Tuesday, 12 December 2017
I Nearly Set Up A SMSF
I have been dead keen to set a up SMSF (Self Managed Superannuation Fund) and have been doing oodles of research about it.
I will not bore you with all the dry details but instead will just chat briefly about why I didn't .... yet.
Why I did not set up a SMSF
1. Primarily, the sheer ongoing time and effort required to manage, research, ensure auditing and taxation requirements are correct and timely looks like an enormous time-sucking commitment to me. I'm just not that keen.
2. The fees, even using the cheapest and fairest SMSF Administration company I could find (GreenFrog Super) are far in excess of the fees we currently pay for two individual Hostplus Super Funds including fees for the Choiceplus share trading platform for each. However, can I say that if you were seriously thinking of using a SMSF Admin company, then GreenFrog appears to have the most flexible and best priced product I can find in Australia at time of writing. (No, I'm not getting paid by GreenFrog, Hostplus or Choiceplus to say any of this).
3. I have no plans to invest in physical property via Superannuation......yet. I am happy with the zero-fuss Real Estate Investment Trust ETF I invest in via Choiceplus - it sure beats chasing tenants for rent and fixing leaking roofs! However, if I do decide to invest in physical property via Super' then a SMSF will certainly be the way to go as I cannot do this via Hostplus or Choiceplus.
Setting up a SMSF with the help of your solicitor, accountant and bank would be the cheapest SMSF option in the long run. You would not want to factor in the cost of your own time however - fully self administered SMSF's can be a huge time commitment to accurately kept abreast of all the tax rules and legislation knowledge required. The ATO is very unforgiving of poorly run SMSF's and have no qualms in whacking hefty fines on inaccurate operators.
The next best option would be to set up a SMSF via an independent SMSF administration company who does the set-up for you and also does the yearly reporting and auditing for you too......all for a fee of course. If and when I do set up a SMSF, I would go with the likes of GreenFrog who have transparent and fair flat fee structures and allow you 100% flexibility on every part of your SMSF. (Beware the SMSF Administrator who only allows you to use certain banks, certain trading platforms and products - a probable sign of hidden fee kick-backs and lack of true independence).
If you are not investing in physical real estate properties, then sticking with a very low fee Superannuation company that offers a low fee stock trading platform is the best option by far. This is what I'm sticking with unless I get lured into buying physical property as a Superannuation investment. (BTW, there are other excellent structures to own investment property within besides Super - a topic for another time)
Yet again, I am not a financial adviser so everything you read here please do your own research on first. I write to encourage folk to get interested in investing and to break the stupid taboos around not talking openly about money.
Take care and stay nice folks
Mr HM (Phil)