SMSF Strategy: 5 Things to Consider Before Setting Up an SMSF

Things to Consider Before Setting Up an SMSF

Setting up a Self Managed Super Fund (SMSF) can be one of the best or worst things you’ll ever do. It all comes down to how you set things up and whether you’ve done your research before committing. With that in mind, we’ve created this handy guide of things to consider before setting up an SMSF:

Get the Right Help

Before you make any decisions or put any wheels in motion, it’s vital that you find the best SMSF accountant for your needs. Despite the name, this is not the type of endeavour you want to be handling alone, so seeking expert advice should be at the top of your to-do list. 

Your SMSF accountant will be able to ensure not only that you’re getting the most out of your super (which is the whole point of establishing a self-managed super fund in the first place) but also that you’re compliant with any laws and regulations that may apply. 

Think About the Tax Implications 

Things to Consider Before Setting Up an SMSF


You’ll also need to think about the tax implications of setting up an SMSF. Tax is applied differently to super contributions, so you’ll want to make sure that you’re getting it right from the start in order to avoid short-changing yourself. This is also the best way to ensure you don’t end up owing the tax department a significant chunk of cash at the end of the financial year

We suggest making use of a tax calculator, and if things seem confusing, engage the services of a registered tax accountant. Remember, this isn’t an aspect where guesswork will cut it. If things go wrong, your best-case scenario is getting a bill at tax time.

Plan Out Your Investment Strategy 

Things to Consider Before Setting Up an SMSF


Once you’re sure that an SMSF is the right choice and you’ve covered all your bases in terms of legal requirements, it’s time to plan out your investment strategy. While the best portfolio selections will be highly subjective and tailored to your needs, we strongly suggest choosing a diverse mixture and holding at least a few options that pay dividends in order to increase your passive income

Consider Whether You’ll Be Leveraging Property 

Many people choose to include property as part of their SMSF investment strategy because it is a tangible asset that tends to provide good returns. If you’ll be doing this, we strongly recommend going through a commercial property management company to ensure that all your bases are covered.

Don’t Forget About Insurance 

Things to Consider Before Setting Up an SMSF


Finally, because insurance is generally included in most superannuation products, many people choose not to take out separate cover. While this is perfectly fine when dealing with standard super, you could find yourself in a bit of hot water if you switch to a self-managed super fund and do not take out insurance. 

So, this is your friendly reminder to ensure that you cover yourself with life insurance, total and permanent disability insurance, and income insurance as a top priority when switching to an SMSF.

Being in charge of your own super can be a fantastic financial decision, but only if you go about things the right way. Be sure to always think about the considerations within this article before committing to anything, and ask your SMSF accountant as many questions as you need to in order to feel comfortable in your knowledge of the entire process. It’s your future on the line, after all, so you want to make sure you get it right. 

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