Below is an overview of the eight biggest myths we have read or heard in relation to setting up a self managed super fund.

The rules keep changing
Verdict: Myth

You read every day that one of the down sides of having a SMSF is that you have to spend time keeping on top of the ever changing landscape of rules and regulations. It is, in truth, more complicated than a retail fund (which you can literally set up and forget about) however changes to the rules are limited and if you are engaging the support of a financial advisor or accountant they will help you to stay on top of the latest requirements.

It’s too complex
Verdict: Myth

Again if you want to take advantage of a SMSF but don’t want to invest time in managing your super you can outsource this function to your accountant or financial advisor.

Superannuation isn’t performing well as an investment
Verdict: Myth

Superannuation is not an investment it’s a structure for undertaking an investment. If your superannuation hasn’t performed well it’s because your chosen investments haven’t performed well. It does not matter if these investments were set up as superannuation or through another structure. They wouldn’t have performed any differently.

It costs more to have a SMSF
Verdict: It depends

This depends on a number of variables including the investment structure you choose, the number and type of assets you hold and your fund balance. To find out more about whether a SMSF is an effective option for you, speak to your MGI advisor.

You don’t have control over your superannuation
Verdict: Myth

You do have control over your super. If it’s invested in a SMSF you have the most control, however even a retail super fund will give you a degree of control with different investment options.

I don’t need to worry about my superannuation until I am older
Verdict: It depends

As with any investment, the longer you invest the better chance you have of achieving your end goal. If you start planning early you also have the flexibility to pursue more high risk strategies, with time to recoup any potential losses.

SMSF is DIY super
Verdict: Myth

You may not be part of an industry fund but when you set up an SMSF you are wise not to go at it alone. You will most likely need the expert support of a financial advisor to help develop your investment strategy and your accountant to ensure you meet the rules and regulations and that you are achieving the best tax outcome.

Managed super funds better allow you to spread your risk and diversify your investments
Verdict: It depends

Most managed super funds have a large proportion of the fund invested in the share market. With a SMSF you can sell your shares if stock market falls are expected. However, with a retail super fund someone else (eg the trustee) is in control of this decision.

Help establishing a SMSF

MGI works with our clients to set up and manage a SMSF. If you would like one of our consultants to review your retirement goals and to evaluate whether a SMSF is the best option for you please book a free SMSF consultation today.