Right now, there’s a lot of noise about setting up self-managed super funds. Having complete control over your super, choosing your investments, and building your wealth can sound very attractive, but is it right for you? The truth is: for some, an SMSF can be a fantastic vehicle. For others, it can be an expensive disaster.
Let’s break it down.
First — What is an SMSF?
A Self-Managed Super Fund is precisely that — self-managed. You take control of where your super is invested. Unlike retail or industry funds, no fund manager makes decisions on your behalf. You (up to 6 members, usually family) are the trustees, responsible for every decision, every rule, and paperwork.
You get complete control. But you also get full responsibility.
The Cost Reality Most Don’t Talk About
I recently spoke with someone who had set up an SMSF with only $50,000. Unfortunately, this is where so many go wrong. ASIC (the regulator) recommends that you have at least $200,000 before setting up an SMSF. Why? Because the costs are real.
- Set-up costs: $5,000 – $10,000 (advice, legal structure, registrations)
- Annual compliance costs: $3,000 – $10,000 (accounting, audit, admin, reporting)
If your balance is too small, the fees quickly chew up your returns. The lower your balance, the higher the percentage of your fund going to fees, not investments.
If you’re not starting with a large enough balance, you’re immediately playing catch-up.
You’re Responsible for Everything
Running an SMSF isn’t just “pick some shares and hope for the best.” You are legally responsible for:
- Investment decisions
- Compliance with superannuation laws
- Keeping minutes, records, and financial statements
- Lodging tax returns
- Annual independent audits
And here’s the blunt truth: if you mess up the compliance rules, your fund could be made non-compliant, meaning up to 47% of your fund could be taxed. You can lose almost half your super overnight if you breach the rules.
What You Can (and Can’t) Do
An SMSF offers a lot of flexibility:
- Buy direct shares, managed funds, and ETFs
- Purchase commercial property (even rent it to your business)
- Borrow money inside the super (under strict borrowing rules)
- Certain alternative assets (art, collectibles, crypto)
But there are severe restrictions too:
- You can’t use SMSF funds for personal benefit.
- You can’t lend money to family or friends.
- You can’t buy a residential property and live in it.
- You must operate entirely at arm’s length from personal finances.
One misstep, even accidentally, can trigger severe penalties.
Not for the Disorganised
Let’s be honest, some people are not well-suited to running an SMSF.
- If you’re terrible at paperwork…
- If you hate compliance…
- If you procrastinate on lodging tax returns…
- If you don’t understand investments…
…then this may not be for you. Running an SMSF requires ongoing attention, discipline, and a willingness to stay across rules and regulations. And no, your accountant can’t do it all for you.
When an SMSF Might Make Sense
Despite the risks, for the right people, SMSFs can be brilliant:
- Large balances (ideally $300k+)
- A desire for complete investment control
- Property purchases inside super
- Strong financial literacy and willingness to stay compliant
- A genuine interest in actively managing your retirement wealth
It’s about knowing your skillset, your appetite for responsibility, and whether this structure genuinely fits your long-term goals.
Final Word
As I tell my clients:
Don’t become another story of someone who set up an SMSF for the wrong reasons and now regrets it.
Setting up an SMSF isn’t a casual decision; it requires proper advice, a clear strategy, and a serious commitment to ongoing management.
This blog post provides general information only and is not intended as personal financial advice. The information presented here does not take into account your individual financial situation, investment objectives, or particular needs. You should consult with a qualified financial advisor before making any financial decisions based on the information in this post. The author and website owner are not liable for any actions taken based on this general advice.
Thinking about an SMSF?
Let’s talk about whether it’s the right fit for you.
Contact us to book a SMSF review session.