- Control over how you invest
- Accountability for your super fund
- More options tailored to your circumstances
- Potential cost savings depending on your circumstances
- More flexibility in how you pass on your wealth.
There’s no hard rule on the amount of super needed to set up an SMSF.
An SMSF involves both set up and annual running costs, which includes any investment-related expenses in addition to accounting, legal and tax advice, the cost of having your fund audited each year and an Australian Taxation Office supervisory levy.
As a general guide The Australian Securities & Investments Commission (ASIC) suggests a fund with a balance of more than $200,000 may be cost-effective, but the more you choose to outsource, the more the cost of these services can dilute your returns.
Another consideration is diversification. Ideally you want to be able to spread your risk by accessing a wide range of investments. For SMSFs with a smaller balance it may be more difficult to spread risk in this way.
If you’re thinking of an SMSF, it is important to understand the following risks, which do not apply to other superannuation funds:
If you would like to learn more about SMSFs and their appropriateness for you, we recommend viewing the ATO SMSF video series.
Things you should know:
* Investment Trends April 2015 SMSF Investor Report, based on a survey of 3,941 SMSF trustees
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Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (Colonial First State) is the issuer of interests in Commonwealth Essential Super ABN 56 601 925 435. This information is not financial product advice and does not take into account any person’s individual objectives, financial circumstances or needs. You should read the Product Disclosure Statement (PDS) for Commonwealth Essential Super and consider talking to a financial adviser before deciding whether to acquire or continue to hold this product. Click here to download the PDS, collect one from any branch of the Commonwealth Bank or call us on 13 4074 and we’ll post one out to you. Colonial First State is a wholly owned subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124 (‘the Bank’). The Bank and its subsidiaries do not guarantee the performance of Essential Super or the repayment of capital by Essential Super. An investment in Essential Super is via a superannuation trust and is therefore not an investment in, deposit with or other liability of the Bank or its subsidiaries. An investment in Essential Super is subject to risk, loss of income and capital invested.
The information contained may include general advice but does not take into account the investment objectives, financial situation and needs of any particular individual or trustee of a self-managed super fund. You should assess with the help of legal, financial and taxation advice, whether the information is appropriate in light of your own circumstances before acting on it.