Setting Up A SMSF

A question we are often asked is “Should I set up a SMSF?” and because of this, we have updated this blog to inform you of the most recent figures possible.

With over $650 billion dollars of Australian funds invested in Self Managed Super Funds (SMSF) in Australia, it is by far the largest super fund segment of choice. It currently makes up 25% of the total superannuation pie and dwarfs its next closest rival, being retail super funds, valued at less than $600 billion each, as of figures from SuperGuide

SMSF is a private super fund option that allows up to 4 members to bring their super together for a common investment purpose. Typically they are used by married couples, but we’ve seen them used between business partners and family units, with kids. The benefit of this pooling effect can be that a more expensive investment is affordable, like a property for example and partly due to the fact that funds can be pooled. The average assets per member is $678,621, with the most recent annual figures being from the 2017/18 financial year, as provided by the ATO.

Each year the Australian Tax Office released statistics on the SMSF sector and the most recent relates to 2017-18. You might be wondering – Why so old? The reason is because SMSF’s have to lodge a tax return like we do as individuals and therefore returns are not typically collated until the following years.

The median age of trustees in 2017/18 is 59 years and it is interesting to note the trends on the age groups opening SMSF’s in the period. It reflects a typically younger demographic that are setting them up, as is reflected in the following graph.

 

SMSF’s are a super investment of choice for many Australians, because they give the most control and flexibility; they can be the least expensive fund to run; and with rapidly improving technology, they are getting simpler to manage too.

This translates into a vast majority of satisfied SMSF members, as reported by Roy Morgan’s 2020 Superannuation Satisfaction Report, with 72.3% of people being satisfied in their fund. This is the second-highest satisfaction level, just under Public Sector Funds with 72.7%.

Coupled with this, the investments available on the ASX that offer simple, diversified and low-cost access to investing, are just some of the reasons SMSF’s are becoming more and more popular and worthy of consideration.

With the above in mind, whether you should set up a SMSF is not a decision to be made lightly, so you should speak to a Financial Adviser to work out whether it is appropriate to you.

To read more about how we can assist with SMSF advice, click here: ‘Our SMSF Advice’.

If you are interested in learning more about SMSF, we have written two ebooks Pro’s and Con’s of SMSF and Guide to Start Your Own SMSF. We’ve also written many blog posts about superannuation you can read here.

Important Note 

Any information provided here is general advice only and does not consider your objectives, financial situation or needs. This information should not be taken as comprehensive and does not constitute legal or financial advice. You should seek legal, financial or other professional advice before relying on any content. Yield Financial Planning is not responsible to you or anyone else for any loss suffered in connection with the use of this information. Information is only current at the date initially published.