Is SMSF a Good Idea? Here Are the Pros and Cons

The Pros and Cons of SMSF

Retirement is something we all dream of. The most pressing question is how to save for retirement and make it a reality.

SMSFs have seen an incredible rise in popularity over the last few years.

At over $787 Billion worth of assets, it makes sense that you’d want to know more about these funds and how to leverage them.

Keep reading for a fast guide on how to set up SMSF, as well as some pros and cons.

What Is an SMSF?

A Self-Managed Super Fund is a superannuation fund. Typically, the fund members are the trustees and monitor it closely, keeping track of performance and investment decisions.

The government is committed to supporting retirees, and in many ways, SMSFs are the best vehicle to do this. The fund is such a good option because of the SMSF reporting requirements and protective laws. Add to that the fact that trustees are running the fund for their own benefit, and it’s too good an opportunity to miss.

The Pros and Cons

Let’s take a look at some of the ins and outs of an SMSF. We’ll tackle the Cons first and then move on to the Pros.


The first disadvantage of an SMSF that you should be aware of is the responsibility of being a trustee. If you self-manage, you’re really responsible for all your investment decisions.

You will need to become familiar with all the relevant tax laws and legislation changes. While these are published regularly, it does take some knowledge to interpret them properly.

You will also need to be a permanent resident before you are able to invest in an SMSF. If you’re planning on moving away or funding your SMSF from outside the country, you may run afoul of the law.


One of the most attractive benefits of an SMSF is the flexibility it affords you. You’re able to tailor the fund to fit your investment personality and complement your existing investments.

You’ll also have the opportunity to select which direct investments to make. An SMSF can invest in pretty much anything, including property, Gold, Artwork, and many more.

How Much Does It Cost?

Let’s talk about the cost of setting up a self-managed super fund. When SMSFs were first established, they were really only for the super-wealthy. The high cost of setting up and compliance fees kept most people out of the market.

This has changed over the last few years. Operational costs are now fixed, which means that as your fund grows, the percentage given over to fees will constantly reduce. Alongside that, it’s now much easier to set up a fund.

How Do I Set One Up?

Although the Government does suggest using a professional to assist with setting up an SMSF, you can do it yourself.

Of course, because a trustee can be either a private individual or company, you could nominate an entity like H&R, Monex, or Klear to manage your fund for you. This option gives you some flexibility but keeps the fund visible to you.

You’ll find that some of the steps to get set up are more complex than others. However, the brief list is:

  • Choose and appoint trustees
  • Create the trust and deed
  • Check regulations
  • Register your fund and get an ABN
  • Set up a bank account
  • Get Electronic service addresses
  • Prepare an exit strategy

There are comprehensive guidelines that will give you all the information you need.

So Now What?

Now that you’ve got a quick overview and understand the pros and cons of an SMSF, you’re well on your way to investing. We’ve covered some of the pros and cons as well as an outline for the setup you’ll need to go through.

The SMSF process remains one of the most popular investment vehicles. Thanks to government support, there’s never been a better time to get into an SMSF.

If you enjoyed this article, why not take a look at the other articles in our Business and Finance category.

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