Some investors find it satisfying to take a do-it-yourself approach to retirement savings by managing their own self-managed superannuation fund (SMSF) and taking responsibility for its growth.

While an SMSF gives you full control over how your retirement funds are invested—within legal limits—there are several important factors to consider first. A well-structured SMSF investment strategy is essential to ensure compliance with regulations, manage risk effectively, and achieve long-term financial goals.

Before taking the plunge, carefully weigh up the risks and rewards. This includes understanding super and tax laws, assessing the costs involved, evaluating the level of administration required, and developing a solid investment strategy.

What you need to know

Setting up an SMSF can be complex and time-consuming, with numerous regulations and rules to navigate. Seeking professional advice can help ensure your SMSF is established correctly, allowing you to qualify for the tax concessions available through the super system.

Your financial adviser can guide you through the setup process, ensuring compliance and making ongoing administration easier throughout the year.

The advantages of an SMSF

A SMSF offers several advantages, particularly for individuals who want more control over their retirement savings and investments. Some of the key pros of having an SMSF include:

Investment control

SMSF members have complete control over their investments, you decide where to invest and when assets are disposed. You can also incorporate property as part of your portfolio.

Estate planning

SMSF members can set up binding death benefit nominations to specify how their superannuation will be distributed after they pass away.

Asset protection

SMSFs can protect members from bankruptcy and litigation, and their superannuation benefits are usually protected from creditors.

Diversification

An SMSF has greater access to investment options and a diversified SMSF portfolio could reduce risk and improve returns over time. Speaking to your accountant or financial adviser can help to ensure you SMSF investment strategy is well-structured for long-term success and is well-diversified.

Tax advantages

SMSFs have one of the lowest tax rates in Australia. Other tax credits can help to further reduce the tax rate.

Lower costs

Running your own SMSF can have lower ongoing costs, especially for larger funds.

Lump sum payments

SMSF can pay benefits as a lump sum, a pension or a combination if the payment is under the laws and the trust deed.

The disadvantages of an SMSF

While there are several benefits to having an SMSF, there are also some drawbacks and challenges. Here are some of the main things to consider:

Responsibility and learning

Trustees must understand and comply with legal and financial requirements.

Cost

SMSFs can be expensive to set up and maintain, especially for SMSFs with smaller balances.

Time and effort

Running an SMSF requires a significant amount of time, effort, and expertise. Engaging with your financial adviser for assistance and ongoing support can help ease the burden and ensure your SMSF investment strategy remains aligned with your financial objectives.

Risk

SMSFs are not guaranteed by the government, and investment returns are not guaranteed. If you lose money, you won’t have access to the government compensation scheme.

Get professional help

Establishing and managing an SMSF can be difficult without professional assistance. The legal and regulatory requirements are complex and must be followed to ensure the fund remains compliant. These requirements are also regularly updated or changed, so it’s important to stay informed about any new obligations.

Many trustees require support with the day-to-day management of the fund, as well as meeting ongoing reporting and administrative obligations.

Managing an SMSF comes with both opportunities and challenges, and professional advice can make all the difference. Your financial adviser can help ensure your fund is set up correctly, remains compliant with evolving regulations, and aligns with your retirement goals. They can also assist with SMSF investment strategies, tax efficiencies, and ongoing administration, so you can focus on building your wealth with confidence.

If you or someone you know is considering an SMSF, reach out to one of our trusted advisers for expert guidance and support.