If you are someone who takes interest in building wealth, saving for retirement, investment markets or the like, than you have probably seen and heard a lot about self-managed super funds (“SMSF”) in recent times.
The number of SMSF’s being created has been consistently increasing, the latest growth statistics show an increase of over 30% in the last 5 years. Some key reasons people are choosing SMSFs include:
- Control – People are keen to take control of their own destiny, especially with volatile markets
- Recent smaller/negative returns – Poor returns have become the norm for many in large funds and value for money regarding the fees paid to investment advisers often just isn’t there
- Flexibility – Ability to purchase investments you understand whether it be shares you know of or property in your area as well as flexibility regarding contribution and retirement strategies
- Gearing – Taking advantage of the recent changes allowing your to borrow for property investment purchases enabling your to increase your investment base
- Access to Information – With the web, access to information has allowed investors to take control of their own investment decisions and by working with their accountant they also better understand their super and its benefits
Of course there are also reasons to choose a large public offer fund rather than a SMSF depending on your circumstances. Therefore we recommend anyone considering their super should obtain independent advice.
Having said that, it is interesting to note that while many large public offer funds argue against the use of SMSFs, a report issued in July 2012 by SPAA & Macquarie titled “SMSF Generations Report” stated that 42% of people set up their own fund without seeking any advice, which supports the view that SMSFs are growing in number because of the free will of the SMSF members as much as for any other reason!
If you are interested in having your own SMSF or just in finding out more about them, let us know and we can arrange to catch up and discuss the pros and cons.
On that note, however, there are proposed new laws that may impact on the SMSF set up process including governing who can and can’t give advice about them, what form the advice needs to take and ultimately the cost to do so. At the time of writing these had been postponed to 1 July 2013 so if you are considering a SMSF now is the time to do it, because come 1 July potentially we may not be able to help and/or the process may become much more involved and much more expensive!