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Do-it-yourself super

SELF-managed super funds are the fastest growing section in the superannuation industry.

The latest figures from the Australian Taxation Office show the number of SMSF members topped one million in March, holding a whopping $547 billion in net assets.

It’s not all wine and roses.  As the trustee of an SMSF, you’re responsible for everything from regulatory compliance to paying benefits.  This makes good management essential.

To sharpen up your approach, here are our four tips for managing an SMSF.

TAKE AN ACTIVE INTEREST

Being trustee requires much more than sound knowledge of financial markets or a knack for picking stocks.  You’re required to run the fund to provide for its members i8n retirement.

This means setting the fund’s investment strategy, organising insurance, complying with legislation and managing the administration, among other things.

Needless to say, taking an active interest is crucial.

Graeme Colley, director of professional standards at the SMSF Professionals’ Association of Australia, recommends trustees learn as much as possible about their fund and the industry in general, and budget to spend time each week on administration.  How long will depend on the complexity of the fund, the investment strategy and other factors.

Good investment managers:

·         Set a strategy and have the discipline to stick to it

·         Base decisions on detailed research and objective analysis – they take out the emotion

·         Use experts and fund managers to plug any weaknesses

·         Never take unnecessary risks – they don’t ‘bet the farm’ on a risky investment

SHARPEN UP YOUR DOCUMENTATION

Keeping paperwork accurate and up-to-date is one of the most important tasks when managing your own super fund.  And to keep you honest, SMSF regulations are enforced by the Australian Taxation Office.

Every year there are a range of reporting requirements that the trustee has to fulfil, including lodging an annual return, paying the SMSF supervisory levy, maintaining records and engaging an ASIC registered auditor.

Penalties for non-compliance with any aspect can be severe.

STAY ON TOP OF REGULATORY CHANGES

It’s crucial to be across any changes to relevant super legislation.  Especially as super’s a complex and highly regulated area that’s been tweaked many times by governments.

The ATO and ASIC websites are a good source of information on super in general and any changes that are coming through.  And pick up the financial press.  Your accountant, financial adviser and industry figures are other great sources of information, so check if they have a regular newsletter and get on the distribution.

KNOW WHEN TO SEEK ADVICE

It makes sense to get experts onboard.

A specialist accountant is well placed to set up and structure your SMSF and can help in drawing up annual reports and much of the admin.  A financial adviser can play a pivotal role I helping set an investment strategy.

It may be necessary to consult a lawyer, particularly on issues like estate planning.

Getting these aspects right is central to how quality funds perform.

 

Source:  MoneysaverHQ – Daily  Telegraph 30 June 2014

 This material provides general information, current at 30/6/14, which Emohruo Financial Services believes to be reliable at the time of publication.  However, we are not the author of this information and therefore do not confirm its content.

 

 

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