Thinking about setting up a self-managed super fund? You’re not alone. More and more Australians are looking for greater control over their retirement savings—and an SMSF can offer just that. But before you jump in, it’s important to understand how they work, what’s involved, and whether it’s the right fit for you.
Let’s break it down in simple terms.
What is an SMSF?
If you want a cake, you can choose from the many pre-made options available. Or, you can bake one yourself.
An SMSF is the cake you make yourself. It’s a private superannuation fund that you manage. Unlike retail or industry funds, you’re the trustee and decision-maker. You control the investments, insurance, and compliance responsibilities—in other words, you get to decide how much icing goes on this cake!
This flexibility is powerful, but it also comes with significant obligations.
Is an SMSF right for you?
An SMSF isn’t for everyone. In fact, most people can achieve their goals with an off-the-shelf super fund. But there are some who may want to consider going down the SMSF path—especially those who:
- Want access to investments not typically available in public offer funds (e.g. direct property, private assets, collectibles—within ATO rules)
- Have the time (or the right support team) to manage the admin and compliance
- Hold a reasonable super balance (more on that below)
In our experience, SMSFs are most often suitable for investors who want to buy direct property or business owners looking to purchase their own commercial premises.
How much do you need to start an SMSF?
Technology is steadily reducing the cost of setting up and operating an SMSF. Because of this, we place more emphasis on why you want an SMSF, rather than how much it costs.
If your “why” is strong, you can usually justify the costs.
That said, if we had to give a ballpark, we typically suggest a minimum balance of $250,000+, where the costs and effort start to make sense.
What are the costs?
Costs will vary depending on who you engage and whether you opt for individual or corporate trustees. Setup costs generally range between $1,000 – $2,000 as a one-off fee.
Then there are ongoing costs, which depend largely on the complexity of your fund’s assets:
| Type of Cost | Typical Range (p.a.) |
|---|---|
| Ongoing accounting / admin fees | $2,000 – $5,000+ |
| ATO levy | $259 |
| Investment platform / asset fees | Varies depending on portfolio choice |
| Audit | $300 – $800 |
Steps to setting up your fund
If you’ve decided an SMSF is right for you, here are the key steps to getting started:
Step 1: Choose your members
An SMSF can have 1–6 members. They can be related, but don’t have to be. We recommend only including people you’re building your long-term retirement plans with.
Step 2: Choose your trustees
Each member must be either an individual trustee or a director of a corporate trustee. For single-member SMSFs, you’ll need a corporate trustee (with you as sole director) or two individual trustees (including one non-member). We usually recommend a corporate trustee for its added flexibility and better succession planning.
Step 3: Create the fund
You’ll need to establish a trust deed to govern your SMSF’s operation. Off-the-shelf deeds are available but may need tailoring. You’ll also need to register the SMSF with the ATO within 60 days, and apply for an ABN and TFN for the fund. A qualified professional can help with this process.
Step 4: Open a bank account
The SMSF needs its own bank account for receiving contributions, paying expenses, and holding investments. It must be opened in the name of the trustee(s) as trustee for the fund.
Step 5: Update your employer
If you want employer contributions to be paid into the SMSF, provide your employer with the fund’s details. This typically involves completing a super fund nomination form.
Step 6: Roll over your super
You can request to roll over your existing super balances into your SMSF. But before doing this, carefully consider what benefits you might lose—particularly personal insurances like Life, TPD, and Income Protection.
If you still need insurance:
- Arrange replacement cover within the SMSF before rolling over; or
- Retain sufficient funds in your existing super account to maintain your current cover.
In the second case, you’ll also need to submit an election form to retain insurance if contributions will no longer be made to that fund.
Step 7: Start investing
As trustee, you must create and document an investment strategy that aligns with the fund’s objectives. Investments must be made in line with this strategy.
Step 8: Keep up with compliance
Each year, your SMSF must meet a number of compliance obligations—including financial reporting, annual audits, and ATO requirements.
It’s achievable—but most trustees work with a financial adviser, accountant, and SMSF administrator to stay on track.
The Guided Investor approach
An SMSF can be a great tool for the right person. But it’s not a one-size-fits-all solution.
If your goal is to invest in a diversified portfolio of low-cost ETFs, you may be better off with a wrap platform—it offers much of the same flexibility without the compliance burden.
But if you’re a business owner looking to buy commercial property, or you’re passionate about direct property investment, an SMSF might be the right fit. It’s a strategy we may explore during Phase 2 and beyond of our Wealth Creation process.
