What You Need to Carefully Consider Before Self Managing Your Superannuation Fund
The world can be a tumultuous and unpredictable place and seems to be getting more complicated by the week. It's hardly surprising that more and more Australians are trying to take responsibility for their own affairs and for their future. This has led to a considerable growth in the number of people who are taking to self managed superannuation funds. If you are considering this yourself, what do you need to bear in mind before you proceed?
Look at the Big Picture
When you become a trustee of your own superannuation fund, you become legally responsible for complying with various regulations as well and need to understand the implications. You've got to be certain that you can be an effective and proactive manager before you start.
Diving into the Markets
As a trustee, you need to engage yourself in financial markets. You're looking for growth and investment and need to cultivate some interest in the stock market. What type of investment strategy are you going to pursue, in order to maximise the potential benefits in retirement? What types of insurance do you need to consider? You cannot be passive in this type of situation and need to set aside a certain amount of time on a regular basis for administration and growth. You also need to be clear that this is not a pastime or a hobby but a very serious proposition.
Complying with Regulation
Every year, a trustee has to lodge an annual return to the ATO and make sure that the accounts are audited. In addition, there are fees and levies to pay. You must also ensure that all your documentation is up-to-date and in place and remember that the ATO and regulators can — and will — impose fines and penalties if not. The regulators may also take away some of your tax concessions if they feel that the fund is not being administered properly.
Nothing stands still and this is certainly the case when it comes to tax and superannuation rules and regulations. You must ensure that you are proactively checking to see what's new and be aware of any potential changes coming down the pike.
Don't Go It Alone
All in all, there's a lot to digest. As you can imagine, it's highly advisable for you to get a financial adviser and accountant on your team. The more experts you have to guide you, the less likely you are that you'll run into problems that may jeopardise your financial nest egg.