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Is an SMSF right for you?

  • October 20 2023
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Is an SMSF right for you?

By Nicole Comendador
October 20 2023

When it comes to planning for retirement, one of the most significant decisions Australians have to make is how to manage their superannuation.

Is an SMSF right for you?

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  • October 20 2023
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When it comes to planning for retirement, one of the most significant decisions Australians have to make is how to manage their superannuation.

is an smsf right for you

One increasingly popular option is an SMSF or Self-Managed Super Fund. But is it the right choice for you? This article delves into the advantages, disadvantages, and considerations to help you make an informed decision.

What is an SMSF?

An SMSF or Self-Managed Super Fund is a superannuation trust where the members are also the trustees. This means that you are in complete control of how the fund’s assets are managed and invested.

Advantages of an SMSF

  1. Opting for an SMSF grants you full control over your investment decisions, giving you the autonomy to make choices that align with your financial goals.
  2. SMSFs offer a broader spectrum of investment options in comparison to retail or industry super funds, providing you with greater flexibility in diversifying your portfolio.
  3. With an SMSF, you have the advantage of managing the timing of investment transactions, enabling you to optimize the fund for maximum tax efficiency, which can result in potential tax benefits.
  4. SMSFs excel in estate planning as they provide enhanced flexibility, allowing you to customize the distribution of benefits according to your specific wishes and requirements.

Disadvantages of an SMSF

  1. Running an SMSF can be quite time-consuming, as it demands a substantial investment of time for tasks like research, compliance, and administrative duties.
  2. SMSFs often come with higher initial and ongoing expenses, particularly if you seek professional advice or services to manage your fund effectively.
  3. When you serve as a trustee of an SMSF, you assume the responsibility for meeting all compliance obligations, and any failure to do so can lead to significant financial penalties.
  4. The absence of a professional fund manager means that you bear the full weight of responsibility for your SMSF's investment performance, exposing you to potential investment risks.

Critical considerations

Financial literacy is an essential trait for anyone looking to manage their investments successfully. It involves having a high level of financial knowledge and understanding concepts such as asset allocation, diversification, risk management, and investment strategies.


The size of your SMSF is also an important consideration. It is generally recommended to have a minimum fund size of $200,000 to make an SMSF cost-effective. This is because there are various costs associated with running an SMSF. If your fund size is too small, these costs can eat into your returns and make the SMSF less viable as an investment vehicle.

is an smsf right for you

Your life stage is another factor that may influence whether an SMSF is the right choice for you. It can play a significant role in determining whether you have the time and expertise to manage your own superannuation fund.

If you are closer to retirement and do not have the time or knowledge to dedicate to managing your investments, it may be more appropriate to leave your superannuation in a professionally managed fund.

When setting up an SMSF, you also need to consider the trustee structure. The individual trustee structure may be more suitable for smaller funds with fewer members, as it is generally less costly to set up and maintain.

On the other hand, the corporate trustee structure may offer more protection and flexibility, especially if there are multiple members or if you plan to have non-family members as members of the fund.

Who should consider an SMSF?

One of the primary reasons people choose an SMSF is to have more control over their investments.

If you are already actively involved in managing your investments and have a good understanding of financial markets, an SMSF may be a suitable option for you.

This level of control can be particularly appealing to individuals who want to tailor their investment strategy to their own risk appetite and financial goals.

For high-net-worth individuals, the benefits of an SMSF may outweigh the costs. If you have substantial assets, an SMSF can provide you with greater control and flexibility over your retirement savings. You can consolidate your various superannuation accounts into one, making it easier to manage your investments and track your progress.

SMSFs can be particularly beneficial for business owners for its ability to hold business premises within the fund. This can provide asset protection, as the property is held separately from the business itself.

It can also be used as a tax planning tool for business owners. They can reduce their taxable income and benefit from the concessional tax treatment of superannuation investments.


Setting up and running an SMSF is a complex process that offers the potential for greater control and investment freedom. However, it’s not for everyone.

The responsibilities and risks are substantial, and it’s crucial to weigh these against the benefits. Do your due diligence, consult professionals, and carefully consider your personal circumstances before making this significant financial decision.

By fully understanding what an SMSF entails, Australians can make a more informed decision about whether this type of superannuation fund is the best fit for their retirement planning strategy.


This article is intended for informational purposes and should not be considered as financial advice. Consult a financial adviser for tailored advice to suit your individual circumstances.

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