Just Sox

Is an SMSF the right choice for your super?

Whenever investment markets experience periods of turmoil there tends to be a spike of interest in setting up self managed super funds (SMSF). Understandable though this may be, there is work and cost involved in setting up and running an SMSF and it may also disrupt existing investments. It is not something that you would want to jump into only to close down 6 months or even 1 or 2 years down the track. I’d like to take a look at some of the features of an SMSF which may help you to decide if they are the right option for your situation.

Ultimate Control

An SMSF allows up to four members/trustees (each member is also has to be a trustee and vice versa) to have ultimate control over many aspects of their superannuation. Within the confines of the regulations, they can tailor many elements such as the as pension structures, insurances and the investment strategy. Most of these options will generally be available through a managed fund or master trust structure however there may be greater flexibility within an SMSF.

The drawback of having control is that you also have responsibility. There are regulations to be adhered to in running an SMSF and there may be serious penalties for not complying with those regulations. You can usually pay someone to assist you with just about every element however ultimate responsibility lies with the trustees. You therefore need to be comfortable that there will be some extra administrative burden and of course the more responsibility you take on the more you may be able to save in fees.

Fees

The fees attached to an SMSF differ from managed fund fees in that there is usually a higher flat dollar component for an SMSF. An accountant or SMSF service may charge $1,000 or more to set up the fund plus an annual fee usually starting around $1,000 (and as much as $5,000 to $10,000 or more per year depending on the size and complexity of the fund). They may also have an additional percentage based fee associated with the investment management within the fund. In contrast a managed fund usually has nominal flat dollar fees with the bulk of the fees calculated as a percentage of the funds under management. These can also vary significantly depending on the fund but would normally be between 1% and 2.5%.

It is generally recommended that you need a minimum starting balance of between $150,000 and $250,000 before starting an SMSF. At this level an average annual $2,500 administration fee represents only 1% to 1.7% of the fund value. On a $1,000,000 balance it is a very low .25%. On a $50,000 balance it would equal a percentage fee of 5%, too much considering the likely long term investment returns.

Depending on the complexity and cost of the fund, an SMSF can be very expensive but it can also be one of the cheapest options available.

Investment Choice

Providing that they also are in line with the regulations (specifically the sole purpose test) SMSFs can choose from a wide range of investment options including direct investments or pooled unit trusts. For example they could hold cash in the bank, artwork, a direct property, some direct Australian shares and maybe units in a international share managed fund. This is generally in contrast to managed funds which are restricted to listed or structured investments generally available through a unit trust. Most obviously they are unable to invest in direct assets such as art or property.

Managing your own investments

The option of having complete control over their investments is a very appealing one, particularly considering the recent performance of traditional super funds. Whatever the investment strategy, some choose to manage their own investments due to a well founded belief in their own ability, they may enjoy making their own investment decisions or they may wish to learn and improve their skills over time. For most people it is probably a mix of all three.

Either way, it’s very important to be aware that despite the apparent poor efforts of investment managers over the past 18 months, their job isn’t easy. There are simple way to replicate market returns (via an index fund for example) but that still leaves the decision of which markets to be exposed to (shares, fixed interest, cash, property, Australia, overseas etc). It is easy to say that an investment would have been better in cash over the past 18 months but the same generally can’t be said about most periods of 5 years plus. There are a lot of new SMSFs that have been established and moved directly into cash in response to recent markets returns but many of these could be still sitting in cash 5 years from now, potentially missing out on a rebound in investment markets.

There are certainly ways that individuals can help to improve their investment returns, they may skills or knowledge for example. Regardless of what anyone tells you, there were also a lot of savvy investors and market commentators that thought that share markets were headed for a big fall about two years ago. Of course that sort of insight doesn’t need an SMSF to be beneficial; it can be used to select appropriate investment options in the managed fund space. Many investors would be shocked to know for example that the vast majority of balanced funds would not have been able to reduce the exposure to growth assets 2 years ago if they knew what was coming.

There are definitely some very good reasons for investing via an SMSF. At the same time they do require extra work, responsibility and potentially additional cost. It’s important to understand why it is that you might want to initiate an SMSF, can you achieve the same result by better utilising the managed fund environment? If not then an SMSF may be the right way for you to go.

About the Author

Daniel Hicks is Senior Financial Adviser with superannuation advisers Superworks Financial. For more information visit www.superworks.com.au

Super Speeders 5 - Out of Control DVD Trailer

Cuisinart CPK-17 PerfecTemp 1.7-Liter Stainless Steel Cordless Electric Kettle $79.99 This Cuisinart Perfectemp Cordless Electric Programmable Kettle offers latest innovation for this product category%2E Heating water will never be easier with this handsome brushed stainless steel kettle%2E Great for making tea%2C hot chocolate or instant soups%2E It will quickly bring 1%2E75 quarts of water to a boil and then turn itself off%2E...

Presto 07046 Tilt 'n Drain Big Griddle Cool-Touch Electric Griddle $59.99 Description:PRESTO 07046 Tilt'nDrain Big Griddle Electric GriddleThe super-sized Presto BigGriddle Cool Touch griddle cooks up to 50% more food than other jumbo griddles. The exclusive Tilt 'n Drain feature makes it easy to adjust the grilling surface from level to a tilted draining surface for meats.Features:Cooks up to 50% more food than other jumbo griddlesExclusive Tilt 'n Drain allows you to ...

Presto 06006 Kitchen Kettle multi-cooker/steamer $39.99 Steams stews roasts boils deep fries and more. Nonstick surface inside and out for easy cleaning. Basket included for steaming blanching and frying. So versatile you willl use it every day!...

Music Machine: The Fruit of the Spirit $6.47 CD Music Machine: Fruit Of The Spirit by Agapeland...

Under a Blood Red Sky - Deluxe Edition CD/DVD $19.99 All products are BRAND NEW and factory sealed. Fast shipping and 100% Satisfaction Guaranteed....

Giant Hits $82.00 Giant hits from over 15 years of Contemporary Christian Music by David and The Giants.Includes Get Together, Show Them The Light, Noah, and 7 more....

Super Nova $0.99 ...

The Super Ladies of Wrestling - Out of Control [VHS] $14.95 ...

Billy Bob Teeth Super Deluxe Kit $29.99 Ever since Denist Rich Bailey invented teeth that change people instantly into hillbillies, the world has not been the same. from the Deliverance Style tothe New Austin Power Teeth (approved by Mike Myers himself), BILLY BOB TEETH are groovey baby!! The How to Have Fun Video will entertain, educate and enlighten you with dozens of gags and hilarious ways to make yoiurself laugh. This campy and out...

Flowtron BK-40D Electronic Insect Killer, 1 Acre Coverage $47.90 Flowtron electronic insect killer eliminates thousands of insect pests daily. Improves the health and quality of life by reducing the spread of infectious diseases and decreasing the annoyance level caused by flying insect pests. 2-year limited warranty. Common Usage: Light, Indoor/Outdoor Use: Outdoor, Battery Required: No, Compatible With: Octenol cartridges, Dimensions L x W x H (in.): 9 3/4 x...

Victor M230 Ultimate Flea Trap $9.54 Don't let your pets and family be pestered by pesky fleas! The Victor(R) Ultimate Flea Trap monitors and controls flea infestations. The patented design features produce the high efficacy of the trap. Lured in by the trap's color, the heat and light from the bulb, and the sweet odor inserted in the specially formulated sticky glue disc, fleas don't stand a chance. Our flea traps let pet owners see...

LEDwholesalers 395 nM 51 UV Ultraviolet LED flashlight Blacklight 3 AA, 7202UV395 $14.25 This large uv flashlight with 51 uv LEDs allows you to cover a much bigger area without losing the intensity of the UV light. The applications is perfect for inspection applications, security control, rodent contamination, hotel room inspection, and much more. Emits 395 nanometer wavelength 51 UV LED allow to cover a larger area Makes semen stains and other bodily fluids fluoresce! Perfect for out...

Food, Inc. $6.54 Your steak and chicken may not taste quite the same after you digest all of the information found in this documentary about food production in the United States. Exposing not only the disturbing conditions under which livestock exist prior to their slaughter, the film examines the complex issues surrounding our health and the profits of corporations invested in supplying people with inexpensive (i...

Despicable Me (Three-Disc Blu-ray/DVD Combo) $14.90 "**** This Year's COOLEST Animated Comedy!" - Jeff Craig, Sixty Second Preview Get ready for a minion laughs in the funniest blockbuster hit of the year! Vying for the title of "World's Greatest Villain", Gru (voiced by Steve Carell) - along with his hilarious crew of mischievous minions - plots to pull off the craziest crime of the century: steal the moon! But when Gru enlists the help of three l...

Crazy Skates $1.99 ...

Precious Cat Ultra Premium Clumping Cat Litter, 40 pound bag $15.24 Precious Cat Dr. Elsey's Ultra Scoopable Multi-Cat Cat LitterA unique formulation that combines the heavy non tracking granules with a medium grain clay. The result is an excellent clumping litter that prevents moisture from reaching the bottom of the tray, while providing a clump that will not break down. Ultra is perfect for multi-cat families and those cat owners with sifting or mechanical litt...

Arm & Hammer Super Scoop Clumping Litter, Unscented, 14-Pound $6.06 Long-term Odor Control Formula Multi-cat owners can try the extra-strong odor elimination formula of Arm & Hammer SuperScoop Clumping Litter. This premium product helps remove the most stubborn litter box odors caused by bacteria and other germs. Arm & Hammer SuperScoop Clumping Litter Ammonia-based odor block formula Contains highly absorbent corn fibers Unique clumping system Super ...

ScoopFree® Self-Cleaning Litter Box ScoopFree® is the self-cleaning litter box you can leave alone for weeks at a time. It is the only self-cleaning litter box that uses disposable litter trays to provide hands-off convenience and unbeatable odor control. You don’t have to see, touch, or smell messy waste. Simply load ScoopFree with the disposable litter tray pre-filled with Fresh Step® Crystals. When your cat uses the...

Kidde FA110 Multi Purpose Fire Extinguisher 1A10BC $21.45 466142 - MULTI-PURP.EXTINGUISHR.1A10BC - For every home or office Disposable Ready to fight small fires before they spread, strap bracket, gauge for easy pressure check ...

Schumacher SC-600A SpeedCharge High Frequency Battery Charger $31.15 Schumacher SC-600A 6/4/2 Amp 12 Volt SpeedCharge High Frequency Battery Charger Schumacher SC-600A 6/4/2 Amp 12 Volt SpeedCharge High Frequency Battery Charger Features: Fully automatic 6 amp medium charge monitors battery condition and adjusts charge rate downward to prevent battery damage, for car, truck, motorcycle, ATV, snowmobile, lawn tractor lead acid, and AGM batteries 4 amp medium charge ...

Scosche IU3.5RC 3.5mm Retractable Cable $9.99 Retractable design allows the user to neatly connect 3.5mm audio devicesSlender barrel works with recessed 3.5mm jacksCable length: 2.8'...

The Blood Sugar Solution: The UltraHealthy Program for Losing Weight, Preventing Disease, and Feeling Great Now! $13.25 In THE BLOOD SUGAR SOLUTION, Dr. Mark Hyman reveals that the secret solution to losing weight and preventing not just diabetes but also heart disease, stroke, dementia, and cancer is balanced insulin levels. Dr. Hyman describes the seven keys to achieving wellness-nutrition, hormones, inflammation, digestion, detoxification, energy metabolism, and a calm mind-and explains his revolutionary six-wee...

The Language of Letting Go: Hazelden Meditation Series $9.42 In this popular meditation book, Melody Beattie evolves the experiences and expertise that she boldly shared in the New York Times best seller Codependent No More into 366 moving reflections and prayers to guide us through each day of the year. Beattie's wise and intimate meditations remind us that the best way to heal and grown is to take responsibility for our own pain and self-care. She helps u...

Cook This, Not That! Easy & Awesome 350-Calorie Meals $9.69 Tired of always being too hungry (and tired!) to make smart food choices? Ever wonder why the less food you try to eat, the more fat you seem to gain? Ready to start enjoying all your favorite foods and never see an ounce of weight gain? Cook This, Not That! Easy & Awesome 350-Calorie Meals is the ultimate cookbook for people who love to eat—even if they don’t love to cook. The au...

Tom Clancy's Ghost Recon: Future Soldier $55.99 Tom Clancy's Ghost Recon: Future Soldier X360...

Mario Tennis Open $36.45 On the portable gaming side a sporty new Mario? game for the Nintendo 3DS? hand-held system is on the way and you don't need to be a pro athlete to jump into the action. Mario Tennis? Open which launches May 20 offers immersive tennis action featuring everyone's favorite characters from the Mushroom Kingdom in classic Mario style. With its intuitive game play even novice tennis players can enjoy p...

Super Mario 3D Land $32.44 Past Mario games have let the blue-suspendered hero roam around fully rendered 3D landscapes. Now, for the first time, players can see true depth of their environment without the need for special glasses. Super Mario is a 3D evolution of classic Mario platforming featuring new level designs and challenges....

The Sims 3 [Mac Download] $27.10 ...

Parallels Desktop 7 for Mac $47.62 Parallels Desktop 7 for Mac is the brand new version of the worldwide #1 choice of customers to seamlesslyrun Windows applications on a Mac without rebooting.Parallels Desktop 7 for Mac is the #1 choice of customers worldwide to seamlessly run Windows applications on a Mac without rebooting.  Microsoft Office Windows Inter Explorer QuickBooks PC games and thousands more applications on your M...

Deus Ex: Human Revolution - Augmented Edition [Download] $29.99 The long-awaited return of the award winning franchise that blends the best of Action and RPG: the perfect mix of combat, stealth, hacking, and social gameplay....

Rogaine for Men Hair Regrowth Treatment, Easy-to-Use Foam, 2.11 Ounce Clinically proven to regrow hair.#1 Dermatologist RecommendedEasy-to-use foam Package Contains:One 60 g (2.11 oz) can (one month supply) Information booklet with complete directions on how to use and obtain best resultsQuestions? Toll Free 1-800-Rogaine (1-800-764-2463) or visit rogaine.com.Not for use by women...

Doc Johnson Lucid Dream #14 Multi-Speed, Waterproof G-Spot Vibrator, Twist-bottom Control ...

Maxell 723443 LR6 AA Cell 48 Pack Box Battery $6.44 AA48 PKBOXUPC : 025215720611Shipping Dimensions : 4.80in X 3.75in X 2.50inEstimated Shipping Weight : 2.6...

Cyber Acoustics Subwoofer Satellite System (CA-3602) $30.95 3 Piece Flat Panel Design Subwoofer & Satellite Speaker System...Thunderous bass response! That is what you notice right off with this speaker system. It is a 3 piece (2.1) set utilizing an 5.25" woofer with a long throw voice-coil and tuned port to further enhance the response. Our new flat panel type satellites with dual 2" super radiators balance the performance for a full audio spectrum respon...

Logitech Wireless Performance Mouse MX for PC and Mac $65.99 Darkfield Laser Tracking provides precise cursor control on virtually any surface even glass tables Micro USB cable charges mouse through puter or standard AC outlet even while in useTiny receiver stays in notebook and patible with additional wireless mouse or keyboard without multiple USB receiversSculpted right-hand shape designed to put hand in natural position for useHyper-fast scrolling gives...

Logitech S220 2.1 Speaker System with Subwoofer $20.95 Ported subwoofer for rich full bassWired control pod with microphone and headphone jacksPlug-and-play simplicity; easily connect to PC MP3 or CD playerGlossy black satellite speakers and control pod in a sleek contemporary design17-watt RMS 34-watt total peak power3-year limited warrantyIncludes wired remote control and all necessary cables...

TPU Rubber Skin Case Compatible With Apple® iPhone® 4, Clear Dark Purple S Shape $0.01 Keep your Apple® iPhone® 4 safe and protected in style with this TPU rubber skin case accessory. Slip your Apple® iPhone® 4 in to add a splash of color. Use this case to reduce the chance of signal loss. Delivers instant all around protection from scratches. Constructed from smooth, treated rubber that resists dirt and stains. Unique design allows easy access to all buttons, controls and ports...

Neewer 110CM 43 5-in-1 Collapsible Multi-Disc Light Reflector $12.98 This 5 in 1 collapsible reflector disc Comes with translucent, silver, gold, white, and black five most popular surfaces. Packs into a zip packet. Folds into 12" carry pouch for easy to carry, durable and flexible steel spring frame insures easy spreading and closing. This reflector fits any standard reflector holders....

Syma S107/S107G R/C Helicopter - Yellow $16.99 The brand new GYRO S107 3.5CH Mini RTF RC Helicopter comes with the greatest advancement in Helicopter Technology, a Gyro. No more crashing, no more replacing parts, the GYRO has changed the Helicopter industry completely, making this RC Helicopter super easy to fly and maneuver. Great for people of all skill levels, this bad boy features a coaxial rotor a single rear rotor for precise movement an...

Syma S107/S107G R/C Helicopter *Colors Vary $15.59 This Brand New 3 Channel Gyro mini Metal rc helicopter is 1 of the world's newest, smallest and lightest RC Helicopter you can get! At approx. 7.5" long, it easily fits in the palm of your hand and is fully functional, equipped with latest Gyroscope technology, which makes this helicopter an instant hot seller in the RC World. This mini Gyro Metal helicopter charges directly either from the USB ca...