How do you know when it’s time to switch to an smsf? 7 life triggers that might point you to an smsf
Thinking about setting up your own super fund? You’re not alone. A self-managed super fund (SMSF) can offer more control and flexibility, but it’s not for everyone.
So when does it actually make sense to consider one?
Here are 7 common life moments that often prompt people to explore an SMSF.
You’re earning more / you’re selling a business
Whether you’ve gotten a promotion, received an inheritance or sold a business, ‘big’ income changes such as these often bring super into sharper focus. If you’ve built up savings and want more control over how your super is invested, an SMSF might give you that opportunity.
You want to invest in property using your superannuation
Most industry super funds don’t let you buy property directly, especially if you want to use it for your business. With an SMSF, it’s possible - although there are strict rules about it (more about this here). This is a common reason business owners and property-savvy investors look at SMSFs.
Retirement is on the horizon
If you’re between your late 40s to early 60s, you’re likely to already be thinking more seriously about retirement. With more to lose (or gain), people at this stage often want more visibility and control over how their super is performing… and where it’s heading.
You’re combining finances with a partner or family
Major life changes such as getting married, planning your estate or caring for ageing parents can make it appealing to manage super together in one place. An SMS can provide that flexibility if you want a joint strategy for the future.
Your super balance has grown
If your super balance is around $250,000 - $300,000 or more, an SMSF might start to make financial sense. At that point, the running costs are often comparable to industry super funds - but with SMSFs, you get full control over your investments.
you’re frustrated with your current super fund
Are you:
Unhappy with your current fund’s performance?
Unclear on fees?
Feeling out of the loop/distant from your investments?
That frustration can be a sign that it’s time to take more control and explore whether managing your own super could work better for you.
You’re interested in managing your own money
Some people just like being more hands-on with their finances.
If you enjoy making investment decisions, tracking performance or aligning your money with your goals, then an SMSF might feel like a natural next step… even if you’re not close to retirement yet.
Key considerations before you set up an smsf
An SMSF gives you more freedom, but it also comes with more responsibility. Here’s what you need to think about:
YOU are in charge. With an SMSF, you’re the Trustee, which means you are legally responsible for following the rules and obligations, even if you have help from advisers.
Rules and obligations. SMSFs are regulated by the ATO and must stick to strict investment and reporting rules. You can’t just do whatever you like with the money.
It takes time. It’s not a get-rich-quick-scheme. You’ll need to stay engaged with your investments, keep records and organise annual tax & audit requirements.
You’ll likely need professional help. Most Trustees rely on auditors, accountants and financial advisers to stay compliant. This adds cost, but also peace of mind.
An SMSF isn’t about “set and forget”. It’s about being in the driver’s seat… which can be empowering, but it’s not suited for everyone.
Debunking some myths about setting up an smsf
You don’t need to be a financial expert
You don’t need millions in super
But you do need to be willing to take more control and understand your responsibilities
Curious if it’s the right fit for you?
An SMSF isn’t for everyone, but if one (or more) of these life triggers sound familiar to you, it could be worth a conversation.
We have an in-house SMSF Specialist Advisor, accredited with the SMSF Association. Everything is done onshore and we have built a strong network of service providers who can support you every step of the way (e.g. SMSF auditor, property valuer, financial planning, brokers, etc.).
Book a free consultation with us today!