SMSF - The Freedom Of Managing Your Own Money

December 14th, 2009

SMSF - The Freedom Of Managing Your Own Money

The superannuation system is great for all of us. Our employer puts money away for our retirement, money which we never really see anyway so it does not impact our lifestyles. Then, when we retire, we have a massive pool of saved funds which we can enjoy.

One of the things I always despise about our retirement industry though, is the way superannuation funds take control of the investment decisions away from me. It is my money, yet I cannot make any investment decisions. The situation has improved over the years, but it is still not good enough. For this reason I set up my own Self Managed Superannuation Fund (SMSF).

Without making this article too complex, all an SMSF is, is a structure which enables you to manage your own superannuation money. There are a number of responsibilities which come with running your own super fund, you can manage these yourself or outsource them as you see fit. Most of these responsibilities follow:

Firstly, someone needs to be the trustee. The trustee takes legal ownership of and responsibility for the fund, and all the assets there within. Time wise, it is not onerous, its more of a legal responsibility.

Secondly, there is the administration and accounting responsibilities. This is a time intensive role, keeping the books up to date and preparing the annual accounts, lodging tax returns and preparing reports for members.

Thirdly the fund needs to be audited. Each year, it needs to be checked by an independent auditor to ensure you are keeping within the superannuation regulations. This is what will ensure you get to keep receiving your superannuation tax concessions.

4. Investments - The investment manager makes all the investment decisions, buying and selling investments to ensure the long term financial success of the fund, for the benefit of its beneficiaries. The investment manager must ensure that the investments made, comply with the superannuation laws, regulations and guidelines of the day. Failure to do so could result in a bad audit and the loss of taxation concessions.

In my situation, all I wanted was control over the investments. I wanted to manage where my money was invested and how much was invested. That way I always knew how much I had in my accounts (as opposed to waiting for the big surprise when my annual statement arrived) and I could feel comfortable knowing that my returns were well earned. They were my responsibility, so in the bad years when my investments fell, at least I wouldn’t get frustrated that I had no control. It also afforded me the luxury of managing my superannuation investment as part of my estate rather than as a separate entity. This meant my entire portfolio was significantly more balanced, which is crucial for long term financial success.

All other responsibilities I outsourced. To me, they were time consuming tasks which were better undertaken by experts in the relative fields. This left me with more time to research and make investment decisions.

Gnifrus Urquart enjoys taking responsibility for his retirement investments, as well as the leisure time outsourcing his DIY Super Administration affords him.