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Things to consider before starting a SMSF

July 6th, 2016


Self-managed super funds (SMSF) may sound attractive at first glance. But do you really know what’s involved?

Here are five major factors to consider before setting up a SMSF.

It’s all on you

You need to know the regulations and the legislation governing SMSF. If anything goes wrong, the ATO will come looking for the trustees, who are the members. There are penalties for non-compliance and responsibility falls on the trustees of the fund.

Industry funds are very user-friendly – let the experts do their job looking after your super savings. Members of industry funds don’t have to be thinking about where their investment is and what they have to do. Industry funds are very well regulated too.


Even if you have a professional administration company, it is very time-consuming to operate your own SMSF. To comply with superannuation laws, you need an accountant to do a tax return and audit each year.


You probably need to have about $250,000 to make it a viable proposition. There may be some higher administration costs for smaller balances. Overall, the fees may not be as competitive as other funds. You need to look at the fees, because it may end up being quite expensive.
Generally speaking, an industry fund is more cost effective and offers competitive fees.

You need investment knowledge

Some people want an SMSF to have more control over their investment strategy and that’s fine, but where do you want to invest and do you need to engage someone – a stockbroker, financial planner and accountant to help you?

SMSF members need to have investment knowledge. They need to have an investment strategy and know where they want to invest. SMSF members also need to be careful because if they don’t invest according to their investment strategy, the Australian Taxation Office can impose penalties. It’s a little bit onerous and it can be complex to understand.

Industry funds are professionally managed and give you a choice of investments that can meet the needs of what you want.

Possible poor diversification

There’s probably going to be the risk of poor diversity without the right knowledge. With an industry fund people are actually managing the account and providing expertise in terms of investment.

First Super is an Industry Super Fund staffed by Service Centre Consultants ready to help you. Contact us on 1300 360 988 if you would like to know more about our investment options.

First Super commissioned The New Daily to research and write this article. The views expressed are of The New Daily.

This article was issued by First Super Pty Ltd (ABN 42 053 498 472, AFSL 223988), as Trustee of the First Super superannuation fund (ABN 56 286 625 181). It does not consider your personal circumstances and may not be relied on as financial advice. Content was accurate at the date of issue, but may subsequently change.