Here are the eight biggest untruths that you might have read or heard with regards to creating and/or running a self-managed super fund:
Myth #1 The Policies are Never Consistent.
You’ve probably heard that one of the disadvantages of owning a SMSF is that you have to be vigilant because the rules and regulations are always changing. While it is true that it is more complex than a retail fund (which can be set up and forgotten), amendments to the regulations are limited, and if you have hired an accountant or a financial advisor they will make sure you are up to date with the latest requirements.
Myth #2 SMSF is very complicated.
If you are considering having a SMSF to reap its various rewards and benefits but don’t have the time to manage it, bring in an accountant or financial advisor to do the task for you.
Myth #3 The performance of superannuation as an investment is below expectations.
Contrary to popular belief, superannuation is a structure for starting an investment, not an investment. If your superannuation is not as performing as well as you’ve expected, then it’s due to the fact the investments you’ve chosen are not performing well. Regardless of whether those investments were arranged as superannuation or via another structure, their performance would be exactly the same – (not good).
Myth #4 Having a SMSF costs more.
A number of factors influence this, including the number and type of assets you own, your fund balance, and the investment structure you picked. Talk to a financial advisor or an SMSF specialist to know whether SMSF is the right investment option for you.
Myth #5 You lack control over your SMSF.
You have major control if your super is invested in an SMSF. But even if you are participating in a retail super fund, there is a level of control with various investment types.
Myth #6 You don’t have to be concerned about your superannuation until you are older.
Like other investments, you increase your chances of reaching your ultimate goal if you invest longer. Begin planning in advance so you gain the flexibility to go after higher-risk strategies and the time to regain any possible losses.
Myth #7 You can do SMSF alone.
Even if you are not a member of an industry fund, it is wise not go at it alone when you open an SMSF. You need the help, the skill and the expertise of a financial advisor to guide you in the right investment strategy, and an accountant to make sure you are on top of the rules and regulations and that you’re getting great tax results.
Myth #8 You can extend your risk further and diversity your investments better with a super fund.
This depends. A large number of super funds own a big part of the fund invested in the share market. A SMSF lets you sell your shares if stock market declines are forecasted. In contrast, with a retail super fund this decision is someone else’s to make (eg. the trustee).
PJS Accountants works with clients to open and manage a SMSF. Contact PJS Accountants if you’d like to talk to us about your retirement goals and help you decide whether a SMSF is the best investment strategy for you.