Self-Managed Super Funds – is it just smoke and mirrors?
In the past few years, the term Self-Managed Super Funds (SMSF) has become wildly popular. Taking the power away from ‘greedy’ financial planners who only want a trail commission on YOUR money. Giving YOU control over YOUR money, to do things like, buy a property, invest in what you want to, get the returns you want to get.
Sounds fantastic, doesn’t it. But figures show that some people in SMSFs are actually losing money, not making it. It is costing them more money to be in control, instead of letting an expert look after it.
Firstly, let’s look at who were ‘selling’ these SMSFs. The biggest culprits were property sellers, off-the-plan especially. These are people selling you a dream, nothing concrete, using money you had planned for your future, now. They tell you that doing so will help when you retire, through investment, but really, what do they know? They know that if they sell enough off-the-plan residences, they’ll make a great return on commission.
Secondly, you need a great Accountant to help you set up the fund, but you also need to remember that they are not investment experts. SMSFs are tax structures first but should also have an investment plan for the future.
You don’t come to a Financial Planner for tax advice, so why are people trusting accountants to invest for their retirement?
Now, let’s take a brief look at cost. Up front, SMFS look cheaper to the general punter. However, for super balances less than $250 000, more often than not, the funds cost more than a simple retail fund. People see savings in being able to control the fund themselves, which is great in theory. But do you know how to control it? Do you have the time, the patience and experience to control how and where your money is used, how it grows?
When someone comes to me, frustrated and exhausted with their SMSF, the first thing I would consider is closing it down, and putting all the funds into a simple low-cost fund. That way you’re saving money on fees, and not focusing on the worries that go with running your own fund.
The next thing I do, is help. Help the person understand what they need for retirement, understand the differences between SMSF and the options that are available, as a qualified Financial Planner whose aim it is to help you get ready for retirement.
If you want to know more about investing, planning for your future, and why having a qualified and experienced Financial Planner will help you, contact me on 9762 0640. Or attend one of my free seminars held regularly in the eastern suburbs of Melbourne. Check our seminars page for our next date and location.
