Self-Managed Superannuation Funds: Pros and Cons

Some people enjoy being able to control how they spend their retirement funds, but regular superannuation funds don’t allow that. And that is why, self-managed superannuation funds, also known as SMSF, are for those people who want to be in control and have the resources to maintain it. However, this fund isn’t entirely without fault and it also has its shortcomings. If you want to know more about SMSF, if you should opt for it or not, and how they work, visit for more information.


The most obvious and the biggest advantage has already been mentioned: complete freedom in spending your funds. Aside from being a great method of saving for your future after your retirement, this fund also allows you to take loans for your investment ventures. This is another one of the more important and useful advantages, as you may not always have the capital for investment.


SMSF pros and cons


You also have the freedom to control the expenditure. For example, you can reduce some of the fees, and so, reduce cost in that way. There are various ways of doing that, as such as keeping transactions to a minimum and by weighing the costs and profits of every investment before you invest. Since you are the one in control, you are the one in charge of the management of the fund and the investment strategy.

Your original form of taxation is according to your marginal taxation rate, and by taking advantage of the tax concession, the revenue earned by your investments would be taxed at only 15%, thus, lowering the amount that you have to pay in tax. On top of that, you can also avoid industrial fees.


As mentioned before, it requires specific skills. You need to have extensive knowledge in investments and finances in order to succeed. Setting up a SMSF account is no different from making an investment in something. Without the right type of skills and the capital, you are surely doomed. According to the Government Review, in 2009, one needs to have a minimum of $200,000 for a startup, as anything less than that is not considered adequate enough and is not considered to be cost-effective.

Aside from that, it also requires a lot of time and effort. You need to manage all the paper works and need to be careful when making investments, as the wrong move could cause you to make a loss. Something else that could potentially get annoying are the rules. The government has imposed strict rules for SMSFs, and not following them could lead you to a lot of trouble.

Bottom Line

Opening a self-managed super fund has both its advantages and disadvantages. Therefore, consider all the pros and the cons carefully before you open a SMSF. If you are unsure as to whether it would be a good idea for you or not, consult a professional, as there are several other ways in which you can save up for your future which might be a better option for you.


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