For many Australians, superannuation is their largest investment outside the family home. While most people leave their super in an industry or retail fund, a growing number consider setting up a Self-Managed Super Fund (SMSF).
But is it really worth it? The answer depends on your financial goals, your balance, and your willingness to take on responsibility. Here are the key things to consider before diving in.
1. Control and Flexibility
One of the biggest drawcards of an SMSF is the control it gives you. With an SMSF, you decide:
- What to invest in (property, shares, managed funds, even certain collectibles).
- How to structure contributions and withdrawals.
- Which insurance policies the fund will hold.
For investors who want to build tailored strategies — like direct property ownership or complex estate planning — this flexibility can be a huge advantage.
2. Costs and Fees
Running an SMSF isn’t free. You’ll need to cover costs such as:
- Annual independent audit and tax return.
- Possible accounting, legal, or administration services.
- Ongoing investment and compliance costs.
Industry research shows SMSFs with balances under $300,000–$500,000 often struggle to be cost-effective compared with standard super funds. If your balance is lower, the extra control may come at a higher price.
3. Time and Responsibility
With greater control comes greater responsibility. Trustees of SMSFs must:
- Ensure the fund complies with Superannuation Industry (Supervision) Act rules.
- Stay on top of contribution limits, tax obligations, and reporting deadlines.
- Make investment decisions with the sole purpose of providing retirement benefits.
The ATO treats SMSF trustees seriously — breaches can result in heavy penalties. If you don’t have the time or interest to manage the fund properly, an SMSF may not be the right option.
4. Investment Opportunities
SMSFs open doors to investments you can’t access in retail or industry funds — like direct property, limited recourse borrowing arrangements (LRBAs), or even private company shares (within strict rules).
This can be an advantage if you have a clear, well-researched investment strategy. But it also increases risk — poorly chosen or overly concentrated investments can hurt long-term retirement outcomes.
5. Estate Planning and Succession
An SMSF can be a powerful estate planning tool. Trustees have more flexibility in:
- How and when benefits are paid.
- Using binding nominations or reversionary pensions.
- Managing intergenerational wealth transfer.
However, this complexity means it’s wise to involve legal and financial professionals when setting up or changing SMSF succession plans.
6. Who an SMSF May Suit
An SMSF may be worth it if:
- You have a combined super balance of $300,000+.
- You want direct control and are comfortable making investment decisions.
- You’re willing to commit time to administration and compliance.
- You’re seeking specialised strategies like property inside super or tailored estate planning.
For those with smaller balances, limited investment knowledge, or little time, a well-run industry or retail super fund often provides lower costs, strong returns, and professional management without the headaches.
The Bottom Line
An SMSF can be a powerful tool — but it’s not for everyone. Think of it like running your own small business: there are rewards, but also risks and responsibilities.
Before deciding, weigh up the costs, time, balance size, and your willingness to take on compliance obligations. And importantly, always seek professional advice to make sure an SMSF aligns with your personal circumstances.
Your retirement is too important to leave to chance — the right structure depends on you.
