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  • Cameron Finlay

Is a Managed Super Fund Right For You?

Self Managed Super Funds are increasingly popular, but may not suit everyone.

Over 25,000 new funds were established in 2021. In 2023, there were 606,217 SMSF’s managing almost $900 billion in assets (ATO numbers).

Why are they attractive to investors? Probably because they are so customisable as to assets, and the costs are reasonable or controllable.

Here is a checklist for assessing whether an SMSF might suit you.

1. The Balance to Invest

At around $200,000 an SMSF is competitive with much larger industry and retail funds.

2. Costs

The median operating cost from the ATO is $4,000. This includes management and administration, audit fees, and the ATO supervisory levy. There may also be investment costs and insurances to consider, depending on the investments made.

3. How many Members?

An SMSF can have up to six members, and as you add people of varying ages, the management may become more complex, considering retirement goals, dates, risk tolerance, and preferred investments.

4. Interest in Investing

SMSFs allow almost unlimited choice – property, equities, term deposits, bonds, managed funds, exchange-traded funds, and even collectables. Investing is not short-term and means following market trends, industry announcements, and legislative conditions. It is also essential not to breach in-house rules (like loans to family, occupying property owned by the SMSF, access to collectables, etc.).

5. Can you commit the Time?

SMSF’s are heavily regulated and need to remain compliant. Regulations change often, and documents must be kept. An SMSF is not ‘set and forget’.

6. Does an SMSF suit you?

A successful investor thinks long-term, is able to manage their emotions, and must make rational decisions. Check fund returns regularly, compare to market funds, and adjust the investment strategy if needed after analysis and research.

7. Structure

The most common structure is a corporate trustee for the SMSF (which has a Deed). All members of the SMSF must be directors of the corporate trustee. The fund is registered with the ATO, obtains an ABN, and opens a bank account. Members may roll benefits out of existing retail or other funds into the SMSF and then start investing.

​Ultimately, understanding whether an SMSF is right for you is a combination of investment decisions and the willingness for you to take control of your financial outcome. This is over-simplified for explanation, and advice should always be taken on whether an SMSF meets your needs.

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