SMSF Investment – It pays To Do Your Homework
In my experience, the majority of Australia’s superannuation members are better off staying out of SMSF and choosing another form of superannuation.
If you are not hell-bent on buying direct property as an asset of your SMSF, then I would strongly encourage you to look at other options before jumping into a Self-Managed Super Fund. The same applies to the group of investments termed, ‘Collectibles’.
If you like to collect valuables like fine wine, stamp, art and coin collections, then perhaps think twice about doing it via an SMSF. The rules have become a lot tougher recently.
If you do your research, you will find that a valuation, adequate insurance and off-storage of collectibles are all mandatory requirements for Collectibles now. Just finding someone who can value your unique collection and provide cost effective insurance could itself be a challenge.
Before jumping into an SMSF, or being talked in to it by an advisor, I encourage you to do your own research or seek a second opinion from an SMSF qualified advisor who comes recommended to you.
Although the majority of trustees cite ‘investment control’ as their number one reason for an SMSF, in practice it rarely plays out that way. In my experience, most SMSF investors are fairly conservative and stick to what they know.
I think the reason is that just like anything else, the art of investing requires training and experience. Most DIY investors are lacking in both, so they tend to set and forget in the familiar options of cash, term deposits, managed funds and listed shares.
However, if you do your research, you’ll quickly realise that you don’t need an SMSF to access these types of investments. They are all readily available through what is called a retail superannuation ‘wrap’.
A wrap is a form of personal superannuation that offers different types of assets grouped together under the same administration and reporting platform. Although real estate and collectibles generally can’t be accessed through a superannuation wrap, there is still a high level of investment control.
Personal superannuation (including the super wrap) offers some significant advantages over the SMSF. These include:
• There is no trustee compliance and reporting responsibility for members.
• All fund administration, accounting and auditing is all taken care of.
• There is a wide choice of diversified investments and online access to your portfolio 24 hours a day, 7 days a week.
• The better funds pay ‘Anti-detriment Payments’ as an additional death benefit payment. An Anti-detriment Payment is effectively the return of contributions tax paid. (An SMSF can in theory pay it as well, but in practice it is rarely paid because of significant barriers to funding it).
• Members have access to the Superannuation Complaints Tribunal (SCT) to resolve disputes. SCT access is not available to SMSF members.
If you are in Brisbane and considering an SMSF, call me for a no-obligation chat about your particular situation.