We’re all worried about the future. Retirement is something that always seems to be a long way off until you realise it’s around the corner. When that happens, many people realise that making a serious plan was something they always put off for tomorrow, always pushed out of their minds. It can be devastating to move out of the work force and realise that you don’t have enough money or assets to live the life you deserve.
For some people, the best option is a Self Managed Super Fund. You’ve heard of them before, the magical SMSF. It sounds like a scary concept, but the truth is it’s actually a viable option. If you’re interested in taking control of your superannuation and making sure that you have the right support to save for your retirement, a SMSF can be a simple way to do that.
So what is a SMSF?
A self managed super fund works similarly to retail funds, with the differences being that you are the one who sets up and looks after it, with the help of your trustees and directors. You can make the calls that are important to you with regards to your finances but you also take on the responsibilities of running it. You have keep your fund compliant with all necessary regulations. For example, a SMSF fund has to be audited every year by an accredited auditor and the fund must abide by certain rules and stipulations from the ATO.
We’ve put together five signs that could tell you that you’re ready for a SMSF.
1. You want more control over your finances
This is the number one reason that anyone sets up a SMSF. Having a retirement plan is about choosing the investment pathways and options that will help you to create a future. If you want to make sure that you are a part of all the decisions around your money and your savings, a SMSF is your best bet. You can choose where your money will be invested and make sure that you are preparing your retirement income stream. If you’ve decided that having control is important to you, that’s a good sign you could be ready for a SMSF.
2. Your superannuation or savings can handle the fees
The last thing you want is to be spending your entire fund on the fees that will keep it afloat. That will leave you treading water, making no headway on your savings. To have a fund that can handle the costs associated with its administration you should be aiming to have close to $200,000 ready to invest or roll into it. That might sound like a lot, but if you’ve been working professionally or running a business for a few years, you could be in a better position than you think!
3. You’re prepared for the administrative work
Naturally with a higher level of control comes more responsibilities. You will have to take your fund seriously, keeping it compliant and ensuring it is audited every year by an accredited auditor. Finding an accounting partner to help you through this is crucial, and you won’t be able to manage your fund without one. You need to be ready to take on the extra responsibilities and tasks of a SMSF. Examine your time and your life to determine whether you have the resources and energy to commit to a SMSF.
4. You’re ready to handle the tax
Keeping your fund tax compliant and minimising the amount taxed on isn’t an easy matter. If you want to make sure you aren’t taxed on your fund at the maximum rate of 15%, you’ll need a decent understanding of ATO regulations and tax law surrounding SMSFS. Again, this is where a firm of expert advisors like Charltons comes in handy - it’s our job to navigate tax for you! If you don’t have a partner firm yet, you should start doing some research or come in to Charltons for a discussion.
5. You have an understanding of investing
Investing effectively is an important part of your SMSF’s success. While Charltons are able to recommend experts in the field who can provide you with advice and guidance, it’s also important for you to understand what your money is doing. If you’ve ever invested before, you’ll have a good grounding in it and your fund may be more successful because of it. If not, there’s no better time to start learning.
As with any financial matters, getting the right advice is going to make all the difference. We have the information that you’ll need to take your savings and plans to the next level and manage them correctly. Charlton are always happy to provide our expertise to our clients and contacts, so if you’re ready to find out more about SMSFs, giving us a call could be the best place to start.