your asset allocation, and change appropriately. If you have a good percentage in solid investments, you can probably ride out any storm until the market recovers.
- Be careful about investing in property. Real estate can be a volatile market so beware if jumping into something thinking you can make a fast buck. Understand yields and aim for solid investments rather than speculative ones.
- Educate yourself as much as you can. There are free online videos on the ato.gov.au website aimed at helping you understand more about SMSF. The videos are useful to people looking to set up an SMSF and also trustees of existing funds.
- Seek professional advice. Whether you need help with the legal aspects or the actual strategy and investments, professionals can guide you. Even if you don’t take the advice on investment, it presents options for you to consider. Professionals are also there should you run into trouble.
Anthony McPhee, Principal
B.Bus (Accy) QUT | FCPA, SSA (SMSF Specialist Advisor with the SMSF Association) & Registered Tax Agent
Anthony has over 25 years accountancy, taxation and superannuation (SMSF) experience. He eagerly welcomes a challenge and his passion is in small business accounting, superannuation, consulting and taxation advice. He provides real business benefits for each of his clients and is well regarded for his succinct and accurate accounting skills. Anthony is also a self-managed superannuation fund (SMSF) specialist with Australia’s leading SMSF body, The SMSF Association.