Should I set up an SMSF?

If you've ever asked yourself, "Should I set up an SMSF?", you're not alone. With more Australians seeking greater control over their retirement savings, SMSFs, or Self-Managed Super Funds, are becoming increasingly popular. 

 

But before diving into it, it’s crucial to understand what is SMSF, who it suits, and what to consider before starting one.

What is SMSF?

An SMSF is a private superannuation fund you manage yourself. Unlike traditional super funds managed by large institutions, an SMSF puts you in charge of your retirement savings and investments. SMSFs can have up to six members, and each trustee is responsible for all decisions and compliance with super and tax laws.

While this type of fund offers flexibility and control, it also comes with legal responsibilities and a time commitment. That’s where getting advice from an SMSF specialist is vital.

The Pros and Cons of Having an SMSF

Before making a decision, it’s important to weigh the pros and cons of having an SMSF.

Pros:

• Full control over investment choices, including direct property, shares, and collectibles.
• Tax strategies tailored to your situation.
• Pooling family assets to grow retirement savings together.
• Flexibility with estate planning and insurance options.

Cons:

• Time-consuming to manage and maintain.
• High responsibility—you are legally liable for decisions.
• Costs can be higher than a retail or industry fund unless your balance is large.
• Complex rules and compliance—getting it wrong can lead to penalties.

Is SMSF Worth It?

So, is SMSF worth it? That depends on your financial goals, level of interest, and account balance. According to the ATO’s latest SMSF Investment Performance Report, the average SMSF balance was around $1.5 million. Funds with higher balances tend to perform better due to economies of scale.

But it's not just about balance. An SMSF can be worth it if you:

• Want to invest in assets not offered by traditional funds.
• Are confident in making complex financial decisions.
• Have time and interest in managing investments.
• Want to include family members in one fund.

Who Should Set Up an SMSF?

An SMSF may suit individuals who:

• Have a super balance of at least $250,000 (to make it cost-effective).
• Have investment experience or work with a professional investments advisor.
• Want full control over asset allocation and retirement strategy.
• Are planning detailed estate planning for family beneficiaries.

Who Shouldn't Set Up an SMSF?

On the flip side, an SMSF might not be the right fit if you:

• Prefer a hands-off approach to super.
• Don’t have the time or financial knowledge to manage a fund.
• Have a low super balance and limited resources to cover costs.
• Don’t want to keep up with constant regulatory changes.

In these cases, a retail or industry super fund may be more practical and cost-efficient. Before deciding, always consult a superannuation financial advisor who can assess your specific needs.

Other Things to Consider Before Starting an SMSF

Before making any moves, ask yourself:

• What are your financial goals?
• Do you want more say over your benefits of superannuation?
• Are you confident in managing a fund, or will you rely on external experts?
• Do you have a trusted financial advisors team to support your strategy?

How to Set Up an SMSF

Setting up an SMSF involves several steps:

1. Choose trustees – Decide if you’ll have individual trustees or a corporate trustee.
2. Create a trust deed – A legal document that outlines the fund's rules.
3. Register the fund – Apply for an ABN and TFN via the ATO.
4. Open a bank account – To manage fund transactions and contributions.
5. Create an investment strategy – Tailored to members’ retirement goals and risk tolerance.
6. Ensure compliance – Meet all reporting, auditing, and tax obligations.

This is where professional help is essential. The setup process requires attention to detail and can get technical. That’s why getting advice from an SMSF specialist is key to ensuring everything is above board from the beginning.

Is an SMSF Aligned with Your Goals?

Before starting an SMSF, think about your long-term financial and lifestyle goals. Can these goals be reached with a standard super fund, or do you need more flexibility? Are you ready for the responsibilities of managing a fund? An expert financial planning session can help answer these questions and more.

Where to Get Help

Making informed decisions about your retirement future starts with the right support. At Inovayt, we specialise in personalised superannuation strategies, including SMSFs. Our team of expert financial advisors and SMSF specialists take the time to understand your goals and give clear guidance on your best options.

We don’t believe in one-size-fits-all advice. We offer strategic, long-term solutions tailored to your life stage and financial goals. If you're exploring whether an SMSF is worth it and need trusted support, we’re here to help with everything from setup to management and compliance.