Published date (29/04/24)
Some commonly asked questions about SMSFs
What is an SMSF? An SMSF is a special type of superannuation fund that you manage yourself. It's like having your own personal savings account for retirement, but you make the decisions about how the money is invested.
Who can have an SMSF? Anyone who is over 18 and wants more control over their superannuation can set up an SMSF. Usually, it's best for people who have a good understanding of financial matters or are willing to learn.
How much money do I need to start an SMSF? You typically need at least $200,000 to $500,000 to make an SMSF worthwhile, as there are costs involved in setting it up and running it. However, this amount can vary depending on individual circumstances.
What can I invest in with an SMSF? You can invest in a range of things like shares, property, term deposits, and managed funds. But it's important to remember that all investments should be made with the goal of growing your retirement savings.
How do I manage an SMSF? As a trustee of your SMSF, you're responsible for making decisions about how the fund is managed and invested. This involves things like keeping records, lodging tax returns, and making sure the fund complies with superannuation laws.
What are the benefits of having an SMSF? Some benefits include greater control over your investments, potential tax advantages, and the ability to pool resources with other members (like family members) to invest together.
What are the risks of having an SMSF? Risks include the responsibility of managing your own investments, potential losses if investments don't perform well, and the need to stay up-to-date with changing superannuation laws and regulations.
How much does it cost to run an SMSF? Costs can vary depending on factors like the size of your SMSF, the investments you choose, and whether you use professional services like accountants or financial advisors. It's essential to budget for things like audit fees, insurance, and administration costs.
Can I borrow money to buy property with an SMSF? Yes, but there are strict rules about borrowing within an SMSF, known as limited recourse borrowing arrangements (LRBAs). These arrangements allow you to borrow money to buy property, but the loan must be used to purchase a single asset, and there are restrictions on how the property can be used.
How do I access my superannuation savings in retirement? When you reach your retirement age, you can access your superannuation savings. You can choose to take your money as a lump sum, regular pension payments, or a combination of both, depending on your preferences and circumstances.
Remember, it's always a good idea to seek professional advice before setting up an SMSF to ensure it's the right option for you and that you understand all the responsibilities involved.
