A self-managed super fund is a superannuation fund that people use to save for their retirement. The main difference from other super funds is that in an SMSF the members are also the trustees.
Running an SMSF has costs. Weigh them against the benefits before you start, so you don't regret it later.
1. Will the fund be cost-effective?
An SMSF has yearly costs, such as accounting, the audit, the ATO's supervisory levy and any advice. Most of these costs are fixed, so they weigh more on a small balance. Work out whether the fund makes financial sense for you.
2. What would you give up?
A fund you join through your employer may come with benefits, such as low-cost insurance. You may lose these if you move your super to an SMSF. Get good advice before you decide.
3. Do you have the investment skills?
SMSFs generally suit people with good investing experience. If investing isn't for you, think again.
4. Do you have the knowledge to run the fund?
To run a fund, you need to keep up with the superannuation and tax rules and understand the financial markets. If you have doubts, get professional advice from someone who specialises in SMSFs.
Understand the risk
An SMSF can lose money, and the trustees carry the responsibility. Members of an SMSF also can't get the government financial help that may be available to members of APRA-regulated funds who lose money through theft or fraud. In the end, the trustees decide whether the fund succeeds or fails.
If you're a trustee, or thinking of becoming one, talk to your accountant or a licensed financial adviser.