Setting up your self managed super funds for success

For many people in Australia their superannuation fund is one of their biggest assets. As a result, many people prefer to have their assets under their own control, rather than paying someone else to manage their money, and enjoy the freedom offered by a self managed super fund ("SMSF"). Here are some of the issues to consider when you set up your SMSF.

With/without your spouse

Many people want to set up their superannuation for maximum efficiency as this can halve the effective fees you pay each year for accounting and reporting services. However when doing so it's worth contemplating how you will manage the fund if you are to split up in the future, or if one of you where to need early access to the funds for another reason such as bankruptcy. Death benefits can be particularly complex in the case of blended families and require some clear documentations. It can be wise to get legal advice from a company like Hollingworth & Spencer Lawyers to help cover any eventuality.

Gearing issues

One of the advantages that a SMSF has is that it can borrow money for investment purposes. Many users have taken advantage of this to invest in property and enjoy long term capital gains. The borrowing structure is more complex than a standard mortgage due to the need to comply with superannuation laws. If you make an investment decision to buy property within your SMSF it can be sensible to get advice from a SMSF specialist as to whether your fund can support the loan and any extra controls you need to put into place such as a restriction on personal use of the asset.

Devising an investment strategy

As part of starting a SMSF you need to have investment strategy devised. This strategy needs to be specific enough to meet legislative requirements, yet flexible enough that you can take advantage of good investment opportunities as they present. Given that even people who are in their fifties when they start a SMSF need to invest with a 30 year time frame given the ever long life expectancy we enjoy, the SMSF needs to have a very long term focus when investing.

Setting a SMSF allows you take control of one of your most precious assets, saving money on fees and charges so that you can maximise your returns. Getting professional advice from a law firm as you set your fund up can prevent stress and confusion down the track.