DIY Superannuation - How Much Control Do You Want?
The retirement industry in Australia is second to none in the world. It forces us to save money in a very comfortable way, a way that doesn't impact our disposable income, so we all have a big pool of money to live off in retirement.
One of the pitfalls of superannuation for me though is the way you lose control of your money. It is your money, yet often someone (such as your employer and usually due to your own inaction) decides where your money is invested. For this reason, I set up my own Self Managed Superannuation Fund (SMSF).
All a DIY Super fund is, is a legal structure you can use to manage your own superannuation money. There are a number of responsibilities you must take care of, ensuring the fund meets its obligations in as much as superannuation laws go. Once set up though, you can be as involved as you want and outsource the parts you are not interested in managing. The things that need to be taken care of include:
1. Your Trustee Responsibilities. Someone needs to legally own the assets of the fund. This is the trustee. The trustee is also responsible for the running of the fund, so if anything goes wrong, it is the trustee who is legally liable.
Secondly, there is the administration and accounting responsibilities. This is a time intensive role, keeping the books up to date and preparing the annual accounts, lodging tax returns and preparing reports for members.
Thirdly the fund needs to be audited. Each year, it needs to be checked by an independent auditor to ensure you are keeping within the superannuation regulations. This is what will ensure you get to keep receiving your superannuation tax concessions.
4. Investments - The investment manager makes all the investment decisions, buying and selling investments to ensure the long term financial success of the fund, for the benefit of its beneficiaries. The investment manager must ensure that the investments made, comply with the superannuation laws, regulations and guidelines of the day. Failure to do so could result in a bad audit and the loss of taxation concessions.
In my situation, all I wanted was control over the investments. I wanted to manage where my money was invested and how much was invested. That way I always knew how much I had in my accounts (as opposed to waiting for the big surprise when my annual statement arrived) and I could feel comfortable knowing that my returns were well earned. They were my responsibility, so in the bad years when my investments fell, at least I wouldn't get frustrated that I had no control. It also afforded me the luxury of managing my superannuation investment as part of my estate rather than as a separate entity. This meant my entire portfolio was significantly more balanced, which is crucial for long term financial success.
Time is always an issue though, which is why I outsourced all the other duties. Getting rid of all those responsibilities left me with much more time to research and make appropriate investment decisions. - 23226
One of the pitfalls of superannuation for me though is the way you lose control of your money. It is your money, yet often someone (such as your employer and usually due to your own inaction) decides where your money is invested. For this reason, I set up my own Self Managed Superannuation Fund (SMSF).
All a DIY Super fund is, is a legal structure you can use to manage your own superannuation money. There are a number of responsibilities you must take care of, ensuring the fund meets its obligations in as much as superannuation laws go. Once set up though, you can be as involved as you want and outsource the parts you are not interested in managing. The things that need to be taken care of include:
1. Your Trustee Responsibilities. Someone needs to legally own the assets of the fund. This is the trustee. The trustee is also responsible for the running of the fund, so if anything goes wrong, it is the trustee who is legally liable.
Secondly, there is the administration and accounting responsibilities. This is a time intensive role, keeping the books up to date and preparing the annual accounts, lodging tax returns and preparing reports for members.
Thirdly the fund needs to be audited. Each year, it needs to be checked by an independent auditor to ensure you are keeping within the superannuation regulations. This is what will ensure you get to keep receiving your superannuation tax concessions.
4. Investments - The investment manager makes all the investment decisions, buying and selling investments to ensure the long term financial success of the fund, for the benefit of its beneficiaries. The investment manager must ensure that the investments made, comply with the superannuation laws, regulations and guidelines of the day. Failure to do so could result in a bad audit and the loss of taxation concessions.
In my situation, all I wanted was control over the investments. I wanted to manage where my money was invested and how much was invested. That way I always knew how much I had in my accounts (as opposed to waiting for the big surprise when my annual statement arrived) and I could feel comfortable knowing that my returns were well earned. They were my responsibility, so in the bad years when my investments fell, at least I wouldn't get frustrated that I had no control. It also afforded me the luxury of managing my superannuation investment as part of my estate rather than as a separate entity. This meant my entire portfolio was significantly more balanced, which is crucial for long term financial success.
Time is always an issue though, which is why I outsourced all the other duties. Getting rid of all those responsibilities left me with much more time to research and make appropriate investment decisions. - 23226
About the Author:
Gnifrus Urquart appreciates taking responsibility for his retirement savings, as well as the leisure time outsourcing his SMSF Administration affords him.
posted by X - Men @ 3:16 AM
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