Self-managed superannuation funds (SMSFs) continue to be popular amongst many investors but ASIC has warned the individuals need to be aware of the potential downside to establishing an SMSF that may be inappropriate for their circumstances.
ASIC Commissioner Danielle Press said:
‘SMSFs may be an attractive option for investors wanting more control over their superannuation investment strategy, but it requires real skill, care and diligence to manage your own superannuation. SMSFs are not for everyone simply because not everyone can meet the significant time, costs, risks and obligations associated with establishing and running one.’
ASIC’s view is that $500,000 is the minimum balance needed to justify setting up a SMSF. ASIC’s research also found that SMSFs are not an appropriate investment option for people who want a simple superannuation solution, particularly if they have a low level of financial literacy or limited time to manage their own financial affairs.
‘As the trustees of their own fund, SMSF investors must remember that they are responsible for their fund’s compliance with the law, even if they pay a professional to help,’ Ms Press said.
At The Wealth Mentoring Group, we can help you decide if a SMSF is right for you. If you’d like additional information, ASIC has released a useful factsheet, SMSFs: Are They For You? Please contact us if you are considering establishing a SMSF or wish to review your existing SMSF arrangements.