7 steps to consider before you decide if a SMSF is right for you.

In my recent blog “7 Step Retirement Plan“, one of the key steps in planning for your retirement is to have a superannuation plan.

A key component of a superannuation plan is choosing which fund is right for you.

Statistics from the ATO show the rapid increase in the number of Self Managed Superannuation Funds (SMSF) being used by taxpayers as a vehicle to accumulate their retirement savings – Self-managed super fund Statistical Report – June 2013. The costs to establish an SMSF are being heavily discounted as new participants enter a market which was previously the domain of accountants. The differences between SMSF’s and other superannuation funds have narrowed because of increased competition and many of the perceived advantages of SMSF’s in the past are no longer valid.Some of the main reasons SMSF’s were set up in the past include;

  • Control
  • Intergenerational wealth transfer
  • Ability to borrow
  • Cost savings; and
  • Investment flexibility eg. purchasing property.

Tread carefully, for if you decide to set up an SMSF for the wrong reasons it can be a costly mistake. Consider the costs associated with administering the fund, winding it up if it no longer required and the risk and cost of making poor investment decisions.
The following are 7 steps to consider before deciding to establish an SMSF:

  1. Investment strategy. What do I plan to invest in, do I need a SMSF to invest in these assets?
  2. Estate Planning. Do you I want to use my superannuation fund to assist in transferring wealth to my family?
  3. Cost. Do I have enough money to invest to make it cost effective to manage an SMSF on an ongoing basis?
  4. Life stage. Is an SMSF suitable for my life stage, do I require simplicity or am I prepared to deal with the complexity of an SMSF?
  5. DIY fund or outsourced. It is very rare that a member of the fund will do all the tasks that are associated with an SMSF themselves. SMSF’s are complex tax structures with onerous legal reporting requirements. Failure to comply with the various rules can lead to severe penalties.
  6. Contribution strategy. What strategies can I use to increase the level of my superannuation savings?
  7. Tax strategies. What taxation strategies do I need to use to maximise my superannuation savings?

Once you have followed these 7 steps you will be in a better position to decide if an SMSF is the right fund for you.

If you would like to arrange a meeting to review your superannuation plan or to discuss if setting up an SMSF is the right choice for you, please contact us on 0499976058.

 

Disclaimers & Disclosures

Geoff Ivanac is Sub-Authorised Representative No. 000309751 of GPS Wealth Ltd (GPS) ABN 17 005 482 726 Australian Financial Services Licence (No 254 544) and can provide the following services financial planning, risk management, managed investments, superannuation and retirement planning, margin lending and self-managed superannuation funds.

The information provided on this website has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your GPS Wealth Ltd (GPS) Adviser before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither GPS nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.

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Geoff Ivanac is Sub-Authorised Representative No. 000309751 of GPS Wealth Ltd (GPS) ABN 17 005 482 726 Australian Financial Services Licence (No 254 544) and can provide financial planning, risk management, managed investments, superannuation and retirement planning, margin lending and self-managed superannuation funds.

Everblue Consulting Pty Ltd is Corporate Authorised Representative No. 000450221 (‘CAR’) of GPS Wealth Ltd. ABN 17 005 482 726, an Australian Financial Service Licence holder (No 254 544)

GPS Wealth Ltd (GPS) ABN 17 005 482 726 is the holder of an Australian Financial Services Licence (No 254 544) and an Australian Credit Licence (No. 254 544) under which GPS is authorised to carry on a financial services business which includes the provision of financial product advice, dealing in financial products and the provision of credit assistance services.